Spotlight on the UK and EU’s agreement to extend the provisional application of the Trade and Cooperation Agreement (2 March 2021)

2 March 2021

As reported in our Brexit insight of 13 January 2021, available here, on 24 December 2020, the United Kingdom (UK) and European Union (EU) signed the Trade and Cooperation Agreement (TCA or Agreement), setting out their future economic and trading relationship, including with regards to investment protection.  The Agreement is yet to enter into force and has been provisionally applied by both parties since 1 January 2021.  On 23 February 2021, the UK and EU agreed to extend provisional application beyond 28 February 2021, the initial time-limit envisaged in the Agreement, until 30 April 2021.  This spotlight explains the concept of provisional application, and why (and what difference it makes that) it is being used for the TCA.

 

Provisional application of treaties in general

Provisional application of treaties is described by the International Law Commission (ILC) as “a mechanism available to States and international organizations to give immediate effect to all or some of the provisions of a treaty prior to the completion of all internal and international requirements for its entry into force” (ILC, “Draft Guide to Provisional Application of Treaties” (Draft Guide), General Commentary, para. (3)).  Article 25(1) of the Vienna Convention on the Law of Treaties of 1969 (VCLT) establishes that “[a] treaty or a part of a treaty is applied provisionally pending its entry into force if: (a) [t]he treaty itself so provides; or (b) [t]he negotiating States have in some other manner so agreed.”  Article 25(1) of the Vienna Convention on the Law of Treaties between States and International Organizations or between International Organizations of 1986 (VCLTSIO) (not in force) mirrors Article 25(1) VCLT as regards relations between States and international organisations.  The rule reflected in both Articles 25 is generally considered to reflect customary international law.

The legal effects of provisional application are not addressed in the VCLT or VCLTSIO themselves.  The Draft Guide adopted by the ILC provides, however, that provisional application of a treaty “produces a legally binding obligation to apply the treaty […] as if the treaty were in force between the States or international organizations concerned […]” (Guideline 6).  As such, a valid agreement between the parties to apply a treaty provisionally creates an obligation upon them under the customary international rule “pacta sunt servanda”.

However, as the ILC explains in its commentary to Guideline 6, the provisional application of a treaty does not carry with it precisely the same legal effects as entry into force.  The ILC explains that as a matter of principle, “provisional application is not intended to give rise to the whole range of rights and obligations that derive from the consent by a State or an international organization to be bound by a treaty”.  For example, the provisional application of treaties “is not subject to all rules of the law of treaties”, such as with regards to their modification (Catherine Brölmann & Guido Den Dekker, “Treaties, Provisional Application” (Max Planck Encyclopedias of International Law, 2020), para. 23).

In practice, provisional application of treaties is commonly used by States and international organisations to create immediate legal effects.  One reason for resorting to it is where there is a particular need for urgency (such as in relation to cease fire agreements, or as the ILC suggests, “when the negotiating States or international organizations want to build trust in advance of entry into force” (Draft Guide, General commentary para. (3))).  Urgency was precisely why provisional application of the TCA was required: the UK and EU came to a final agreement on the text of the Agreement just days before the end of the Transition Period established in the Withdrawal Agreement was due to come to an end, leaving insufficient time for the EU to complete the internal processes needed for it to ratify the agreement.

 

Provisional application of the TCA

Article FINPROV.11.2 of the TCA provides that “[t]he Parties agree to provisionally apply this Agreement from 1 January 2021” until the earlier of (a) “28 February 2021 or another date as decided by the Partnership Council”, the governance body established by the TCA, and (b) the date of entry into force of the Agreement.  The TCA therefore falls squarely within the rule reflected in Articles 25(1)(a) of the VCLT and VCLTSIO.  Since the Agreement is not yet in force, as the parties have not yet “completed their respective internal requirements and procedures for establishing their consent to be bound”, as required by Article FINPROV.11.1, provisional application of the TCA had been due to cease on 28 February 2021.

On 10 February 2021, the EU Commission adopted a proposal for a decision of the Council of the European Union (Council) to extend the provisional application of the Agreement until 30 April 2021 (here).  The proposal was then formally presented to the UK government on 19 February 2021, through a letter sent by the Vice-President of the EU Commission and Co-Chair of the Partnership Council, Maroš Šefčovič (here).  The purpose of the proposed extension was to allow the EU to complete its required internal procedures to ratify the Agreement.  In particular, the European Parliament is yet to provide its consent, before the Council adopts a formal decision for the conclusion of the TCA.  As explained by the EU Commission in its proposal of extension, the legal-linguistic revision of the Agreement in all 24 languages of the EU is yet to be completed, before the European Parliament and the Council can scrutinise it.  The next plenary sessions of the European Parliament, in which the scrutiny of the TCA will take place, will be held in March 2021.

