The Impact of Brexit on the EU’s International Agreements

Friday, 15 July 2016
CEPS Commentaries

Authors: Guillaume Van der Loo and Steven Blockmans

Series: CEPS Commentary

The prospect of Brexit has kicked up a lot of dust around the now famous Article 50 TEU withdrawal procedure, and the form, scope and sequence of the ‘divorce’ and future framework agreements between the EU and the UK.[1] One issue that has received far less attention is whether the international agreements concluded by the EU will continue to apply to the UK after Brexit, and if so, how.

The EU has concluded 1,139 bilateral and multilateral agreements with third parties, ranging from trade, development and sectoral economic issues like aviation, energy and fisheries, to matters related to visa, human rights, and the Common Foreign and Security Policy (CFSP).[2] For those accords that fall squarely within the realm of the EU’s exclusive competences (e.g. classic free trade agreements) there is in principle no discussion: thanks to its single international legal personality, the EU and the third parties are the sole signatories to the agreements and will remain bound by them. A simple notification by the EU to the third parties might thus suffice to inform them that the EU no longer consists of 28 but 27 member states.

The situation is far more complex for ‘mixed’ agreements, however. These are agreements concluded by third parties, on the one hand, and the EU and its member states, on the other, because these agreements cover elements of both exclusively EU and member state competence. The procedural consequence of ‘mixity’ is that the 28 member states have to ratify the agreement alongside the EU, each according to their own ‘constitutional’ ratification procedures. In some cases, for example Belgium, this will require the consent of the constituting parts of the federation. When more than 35 national and regional parliaments are involved on the EU side alone, one can imagine that this renders the disentanglement of mixed agreements much more vulnerable, requiring negotiations that provide an opportunity for each of the respective third parties too to try and squeeze out a better deal. Unfortunately, a considerable number of EU international agreements are mixed, namely almost all the Association Agreements ever concluded by the EU and most of the recent trade and investment agreements. Brexit may thus open up Pandora’s Box.

EU-only agreements

Although the situation is not described in Article 50 TEU, the international agreements concluded by the EU will no longer be applicable to the UK from ‘Brexit Day’ onwards, which in the best-case scenario is the same day on which the new contractual relations with the EU27 will start to apply. Primary EU law, the international agreements themselves and international law all point in that direction.

Firstly, Article 216.2 TFEU prescribes that international agreements concluded by the EU are only “binding upon the institutions of the Union and its Member States”. Thus, from the moment the UK ceases to be a member state, it is no longer bound by EU-only international agreements.

Moreover, most international agreements concluded by the EU include a ‘territorial application’ clause, restricting the application of the agreement “to the territories in which the Treaty on the European Union (TEU) and the Treaty on the Functioning of the European Union (TFEU) are applied”, which in a post-Brexit situation would no longer cover the UK and its overseas territories.[3] This change could, however, trigger objections from the respective third parties to the agreements with the EU. Trading partners, for instance, may feel cheated at the sudden loss of access to a sizeable chunk of the Single Market (64 million fewer consumers) and the cost and time of having to renegotiate a bilateral agreement with the UK. In strict legal terms, however, there is little these third parties can do against the EU. Most EU-only agreements include a termination or denunciation clause, stating that the agreement can be terminated/denounced by the contracting parties after six months’ notice.[4] But these clauses do not apply to managing the termination of the UK’s application of that agreement because the UK is not a contracting party to those agreements.[5] 

The 1986 Vienna Convention on the Law of Treaties between States and International Organisations (VCLT) − which is widely regarded as reflecting customary international law − provides several rules that apply when parties have not included specific denunciation or withdrawal clauses in the international agreements between them. These exit provisions share a distinctive attribute: they authorise one party acting unilaterally or all parties acting collectively to end their obligations under an international agreement, but only when either a right of withdrawal may be implied from the nature of the treaty, or when the parties intended to admit to that possibility (Article 56.1). When read in the light of the above-mentioned Article 216.2 TFEU, the latter exception allows for continuity (not succession) of the EU as a party to an international agreement when one of its member states withdraws from the EU. Indeed, it does not imply that the EU as a whole needs to withdraw from such international agreements. It could be argued, however, that the EU should stick to the procedural requirement of Article 56.2 VCLT and give the respective third parties 12 months' notice of the fact that the UK will cease to be a member of the Union and that therefore the agreement will cease to apply to its territories.

