If, by the middle of November 2020, the EU and UK agree the terms of a new trade agreement that will define the shape of their future relationship from 1 January, our expectation is that it will be ratified by both sides as required to ensure that it comes into force in time for the deadline. However, all the institutions involved will be under considerable time pressure to get the process over the line.
On the EU side, ratification will require approval by the European Parliament (by simple majority of all votes cast) and the Council of the European Union (through a qualified majority*. If this should prove impossible, the EU has the option of applying the agreement provisionally from signature, which only requires approval by the Council and information of the Parliament.
A possible complication that could arise would be if the agreement is considered to cover topics of Member State or shared EU and Member State competence. If topics of Member State competence are covered, the agreement will require Member State ratification, which would give rise to a very considerable delay. Where the topics are of shared competence, national ratification is an option and the decision to is political. We note that the 2019 Japan–EU trade agreement was ratified as an ‘EU-only’ agreement on this basis even though it included provisions of shared competence.
In the UK, the Government has alternative processes it could use. It could use the normal process for ratifying an international agreement, which would mean that the agreement could become binding 21 days after the terms have been laid before Parliament, provided that MPs do not vote against it. The Government is not required to schedule a vote or make time for a debate on any treaty.
Indications are, however, that the UK Government may prefer, as with the Withdrawal Agreement, to use primary legislation to bring the new trade agreement into force. This can be even quicker than the usual process and would also enable any necessary changes to existing legislation or the introduction of any new law required by the agreement. In the circumstances, and with the UK Government’s large majority, the agreement is unlikely to be blocked in the UK Parliament.
If you would like to discuss any issues in relation to the countdown to the 31 December 2020 and beyond, please contact your regular Herbert Smith Freehills relationship contacts, or otherwise any of our experts listed here.
*This requires 55% of member states, representing at least 65% of the total EU population, to vote in favour