On 23 February 2021, following a draft decision of the Partnership Council to that extent, the UK government formally accepted the proposal through a letter addressed to the EU Commission (here).  In the letter, the UK’s Chancellor of the Duchy of Lancaster, Michael Gove MP, explained that provisionally applying the Agreement was not the UK’s preferred solution, given “the uncertainty it creates for individuals and businesses and indeed the Parties” and that extending such provisional application “prolongs that uncertainty”.  He then expressed the UK’s expectation that the provisional application of the Agreement will not be extended further beyond 30 April 2021.

On its side, the UK passed the “European Union (Future Relationship) Act 2020” on 30 December 2020, implementing the TCA in domestic law.  Usually, the requirements of the Constitutional Reform and Governance Act 2010 (CRAG) must be fulfilled before the UK can ratify an international agreement.  These include laying a treaty before Parliament prior to ratification.  However, section 36 of the European Union (Future Relationship) Act 2020 provides that this requirement of CRAG does not apply to the TCA.

The parties are provisionally applying the entire TCA (as opposed only to part of it, as permitted for example in the Energy Charter Treaty) pursuant to Article FINPROV.11, so the starting point is that the entire TCA is in effect as if it were in force.  However, the fact that it is not yet in force does have a few concrete consequences.  The first is what Michael Gove MP alluded to when he referred to the “uncertainty” that provisional application “creates for individuals and businesses and indeed the Parties”; that is, provisional application may be terminated more quickly than the TCA could be terminated if it were in force (compare Draft Guide, Guideline 9.2 and para. (7) of the commentary to it, to Article FINPROV.8 (Termination)).  So if, for example, the European Parliament refused its consent to the TCA, the EU could in theory put an end to the provisional application of the TCA almost immediately.  The second consequence is that while the Agreement is provisionally applied, and until its entry into force, the various bodies it establishes for its implementation, including Committees, Working Groups and the Partnership Council itself, are not fully operational.  As explained by Michael Gove MP in his letter, pending provisional application, the UK maintains that “the Partnership Council and other bodies established under Title III of Part I of the Agreement should [not] begin their work formally, except […] where there are essential decisions which cannot be deferred.”  Thus, according to the UK, although the TCA produces legal effects during its provisional application, it cannot be fully implemented until it formally enters into force.

 

Provisional application practice of the EU and the UK outside the TCA

The EU is increasingly resorting to provisional application of its Free Trade Agreements (FTAs).  Some of these are mixed agreements – i.e., agreements with a third State or States that touch both on competences exclusive to the EU and on those exclusive to Member States, which must be ratified by both the EU and its Member States before the FTA can enter into force.  The EU has relied on provisional application to accelerate the application of FTAs – allowing Member States and third countries to enjoy their benefits pending the completion of the sometimes lengthy ratification processes at the Member State level.  Recent examples include the FTA between the EU and South Korea and the EU-Canada Comprehensive Economic and Trade Agreement (CETA).

The practice is far from unknown to the UK as well.  Provisional application has been used particularly frequently in relation to post-Brexit agreements.  At the end of the Transition Period, the UK used provisional application to bring into effect many of the “roll-over” agreements it had negotiated so as to avoid any gap in coverage after the EU’s trade agreements with third States and trading blocs ceased to apply to the UK from 1 January 2021.  A few of these agreements, which have not yet been ratified, are currently subject to provisional application.  These include agreements with Moldova, Morocco, Turkey and Vietnam (the full list is available here).  Even outside the particular exigencies of Brexit, the UK had occasionally relied on provisional application, as it explained in its comments to the ILC on the topic of provisional application in 2014.  A recent example is the agreement between the UK and Morocco concerning the system of British Schools in Morocco, signed in 2018, which has been provisionally applied since signature, as per its Article 15, pending the completion of the necessary procedures required by each party for the entry into force of the treaty.

 

Next steps

Following the agreed extension to the provisional application of the TCA, the attention now returns to the European Parliament, which needs to provide its consent before the Council adopts a decision on the ratification of the TCA.  The UK expects such decision to be delivered before 30 April 2021, the date until which the Agreement is now due to be provisionally applied.

 

The text of the TCA and the parties’ agreement to extend its provisional application are available here.

The ILC’s Draft Guide to Provisional Application of Treaties is available here.

 

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