Mixed agreements

In view of the above, leaving the EU would mean that the UK ceases to be bound by the ‘EU-only’ elements of mixed agreements. By the same token, it could, if it wanted to — and the other parties agreed to it, remain bound by the ‘mixed’ elements of such agreements because they were signed and ratified by the UK as a contracting party in its own right. So far, so good.

However, the situation becomes paradoxical when one considers, first, that in terms of competence delimitation, it is difficult in mixed agreements to draw up a catalogue; and second, that the other contracting parties might want to seize the opportunity to revise the terms of the agreement if the UK decided to withdraw its own signature. Below, we deal with each of these situations before turning to the scenario of the UK wishing to remain in a mixed agreement as a non-EU state.

First, mixed agreements do not normally stipulate which elements are mixed in nature. This is intentional, mainly to avoid competence discussions between the EU institutions. Yet, under EU law, mixed agreements are considered to be of an essentially bilateral nature.[6] Therefore, in order to extract itself from a mixed agreement, the UK will need to repeal its approval act that ratified the agreement[7] and terminate or denounce the agreement as foreseen in the agreement’s termination or suspension clause. Contrary to EU-only agreements, the UK is a contracting party to the agreement for the mixed elements of the agreement and these termination and denunciation clauses are applicable. As noted above, most of these clauses require six months’ notice. In addition, the EU will need to notify the respective third parties that the UK will cease to be a member of the Union and that the EU-only elements of the agreement will thus cease to apply to the UK's territories.

Second, the simple ‘scrapping’ of the UK’s the name as a contracting party to a mixed agreement will more often than not be insufficient. After all, the UK’s extraction from a mixed agreement will have practical, economic and/or financial consequences that will need to be cushioned and secured by transitional periods and legal straps. Such arrangements will need to be negotiated between the EU, its 27 remaining member states and the other contracting parties, and laid down in a legally binding act (e.g. a protocol to the agreement, an exchange of letters or a decision by the joint committee established by that agreement). Because such a legal instrument will have the effect of amending the mixed agreement, it will need the consent of all involved and − depending on the format − possibly even ratification.[8]

Although the EU and its 27 member states will have an interest in maintaining their international legal commitments post-Brexit, it is not unthinkable that third parties would have serious concerns about the consequences of the UK’s termination of their respective international agreement. In a worst-case scenario, if such third contracting parties are not satisfied with (or cannot agree to) a legal solution to manage the UK’s withdrawal from the agreement, they can terminate or denounce the entire agreement according to dedicated clauses included in that agreement.[9]

In a post-Brexit scenario, however, there may be good reasons for the UK to remain a contracting party to most of the EU’s mixed agreements. Contrary to what key Brexiteers have claimed, it will be virtually impossible for the UK to swiftly negotiate and conclude new bilateral agreements with the third countries with which it was previously bound through the EU’s international agreements. This is not just a question of the number of trade negotiators that the UK can muster. Third states may simply not wish to enter into trade talks with the UK before knowing whether and under what conditions goods leaving the UK will be able to enter the Single Market. Those at the helm of the new Department for International Trade may discover that it is actually far more attractive for the UK to remain a party to an existing EU agreement after all, instead of going through complex extraction negotiations from EU mixed agreements and entering into subsequent bilateral talks as a much smaller player than the EU. If, however, the Brexiteers were nonetheless to take that route, they might want to try and soften the blow in-between legal regimes by negotiating a continuation of the application of EU mixed agreements over a transitional period during which the UK could develop its own legal framework with third countries or other international organisations. Arguably, the UK would be at the mercy of the other contracting parties in such a case, i.e. the EU and its 27 member states. After all, post-Brexit, the UK will no longer enjoy the ‘right’ to remain a part of EU international agreements.  

