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THE BRIEF JUNE 2018

This article appears in the June 2018 edition of Valemus Law's THE BRIEF, a monthly email newsletter containing the latest legal news and opinion from our lawyers. To download your copy, please click on the button above. To subscribe to our monthly news round-ups, please email info@valemuslaw.com with 'Subscribe to The Brief' in the subject line.

Brexit: UK and EU negotiators publish joint statement on progress made in drafting withdrawal agreement

Reproduced by kind permission from Practical Law

The UK and EU negotiators published a joint statement on 19 June 2018 recording the progress made since the publication on 19 March 2018 of the draft withdrawal agreement.

Background

On 19 March 2018, the UK government and the EU published a coloured version of the draft withdrawal agreement highlighting the areas of agreement and disagreement and reflecting the progress made in the negotiation round of 16-19 March 2018.

On 19 June 2018, the UK and EU negotiators published a joint statement outlining the progress made on the terms of the draft withdrawal agreement since the publication of the draft on 19 March 2018. The European Commission notes that, under the caveat that nothing is agreed until everything is agreed, the progress recorded in this joint statement will be reflected in the withdrawal agreement in full.

The European Council stated in its of 23 March 2018 that it would return to the remaining withdrawal issues (and the framework for the future relationship) at its 29 June 2018 meeting. The joint statement of 19 June 2018 was put forward with a view to that meeting.

Areas of agreement

Part three of the draft withdrawal agreement (separation provisions) will apply from the end of the transition period and aims to clarify what will happen if procedures are ongoing at the end of that period, when EU law would generally stop applying to the UK.

There is now agreement at negotiators’ level on the following articles of part three, and the agreed text is annexed to the joint statement:

  • Article 42
  • Articles 47, 94 and 95
  • Article 56
  • Article 63
  • Articles 72(2) and 73.
  • Article 79. This was the only article that remained outstanding under the title on Euratom-related issues. Article 79 addresses the ownership and rights of use and consumption of special fissile materials in the UK at the end of the transition period.

Agreement was also reached at negotiators’ level on the following annexes to the withdrawal agreement, and the agreed text is annexed to the joint statement:

  • Annex y+7 on time-limits for customs procedures mentioned in Article 45(1) (ending of temporary storage or customs procedures). These time-limits set an end date for the application of Regulation (EU) No 952/2013, which lays down the Union Customs Code (UCC).
  • Annex y+4 (list of network and information systems and databases referred in Articles 46, 49, 94 and 95). This list relates to customs, excise, VAT, and tax and duty recovery assistance.

Goods placed on the market

Previously, Article 42 was the only article that remained outstanding under the title dealing with goods placed on the UK or EU market before the end of the transition period. The UK government has now accepted the European Commission’s draft wording for Article 42, which requires the UK and the member states to make information available.

VAT

The draft withdrawal agreement provides for Council Directive 2006/112/EC (Principal VAT Directive) to apply to cross-border supplies of goods between the UK and EU initiated before the end of the transition period (and delivered after that date).

It is now agreed that taxpayers’ rights and obligations under the Principal VAT Directive in relation to such supplies and supplies made before the end of the transition period will continue for five years after the end of the transition period. By way of exception, eighth directive reclaims must be submitted by 31 March 2021 and amendments to VAT returns in respect of one-stop shop services supplied before the end of the transition period must be submitted by 31 December 2021 (Article 47).

In respect of these matters, it is also agreed that Council Regulation 904/2010 (administrative co-operation) will apply for four years after the end of the transition period and Council Directive 2010/24/EU (mutual assistance directive) will apply to any claims within five years of the end of the transition period (Articles 94 and 95).

Intellectual property

Article 56 deals with the situation where applications for supplementary protection certificates for plant protection or medicinal products (or applications to extend their duration) are pending in the UK at the end of the transition period. The UK government has now accepted the European Commission’s draft wording, which provides for the continued application of relevant EU law in such situations. Some of the other articles under this title are still under negotiation.

Jurisdiction, recognition and enforcement of judgments

Previously, Article 63 was the only article that remained outstanding under the title dealing with judicial co-operation in civil and commercial matters that are ongoing at the end of the transition period. This title aims to clarify when the relevant provisions of EU law will continue to govern such matters. Article 63 addresses the jurisdiction, recognition and enforcement of judicial decisions, and related co-operation, including the application of the Recast Brussels Regulation (Regulation (EU) 1215/2012).

Ongoing public procurement and similar procedures

Previously, Articles 72(2) and 73 were the only articles that remained outstanding under the title dealing with the treatment of public procurement procedures and similar procedures that are ongoing at the end of the transition period. The UK government has now accepted the European Commission’s draft wording for:

  • Article 72(2), which requires compliance with the non-discrimination principle in relation to ongoing procedures.
  • Article 73, which sets out the EU law applicable to review procedures.

Areas outstanding

The joint statement reports that the following issues have been discussed, but are still outstanding:

  • Protection of data processed before the end of the transition period
  • Geographical indications
  • Treatment of ongoing police and judicial co-operation in criminal matters
  • Finalisation of ongoing EU judicial and administrative procedures at the end of the transition period and possible new procedures concerning facts arising before the end of the transition period
  • Consistent application and interpretation of the withdrawal agreement by both the EU and the UK.
  • Dispute settlement

Protocol on Ireland/Northern Ireland

The European Commission chief negotiator Michel Barnier has previously called for “substantive progress”, before the European Council’s June 2018 meeting, on the backstop option in the withdrawal agreement for avoiding a hard border between Ireland and Northern Ireland. On 19 June 2018, Michel Barnier said “Serious divergences remain, however, on the Protocol on Ireland/Northern Ireland.”

The joint statement reports that:

  • Discussions were held on the UK proposal of 7 June 2018, which aims to address the customs aspects of the backstop option
  • The finalised results of the north-south mapping exercise on cross-border co-operation will be published shortly.
  • The parties are committed to accelerating work on the outstanding areas, and notes that both parties agree the scope of the draft protocol reflects the issues that require legally operative agreed text in the withdrawal agreement.

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