Briefings from both the EU and UK sides have been more positive over the last few days, with the Commission President briefing on 20 November that most major issues were now agreed. That adds to the impression that a Deal is close to being signed off (even if some members of the UK’s Cabinet have been reverting this week to the slogan ‘No Deal is better than a Bad Deal’).

Ratification is the Next Obstacle…

However, any Brexit deal between the UK and the EU must be ratified by the European Parliament.  The Transition Period expires at midnight EU time on 31 December.  In order for ratification to take place, the deal needs about three weeks for translation and consideration.  The European Parliament is due to rise for the Christmas break on 16 December. That timetable means that this week is the last week in which the Deal can be reached.   Given the urgency, it is unfortunate that the EU’s lead negotiator has been in self-isolation this week following a Covid case amongst his team, which has necessitated a reversion to virtual, rather than in person talks this week, slowing down their progress.

But the tight timetable has also raised the possibility of exceptional measures.  One apparently under active consideration is for the Commission to allow any Brexit deal to enter into force provisionally, with the European Parliament giving its consent later on. The Commission would almost certainly need to ask Parliament for prior consent to this approach.  it is likely that Parliament would be reluctant to agree, fearing the creation of a precedent that the Commission may later abuse.

Added to the Parliamentary hurdle is the question of whether each EU Member State must approve any deal.  This is the case if the UK-EU Deal contains any  “mixed” competences that Brussels shares with EU Member States (and regional parliaments – last year’s EU-Canada CETA Deal was held up by Belgium’s Wallonia regional parliament). The Commission could ask Member States to ratify on a provisional basis until such time as they can consider the Deal correctly. Member States are just as keen to avoid this outcome as the Parliament – ceding more power to the Commission not only creates a precedent, but plays badly with domestic audiences.

However, provisional consent is far from ideal and would fail to deliver certainty, since provisional application of the Deal would be terminated if either the Parliament or a Member State indicated it would not ratify.

But There is Some Good News….

The EU is considering possible extreme solutions to these two problems.  There is some discussion of the Parliament meeting on 28 December to ratify any Deal; and the Commission may either ask the Council to decide that any ‘mixed competences’ will be exercised on an EU-only level.  If the Council agrees to exercise the shared competences, the deal will be an EU-only Deal and not require national ratification.  This is not a total panacea for the situation, since some EU MS must brief their national parliaments on the potential deal before being able to approve it, even if the deal is considered EU-only.

That consideration is being given to these solutions is positive in that it indicates a determination to reach and ratify a Deal before midnight on 31 December.

And that is Important for UK Trade in Services with EFTA/EEA

Reaching a Deal is important not just for the EU, but also for countries in the EEA and EFTA. The failure (so far) to reach a Deal between the UK and the EU has meant that a Deal on trade in services between the UK and Norway, Iceland and Liechtenstein is unlikely to be agreed by the end of the year. Whilst not on the same scale as any Deal with the EU, it is worth noting that UK trade with Norway alone was worth £26.3 billion in 2019, with services accounting for nearly 50% of Britain’s exports to Norway.

The key to unlocking this delay is a UK/EU Agreement on data sharing. If the UK’s data regime is not considered as adequate by the EU, it impacts on the ability of EEA and EFTA countries to fulfill trade in services because controllers or processors of personal data in an EEA/EFTA state are subject to the same rules as in an EU member country.