EUROPEAN COMMISSION

Brussels, 10.12.2020 COM(2020) 831 final

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS

on targeted contingency measures in the absence of an agreement with the United Kingdom on a future partnership

INTRODUCTION

The United Kingdom of Great Britain and Northern Ireland (‘United Kingdom’ or ‘UK’) withdrew from the European Union (‘EU’) and the European Atomic Energy Community (‘Euratom’) – hereafter referred to together as the ‘Union’ – on 1 February 2020. The Withdrawal Agreement1, which entered into force on that date, secures the United Kingdom’s orderly departure.

The Withdrawal Agreement provides for a transition period during which Union law continues to apply to and in the United Kingdom2. This period will end on 31 December 20203. The United Kingdom will then leave the EU Single Market and Customs Union and all Union policies, and the application of EU law to and in the United Kingdom will cease.

The substantive provisions of the Withdrawal Agreement apply irrespective of the outcome on the future relationship negotiations. It provides for:

• the continued protection of citizens’ rights, including social security rights, for EU citizens and UK nationals concerned for the duration of their lifetime;
• a financial settlement, ensuring that the United Kingdom and the Union will honour all financial obligations undertaken while the United Kingdom was a member. The settlement also ensures that EU projects and programmes under the current Multiannual Financial Framework (2014-2020) are financed as foreseen until their closure, thereby providing certainty to all beneficiaries of EU programmes, including UK beneficiaries4;
• a legally operative solution that avoids a hard border on the island of Ireland, protects the all-island economy and the Good Friday (Belfast) Agreement in all its dimensions, while safeguarding the integrity of the EU Single Market (Protocol on Ireland and Northern Ireland, most parts of which will apply as from the end of the transition period);
• the protection of the interests of persons residing or employed on the territory of Sovereign Base Areas (Protocol on the Sovereign Base Areas (SBA) in Cyprus, which will apply as from the end of the transition period);
• close cooperation between Spain and the United Kingdom in respect of Gibraltar on the implementation of citizens’ rights provisions of the Withdrawal Agreement, and administrative cooperation between competent authorities in a number of policy areas

1 Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community, OJ L 29, 31.1.2020, p. 7 (‘Withdrawal Agreement’).

2 Subject to certain exceptions provided for in Article 127 of the Withdrawal Agreement, none of which is relevant in the context of this Communication.

3 The Withdrawal Agreement provided for a possibility to extend the transition period for one or two years beyond 31 December 2020. At the 15 June 2020 High Level Meeting, the Parties noted the United Kingdom’s decision not to request any extension to the transition period.

https://www.consilium.europa.eu/de/press/press-releases/2020/06/15/eu-uk-statement-following-the-high-level- meeting-on-15-june-2020/

4 Excluding financial instruments approved after withdrawal.

(Protocol on Gibraltar, which will cease to apply at the end of the transition period, except for its first article concerning the citizens’ rights);

and other arrangements required for an orderly withdrawal of the United Kingdom,

ensuring inter alia:

• a smooth winding-down of cooperation arrangements and procedures between the United Kingdom and Member States in relevant matters of EU law;
• legal clarity for goods already placed on the market, and goods that are moving between the EU and the United Kingdom at the end of the transition period;
• continued protections and safeguards in the United Kingdom on a wide range of issues, from EU intellectual property rights, to personal data transmitted before the end of the transition period or processed thereafter in the United Kingdom on the basis of the Withdrawal Agreement, or EURATOM material located in the United

The outcome of negotiations between the EU and the United Kingdom on an agreement on a future EU-UK partnership remains uncertain today, even though the end of the transition period is very near. The Commission will continue to do its utmost to conclude negotiations on an agreement, which respects the EU interests.

The EU will continue negotiating with the United Kingdom as the overall objective of agreeing an ambitious, broad, deep and flexible partnership with the United Kingdom remains, with overarching conditions in terms of level playing field and governance. However, given that the end of the transition period is very near, it is not possible to guarantee that such an agreement will enter into force on 1 January 2021, which would lead to a period without such an agreement. This Communication and the contingency measures proposed today serve to cater for such a period. Accordingly, and with the exception of the regulation on aviation safety, the proposed contingency measures will automatically stop when an agreement enters into force or stop after a fixed period if no agreement enters into force (6 months for the air services and road related measures and 1 year for the fisheries related measures).

