Articles 36 – 120 of the draft Withdrawal Agreement cover ‘separation issues’ that were not fully agreed upon during the Phase 1 negotiations. In brief, these relate to processes in a variety of areas that may be ongoing when the transition period ends The below provisions set out how these ‘ongoing processes’ will then in the EU’s view be resolved.
The policy areas covered are market access for goods, ongoing customs, VAT and excise matters, intellectual property, ongoing police and judicial cooperation in both criminal and civil/commercial matters, the protection of data obtained prior to the end of transition, ongoing public procurement procedures, Euratom issues, ongoing EU judicial/administrative processes, and privileges and immunities, and a few final provisions relating to the functioning of the EU institutions.
Under the draft Articles 36 – 42 cover goods placed on the UK / EU market before the end of the transition period that remains in the market after the end of the transition. The December Joint Report included high-level agreement on this area:
On ensuring continuity in the availability of goods placed on the market under Union law before withdrawal both Parties recognize the need to provide legal certainty and minimise disruption to business and consumers. Both Parties have agreed the principles that the goods placed on the market under Union law before withdrawal may freely circulate on the markets of the UK and the Union with no need for product modifications or re-labelling; be put into service where provided in Union law, and that the goods concerned should be subject to continued oversight.
The EU proposes
- a wind-down procedure for goods put on the market before the transitional period ends but which are exported to the other’s territory after that date:
- Goods that have been placed in the EU or UK markets before the end of transition may circulate in those markets until they reach their end users, and may be used (‘put into service’) in the EU or UK;
- Live animals and animal products could be moved between the UK and an EU Member State if they depart before the end of the transition period, but will additionally be subject to certain EU laws on movements of such products within the EU;
- Businesses would be responsible for proving, if necessary, that goods were on the market before the end of the transition period (if they want to rely on free circulation);
- he certain information would be shared between supervisory bodies in the UK and those in the EU in relation to the goods that continue to be on the market after the end of the transition, for example, information on tests on goods (conformity assessment).
Ongoing customs procedures
Draft Articles 43 – 46 cover ongoing customs procedures that apply to goods moving between the UK and EU that start before the end of the transition period and end afterwards. The Union Customs Code would continue to apply to Union goods moving between the UK and the EU customs territory if the movement started before the end of the transition period and ended after it. Proof may be required in certain circumstances that (a) the goods concerned are Union goods and (b) that the movement started before the end of the transition period.
Certain forms that were lodged before the end of the transition period would continue to be valid afterwards in the UK and the EU customs territory, and certain procedures that were started can be concluded. Customs debts could arise and be collected.
The UK government has said it “agrees with the broad principle put forward in the EU’s paper that movements of goods which commence before the UK’s withdrawal from the EU Customs Union should be allowed to complete their movement under the rules which were in place at the start of their movement”, and that it looks forward to discussing the practical application of this in more detail with the EU.
VAT and excise duty
Articles 47-49 of the draft WA cover ongoing VAT and excise duty matters. Taxation is very largely a Member State competence. The major exception to this generalisation is indirect tax: VAT – for which there is a substantive body of EU law establishing common rules across the Member States – and, to a lesser extent, excise duties.
It has long been recognised that the harmonisation of indirect taxes is an essential element to the achievement of an effective single market. Although it is anticipated that Brexit will see the UK having its own VAT and excise regime, no specific details have been published yet. The Government’s general position has been “the administration of the VAT and excise regimes following EU exit will remain largely as it currently is, in so far as this is desirable and practicable”.
Article 47 states that the current EU VAT arrangements, as set out in Directive 2006/112, will apply to goods dispatched or transported from the UK’s territory to the territory of a Member State, or vice versa, where the dispatch or transport started before the end of the transition period and ended afterwards. Absent an agreement to the contrary, goods exported from the UK to the EU after the end of the transition would attract VAT on entering the EU as an import tax, necessitating customs formalities that are currently absent. The reverse would also be true on goods exported from the EU to the UK.
Article 48 makes equivalent provision for EU excise arrangements, as set out in Directive 2008/118 for fuel, alcohol and tobacco products. After the transition, exports of excisable products from the UK to the EU will be subject to customs formalities before they can be moved within the EU. Article 49 provides that to meet these requirements, the UK may have access to relevant network and information systems and databases.
This Article draws on BRIEFING PAPER Number 8269, 23 March 2018 Brexit: the draft withdrawal agreement. UK public sector information is reproduced pursuant to the Open Government Licence The Legal Materials contain UK public sector information licensed under the Open Government Licence v3.0. The Licence is available at http://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/ (the UK Licence).