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Can the post-Brexit transition period be extended — and if not, why not?

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By Alasdair Sandford
An electronic advert, promoted by Britain's Government, alerts businesses that they need to be ready for the end of the 'Brexit transition period' , London, December 8, 2020.
An electronic advert, promoted by Britain's Government, alerts businesses that they need to be ready for the end of the 'Brexit transition period' , London, December 8, 2020.   -   Copyright  TOLGA AKMEN / AFP

Boris Johnson's government has always been clear that it is opposed to an extension of the post-Brexit transition period, which expires on December 31.

But the longer the UK and EU fail to strike a deal on trade and future ties, the greater the pressure is likely to be for some mechanism to offset the worst effects of a "no-deal scenario" so dreaded by many cross-border traders.

"We've been clear on multiple occasions that we won't be extending the transition period. That remains the case," Johnson's Downing Street office repeated this week.

It echoed the prime minister's own words: "Of course we're not going to extend the transition period," he told parliament in late November.

Much may depend on whether there remains any political will to reach an agreement. If it looks like a deal is within reach — and the main problem is a lack of time before the New Year deadline — one possibility might be for the EU and the UK to agree to apply a deal provisionally, pending ratification.

The divorce agreement that set the terms for the UK's exit from the EU allowed for a two-year extension of the transition period to give more time for negotiation.

However, the deal set a deadline for the end of June 2020 for a decision on whether to invoke it. The EU eventually accepted the UK's opposition to an extension — despite the coronavirus pandemic — and the deadline passed.

The British government went further: it included a specific commitment not to extend the transition in the Withdrawal Agreement Act, passed by Parliament giving legal effect to the divorce deal. New legislation would be needed to reverse this.

Adding extra time to extra time

Earlier this year, a UK Institute for Government report set out several methods that the EU and UK could consider to secure more time, even if they acted after June 30. It acknowledged that "all four options are politically sensitive or legally complex".

One way would be to amend the June 30 deadline in the divorce treaty, even after this date had passed. International law allows parties to a treaty to amend it. The UK would be able to do this (should it so wish) under its own laws, the report said. But for the EU it would be much more complicated, and legally and politically uncertain.

A second option could be for the EU and UK to break off trade talks and negotiate a new treaty to create a new transition extension. But this too would be fraught with "significant political and legal risks".

Under a third scenario, an implementation period could be included as part of a future relationship treaty. This would not work if no such deal was done, but it could open a path for basic accord to be struck, putting off difficult questions till later.

"Even though the government is not considering one now, an implementation phase could look more desirable if the UK and EU do succeed in negotiating a future relationship agreement," the IfG argued.

Cushioning a no-deal blow

A fourth option explored by the Institute for Government envisages creating an implementation period where no trade deal had been agreed. The EU and UK would "agree a temporary deal to allow traders to adapt to a no-deal scenario in the event that talks break down," it said.

This last approach would not be able to prevent the UK from falling out of the EU's structures at the end of the year. But it could help to turn a cliff-edge into a kind of sliding ramp.

However, the Institute for Government judged that such a standstill arrangement would be "technically and legally complex, and would require some time to negotiate" — time that is now no longer available.

Above all, such an option would probably be "politically impossible," it said, citing a likely breakdown in goodwill if trade talks broke down.

"It would be rash for the UK and EU to rely on a workaround being available at some point later in 2020," the institute said in its report on May 30.

It is advice that was not taken up. As things stand, failure to strike a deal is unlikely to see a sudden drive for a transition extension, overcoming legal and political difficulties.

Already, some EU nations have been leaning on the Commission to kickstart contingency plans for a "no-deal scenario". Expect that pressure to mount if the trade talks end in breakdown rather than breakthrough.