Without an agreement in application by 1 January 2021, relations between the United Kingdom and the Union would mostly be governed by multilateral international frameworks that both the United Kingdom and the EU and/or its Member States are parties to, as well as by the EU’s or Member States’ domestic laws in relation to third countries. For instance, EU-UK trade in goods and services would take place under the terms of the World Trade Organisation, with each party applying tariffs on the basis of the ‘Most Favoured Nation’ principle to goods originating from the other party. Similarly, police and judiciary cooperation would fall back on a variety of international conventions and other tools.

However, in the aviation sector, there is no such international fall-back solution, while in  road transportation, the fall-back solution of permits under the regime of the European

Conference of Ministers of Transport (ECMT) is clearly insufficient in relation to the United Kingdom. This would create unmanageable disruptions and pose a serious threat to EU interests.

Furthermore, without an agreement in force by 1 January 2021, access by EU and UK fishing vessels to each other’s waters would not be guaranteed, in spite of the importance of fisheries for the economic livelihood of coastal communities and the need to ensure sustainable fishing.

In these three areas, the Commission believes that ‘contingency’ measures are warranted5.

Should an agreement on a future partnership be in application by 1 January 2021, these contingency measures would not enter into application.

READINESS IS AS IMPORTANT AS EVER

On 1 January 2021, disruptions will happen with or without an agreement between the EU and the United Kingdom on their future relationship. This is the natural consequence of the United Kingdom’s decision to leave the Union and to no longer participate in the EU Single Market and Customs Union. The Commission has always been very clear about this6.

In its Communication on ‘Readiness at the end of the transition period between the European Union and the United Kingdom’ of 9 July 20207, the Commission reiterated the need for public administrations, businesses and citizens to take all necessary measures to get ready for the changes that will take place as inevitable consequences of the United Kingdom’s decisions, even with an agreement on a future partnership in place.

Furthermore, the Commission has issued 89 sectoral notices8 with detailed information on changes to be expected and the necessary actions that administrations, businesses and citizens have to take. These include notices on trade in food, consumer and industrial products as well as in services, VAT, copyright and intellectual property rights, civil justice, company law, and customs.

Since July, the Commission services have conducted bilateral meetings with all 27 Member States in order to address the state of readiness together with each national administration. The overall conclusion is that Member State administrations are well prepared for the inevitable changes that take place as of 1 January 2021. Nonetheless, continued efforts are needed when it comes to raising awareness, in particular among small and medium-sized

5 Regardless of the negotiations between the EU and the UK on the future partnership, a temporary measure is necessary also to cater for the continued operation of the Channel Fixed Link through the Channel Tunnel as of 1 January 2021; cf. section 4.3 of this Communication.

6 See Commission Preparedness Communications COM/2018/556 final/2; COM/2018/880 final; COM(2018) 890; COM(2019) 195 final; COM(2019) 276 final; COM(2019) 394 final

7 COM(2020) 324 final

8 The notices are published here: https://ec.europa.eu/info/european-union-and-united-kingdom-forging-new- partnership/future-partnership/getting-ready-end-transition-period_en

enterprises with exposure to the United Kingdom, which may still not be familiar with all the procedures for trading with a third country.

To this end, the Commission has launched a number of awareness-raising campaigns and intensified its stakeholder outreach over recent months. It also provided training and guidance on ‘Brexit readiness’ to Member State administrations, and will continue to organise sectoral seminars with all Member States at technical level, to help fine-tune the implementation of readiness measures, in particular in the areas of border checks for persons and goods.

More details on these actions can be found in the Annexes to this Communication, including a full list of the Readiness notices and an overview of the main areas of stakeholder outreach.

It should also be recalled that the EU and the United Kingdom have expressed, in the preamble of the Protocol on Ireland and Northern Ireland, their strong commitments to continue the PEACE+ programmes in the future. As this programme is a European Territorial Cooperation (ETC) programme, it is possible to have a financing agreement allowing the continuation of PEACE+ even in a no-deal situation, along the lines followed for the participation of other third countries to ETC programmes. The Commission will continue these discussions in order to have such a financing agreement in place for all situations.