The formalisation of the UK's desire to remain a party to a mixed agreement would again require a legal instrument (for instance a protocol) stating that the UK takes over the rights and obligations it previously had under the agreement as an EU member state and that it joins the agreement as a third party. In all likelihood, this would trigger negotiations to accommodate unforeseen practical problems. Obviously, such a legal instrument would need to be ratified by the EU, its 27 member states, the third party and the UK.

Conclusion

Many of these issues will be the subject of discussion during the negotiations on both the withdrawal agreement of Article 50.2 TEU and the future legal framework between the EU27 and the UK. But it is highly unlikely that the EU and the UK will find one magic formula that can be applied to all of the EU’s international agreements. Many of these will require tailor-made solutions to manage the UK’s extraction or, in some cases, continued application. Moreover, the EU and the UK will need to rely on the goodwill of the third parties to these agreements. At this stage, it is hard to gauge whether there is much of that in supply. What is certain is that both the UK and the EU will have to tread carefully to prevent their international positions from being weakened.

 

Guillaume Van der Loo, is a Researcher in the Europe in the World Unit at CEPS, and Steven Blockmans is Head of Europe in the World, CEPS.

 

[1] See A. Łazowski, “Procedural steps towards Brexit”, CEPS Commentary, 13 July 2016.

[2] See http://ec.europa.eu/world/agreements/SimpleSearch.do.

[3] See, for example, Article 360 of the EU-Central America Association Agreement (OJ, 2012, L 346/1), Article 286 EU-Kazakhstan Enhanced Partnership and Cooperation Agreement (OJ, 2016, L 29/3) and Article 15.15 EU-Korea Free Trade Agreement (OJ, 2011, L 127/1).

[4] For an example of a termination clause, see Article 18(4) of the agreement between the European Union and the Republic of Niger on the status of the European Union mission in Niger CSDP (EUCAP Sahel Niger) (OJ, 2013, L 242/2). For an example of a denunciation clause, see Art. 16 (5) of the agreement between the EU and Macedonia establishing a framework for participation of Macedonia in EU crisis management operations (OJ, 2012, L 338/3). It has to be noted that there is a large variation between these termination and denunciation clauses (for example, the EU-Moldova agreement on the protection of Geographical indications may be terminated by giving one year’s written notice (OJ, 2013, L 10/3)).

[5] Some EU-only agreements even explicitly mention that the EU can only terminate the agreement “in respect of all its Member States” (see for example Article 8(7) of the agreement between the EU and the Commonwealth of Domenica on the short-stay visa waiver (OJ, 2015, L 173/21), emphasis added).

[6] Court of Justice of the European Union, European Parliament v. Council, C-316/91, para. 29

[7] In the UK mixed agreements are designated as an EU treaty for the purpose of the 1972 European Community Act. On the UK’s constitutional procedureto ratify mixed EU agreements, see V. Miller, EU External Agreements: EU and UK procedures, Briefing Paper, House of Commons, 28 March 2016.

[8] Article 39 VCLT states that a treaty may be amended “by agreement between the parties”.

[9] In absence of such a clause, it may be argued that a third party can terminate the agreement by invoking the ‘fundamental change of circumstances’ principle of Article 62 VCLT. However, the International Court of Justice applies a strict interpretation of this principle as it argues that “the stability of treaty relations requires that the plea of fundamental change of circumstances be applied only in exceptional cases” (Judgment of 25 September 1997, Gabcíkovo-Nagymaros Project (Hungary v Slovakia)).

 

 

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