THE NEED FOR TARGETED EU CONTINGENCY MEASURES UNDER A NO-DEAL SCENARIO

The end of the transition period is coming close and there is continued uncertainty on whether an agreement on a future EU-UK partnership will be in application by 1 January 2021. Should there be no agreement by that date, the Commission intends to remain available for continued negotiations on a new partnership during 2021. However, it is also clear that a limited number of targeted measures are needed to bridge the time-period until a future arrangement is in place and to protect the interests of the EU.

The Commission is proposing a targeted and limited number of contingency measures to be fully prepared for a scenario of a ‘no deal’9. The contingency measures are guided by the following principles:

a. Contingency measures cannot provide continuity or replicate the benefits of EU membership or of the transition period. Nor can they provide for a situation

9 It should be recalled that a number of Union legislative measures that were adopted in 2019 will remain in force or become applicable at the end of the transition period, notably

• the listing of the United Kingdom as a third country whose nationals are exempt from the visa requirement for short-term stays; Regulation (EU) 2019/592 of the European Parliament and of the Council of 10 April 2019 amending Regulation (EU) 2018/1806 listing the third countries whose nationals must be in possession of visas when crossing the external borders and those whose nationals are exempt from that requirement, as regards the withdrawal of the United Kingdom from the Union (OJ L 103I , 12.4.2019, p. 1–4)
• the apportionment of the EU’s WTO tariff rate quotas between the European Union and the United Kingdom; Corrigendum to Regulation (EU) 2019/216 of the European Parliament and of the Council of 30 January 2019 on the apportionment of tariff rate quotas included in the WTO schedule of the Union following the withdrawal of the United Kingdom from the Union, and amending Council Regulation (EC) No 32/2000 (OJ L 38, 8.2.2019); OJ L 85I , 27.3.2019, p. 69–69

that is as beneficial as that which a partnership agreement would provide for. As a result, contingency measures can by way of principle never be more far-reaching than what the EU offered to the United Kingdom in the Draft text of the Agreement on the New Partnership between the European Union and the United Kingdom, published on 18 March 202010.

1. Contingency measures should be targeted to avoiding or mitigating disproportionate disruptions resulting from a no-deal scenario, and should only seek to do so where these effects cannot be remedied or alleviated through the application of existing international or multilateral agreements or appropriate readiness actions. In no way should contingency measures seek to compensate economic actors for having failed to take the necessary
2. Contingency measures should provide a transitory solution, while negotiations on a future partnership continue, and not look to mitigate the negative impacts of Brexit in a sustained manner. They must be temporary in nature, so as to not replace a long-term

1. In line with the principle of subsidiarity, contingency measures shall be taken only where action is indispensable at Union level to protect the EU interests, to avoid distortions in or fragmentation of the internal market, and because a similar result could not be achieved through action at Member State
2. Contingency measures are, by nature, unilateral measures, taken to protect the EU interests. In some cases, their application, however, depends on the United Kingdom reciprocating.
3. Their territorial scope will not include

 

PROPOSED LEGISLATIVE CONTINGENCY MEASURES TO BE APPLICABLE AS OF JANUARY 2021

In addition to the proposal on the railway connection through the Channel Tunnel, which was adopted on 27 November 2020, the Commission has today adopted a package of four legislative proposals. The Commission will work closely with the European Parliament and Council with a view to facilitating their timely adoption before the end of the year 2020.

4.1   Aviation basic connectivity and aviation safety

Unless there is a contingency measure in place on air transport at the end of the transition period, air traffic between the EU and the United Kingdom will be

10 See: https://ec.europa.eu/info/publications/draft-text-agreement-new-partnership-united-kingdom_en.

 

To ensure basic air connectivity, the Commission has today adopted a proposal for a Regulation to ensure the provision of certain air services between the United Kingdom and the EU for a limited period of time.

This measure would allow, for a maximum duration of up to 6 months, air carriers from the United Kingdom to fly across the territory of the Union without landing, make stops in the territory of the Union for non-traffic purposes, and perform scheduled and non-scheduled international passenger and cargo services between points in the United Kingdom and points in the EU (third and fourth ‘Freedoms of the Air’). These arrangements would be subject to the United Kingdom conferring equivalent rights to air carriers from the Union, as well as providing strong guarantees on fair competition and on the effective enforcement of these rights and guarantees.

To that end, the proposed contingency Regulation confers implementing powers on the Commission analogous to those under contingency Regulation (EU) 2019/502 on common rules ensuring basic air connectivity with regard to the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the Union11, which did not become applicable due to the entry into force of the Withdrawal Agreement.

• In the absence of a contingency measure in place on aviation safety, existing design certificates issued by the European Union Aviation Safety Agency (EASA) to UK-based companies before the end of the transition period will no longer be valid in the Union. For these certificates the United Kingdom will become responsible (“State of Design”) as a third country as of the end of the transition period. The same would be true for certificates issued by design organisations based in the United Kingdom and certified by EASA. If these existing design certificates become invalid in the EU, many EU aircraft containing products with the existing EASA design certificates issued to UK companies would have to be grounded.

The Commission has therefore today adopted a proposal for a Regulation ensuring that the affected aviation products or designs, which were certified by EASA or by a design organisation certified by EASA before the end of the transition period, can continue to be used in Union aircraft without disruption. The measure would only apply with respect to aircraft registered in the Union.

• By contrast, as regards ownership and control of EU air carriers, the Commission will not propose further contingency measures. Regulation (EU) 2019/502, adopted in February 2019, did not become applicable save for some elements12. Nevertheless, it foresaw a grace period

11 Regulation (EU) 2019/502 of the European Parliament and of the Council of 25 March 2019 on common rules ensuring basic air connectivity with regard to the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the Union (OJ L 85I , 27.3.2019, p. 49–59)

12 The Regulation did not apply due to the conclusion of a withdrawal agreement with the United Kingdom, with the exception of the following provisions which applied from the entry into force of the Regulation on 28 March 2019: Articles 7 on the treatment of operating licences in view of ownership and control requirements; Article

of six months so that air carriers could take the necessary action to ensure full compliance with the ownership and control requirements. That grace period was conditional on air carriers submitting a satisfactory plan for remedial action to the national competent authorities. That obligation applied as of the entry into force of the Regulation. Some air carriers have taken the necessary actions, and contingency measures should not give unfair advantages to those stakeholders and business that may have omitted to adapt on time to the new situation.

4.2   Road transport connectivity

In the absence of an agreement on a future partnership between the EU and the United Kingdom by 1 January 2021, there would be no basis in Union law for the provision of road freight transport services between the United Kingdom and the Member States by road haulage operators beyond that date. The multilateral quota system of the European Conference of Ministers of Transport (ECMT) would become the only legal framework on which continued service provision could be based. However, the strict limits that govern the number of ECMT permits mean that these would not be sufficient to carry goods by road between the United Kingdom and the Member States and would result in serious disruptions, potentially even threatening public order.

Furthermore, in the absence of an agreement on a future partnership between the EU and the United Kingdom by 1 January 2021, regular bus services to and from the United Kingdom would have to be interrupted. The relevant multilateral fallback (the Protocol to the Interbus agreement) is likely to enter into force between the EU and the United Kingdom only during the course of 2021.

Therefore, the Commission has today adopted a proposal for a Regulation covering basic connectivity with regard to both road freight, and road passenger transport13 for  a limited period of time.

Basic road freight connectivity

The proposed Regulation would ensure continued basic road freight connectivity for a maximum duration of up to 6 months.14 This is conditional on the United Kingdom conferring equivalent rights to Union road haulage operators, and subject to the application of rules equivalent to those of the EU on fair competition as well as social and technical rules. Monitoring and ensuring the equivalency of market access rights and ensuring fair competition are part of the powers delegated to the Commission in the same manner as in the contingency Regulation (EU) 2019/501 on common rules ensuring basic road freight and

10(3) regarding early applications for operating authorisations, and Article 11(2) regarding early applications for operational plans, programmes and schedules.

13 Proposal for a Regulation on common rules ensuring basic road freight and road passenger connectivity following the end of the transition period

14 Provisions of the regulation concerning road freight connectivity will cease to apply either 1) on the date of entry into force of an international agreement governing road transport, concluded between the Union and the United Kingdom, or 2) on 30 June 2021, whichever date is earlier.

road passenger connectivity15, which never became applicable, due to the entry into force of the Withdrawal Agreement.

As was the case in Regulation (EU) 2019/501, the new proposed contingency Regulation does not provide for the recognition (“grandfathering”) of UK licenses and certificates held by EU operators, for instance on professional competence. Those EU operators still working in the EU with UK-issued certificates ought to have EU certificates by 1 January 2021.

Passenger transport – bus services

The proposed Regulation would ensure continued bus service connectivity for a duration of up to 6 months.16 Fair competition, social and technical rules would apply in the same way as for road haulage.

With regard to cross-border bus services on the island of Ireland, the proposed contingency Regulation also provides for the right to pick up and set down passengers in the border region as part of a regular service. This is to protect the all-island economy and the sensitive situation on the island of Ireland, ensuring connectivity between the border communities, that otherwise will be interrupted.

4.3   The railway connection through the Channel Tunnel

In the absence of a Union contingency measure, the operation of the Channel Fixed Link through the Channel Tunnel would need to be suspended after the end of the transition period. In such a case, trains would not be able to circulate through the Channel Tunnel connecting the United Kingdom with the European continent.

In light of the economic importance to the Union of the Channel Fixed Link, the Commission adopted, on 27 November, a proposal for a Regulation17 that would ensure that the Channel Fixed Link continues to operate after 1 January 2021, until other arrangements have been put in place.

The operation of the Channel Fixed Link through the Channel Tunnel is supervised by an Intergovernmental Commission (the “IGC”), established by the Treaty of Canterbury  between the French Republic and the United Kingdom signed on 12 February 1986. Until the end of the transition period, the IGC is recognised as a national safety authority entrusted by

15 Regulation (EU) 2019/501 of the European Parliament and of the Council of 25 March 2019 on common rules ensuring basic road freight and road passenger connectivity with regard to the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the Union (OJ L 85I , 27.3.2019, p. 39–48)

16 Provisions on bus connectivity will cease to apply either 1) on the date of entry into force of an international agreement governing road transport, concluded between the Union and the United Kingdom, or 2) on 30 June 2021, whichever date is earlier, unless the Protocol to the Interbus Agreement enters into force before. The connectivity of the border communities in Ireland is an exception, as the relevant provision of the regulation would continue even if the Protocol to the Interbus Agreement will enter into force.

17 COM(2020) 782 final

two Member States with ensuring that Union safety and interoperability rules apply to the whole Channel Tunnel. It issues relevant safety certificates and authorisations.

France has been empowered to negotiate, sign and conclude an international agreement with the United Kingdom in order to maintain a unified safety regime and the IGC. However, an agreement will not have entered into force at the end of the transition period. Without such an agreement, as from 1 January 2021, the IGC no longer qualifies as national safety authority under EU law and the certificates and authorisations it has issued lose their validity.

The proposed Regulation would extend the validity of authorisations issued by the IGC for a period of two months. This would give enough time for the French national safety authority to take over the supervision and issue its own certificates.

In order to ensure connectivity between the Union and the United Kingdom, it is also essential that the rail operators providing services in the Tunnel continue to do so and can reach the border-crossing station of Calais-Fréthun. To that end, the period of validity of their licenses issued by the United Kingdom and of their safety certificates issued by the Intergovernmental Commission should be extended for a period of nine months. This extension would give enough time for the negotiation and conclusion of the necessary arrangements foreseen in Union law to avoid disruptions.

4.4   Fishing activities

The Commission continues to attach great importance to an agreement on fisheries in the framework of the future EU-UK partnership. Ending the transition period without an agreement on the future relationship could be very disruptive for the economic livelihoods of coastal communities, and threaten the sustainable nature of fishing in the waters concerned.

With the aim of protecting the interests of EU fishermen and -women, the Commission has adopted a proposal to amend Regulation (EU) 2017/2403 on fishing authorisations for the period until the end of 2021.

The proposal allows for reciprocal access by EU and UK vessels to each other’s waters. Its legal provisions, once adopted, would make it possible for the Union to grant authorisations to UK vessels to enter EU waters and to manage authorisation requests by EU vessels for entering UK waters, where sustainability conditions are fulfilled and subject to reciprocity. Fishing opportunities provided under such arrangements and set by both parties combined would have to be in line with the sustainable management of the relevant stocks.

These provisions would provide legal certainty for the fishing industry and ensure the conservation of the fish stocks. Based on prior coordination with Member States, the Commission stands ready to submit to the United Kingdom the authorisation requests concerning EU vessels, immediately after the end of the transition period.

MITIGATING THE IMPACTS THROUGH THE EU BUDGET

5.1   The Brexit Adjustment Reserve

The Commission will present shortly a proposal for the Brexit Adjustment Reserve (BAR) of 5 billion EUR, in line with the European Council conclusions18. The BAR conditions for funding will accommodate both a deal and a no-deal situation.

In terms of the regions and sectors most affected, it is already clear that a no-deal scenario poses specific risks to the EU fishing industry. The proposal will reflect this reality.

5.2   Programmes and instruments in the EU Budget 2021-2027

It is not possible today to assess the full impact of the United Kingdom’s decision to end the transition period this year, combined with the absence of an agreement. Beyond the BAR, the programming of Union funding for the 2021-2027 period should clearly take into account the impact of the end of the transition, both in the deal and the no-deal scenarios. In a possible situation where there are unknown side effects after the end of the transition period, especially in a no-deal situation, the Commission stands ready to act swiftly in line with the regulatory provisions, in case Member States would decide to amend their programmes covered by the Common Provisions Regulation in order to reallocate part of the available resources, within their national envelopes. The Commission will also act swiftly, should Member States wish to change the allocation of their national envelopes under the European Maritime and Fisheries Fund, while respecting the regulatory provisions.

For more immediate support to affected stakeholders, for example small and medium-sized companies with a significant exposure to the United Kingdom, EU State aid rules offer flexible solutions for national support measures.

PRINCIPLES FOR MEMBER STATE-LEVEL CONTINGENCY MEASURES

The Commission sees no need for any other Union-wide, legislative contingency measures than those proposed today.

With regard to national measures, the Commission will continue to engage with Member States with the aim of ensuring that national measures do not fragment or undermine the Single Market.

Consequently, in the view of the Commission, one core principle of national measures should be their temporary nature. A second principle is that the United Kingdom should not draw similar benefits from such measures as the ones offered by the Union in the negotiations on the future agreement. National measures should also take into account the overarching priority with regard to the relationship of the Union with any third country, in order to

18 Conclusion from the Special meeting of the European Council (17, 18, 19, 20 and 21 July 2020) https://www.consilium.europa.eu/media/45109/210720-euco-final-conclusions-en.pdf

preserve the integrity of the Single Market, limit the risk of fragmentation and avoid unequal treatment of Member States. In any event, national measures of any kind have to comply with EU law, including the principle of sincere cooperation.

At any rate, the EU collectively has a stronger bargaining power than each Member State acting alone. This bargaining power benefits all Member States. It must be used to ensure a level playing field between the EU and the United Kingdom.

The Commission looks forward to continued discussions with Member States about their national preparedness measures.

RESPONDING TO DISRUPTIONS IN THE AFTERMATH OF THE END OF THE TRANSITION PERIOD

At the end of the transition period, many stakeholders and citizens may face disruptions. It will be crucial that the Union continues to respond in a united and coordinated manner to such disruptions. The Commission and Member States will remain in close contact to coordinate their response to any issue that might arise and to identify how best to address them. For the period just before and after the end of the transition period, the Commission has set up a Brexit hot line for the use of Member State central administrations, giving them rapid access to the expertise of the Commission services by establishing a direct channel of communication between national administrations and the Commission.

EU citizens, business and other stakeholders can contact their national or local administrations through their usual channels. The Commission will publish on its website an overview of national Brexit contact points set up by Member States. They can also contact the Europe Direct Contact Centre for any questions (Freephone 00 800 6 7 8 9 10 11 from anywhere in the European Union or by email in any EU language19), and responding to questions regarding Brexit will be prioritised by the Centre.