Brexit: European Commission implements “no-deal” Contingency Action Plan in specific sectors
Brussels, 19 December 2018
The United Kingdom will leave the European Union in 100 days' time.
Given the continued uncertainty in the UK surrounding the
ratification of the Withdrawal Agreement, as agreed between the EU and
the UK on 25 November 2018 – and last week's call by the
European Council (Article 50)
to intensify preparedness work at all levels and for all outcomes – the
European Commission has today started implementing its “no deal”
Contingency Action Plan. This delivers on the Commission's commitment to
adopt all necessary “no deal” proposals by the end of the year, as
outlined in
its second preparedness Communication of 13 November 2018.
Today's
package
includes 14 measures in a limited number of areas where a "no-deal"
scenario would create major disruption for citizens and businesses in
the EU27. These areas include financial services, air transport,
customs, and climate policy, amongst others.
The Commission considers it essential and urgent to adopt these
measures today to ensure that the necessary contingency measures can
enter into application on 30 March 2019 in order to limit the most
significant damage caused by a "no-deal" scenario in these areas.
These measures will not – and cannot – mitigate the overall impact of
a "no-deal" scenario, nor do they in any way compensate for the lack of
stakeholder preparedness or replicate the full benefits of EU
membership or the terms of any transition period, as provided for in the
Withdrawal Agreement. They are limited to specific areas where it is
absolutely necessary to protect the vital interests of the EU and where
preparedness measures on their own are not sufficient. As a rule, they
will be temporary in nature, limited in scope and adopted unilaterally
by the EU. They take into account discussions with Member States and are
in addition to the preparedness measures that have already been taken,
as set out in the two previous preparedness Communications.
The Commission will continue to implement its Contingency Action Plan
in the weeks to come and will monitor the need for additional action,
as well as continue to support Member States in their preparedness work.
Putting citizens' rights first: right to stay and social security coordination
The Commission has consistently put citizens first throughout these
negotiations and throughout its "no-deal" preparedness and contingency
work. Today's Communication invites Member States to take a generous
approach to the rights of UK citizens in the EU, provided that this
approach is reciprocated by the UK.
In particular, Member States should take measures to ensure that UK
citizens legally residing in the EU on the date of withdrawal will
continue to be considered legal residents. Member States should adopt a
pragmatic approach to granting temporary residence status. It is
recalled that the Commission has already adopted a proposal for a
Regulation which exempts UK nationals from visa requirements, provided
that all EU citizens are equally exempt from UK visa requirements.
As regards social security coordination, the Commission considers it
necessary that Member States take all possible steps to ensure legal
certainty and to protect the rights acquired by EU27 citizens and UK
nationals who exercised their right to free movement before 30 March
2019.
Sector-specific regulation
Financial services
After a thorough examination of the risks linked to a no deal
scenario in the financial sector, the Commission has found that only a
limited number of contingency measures is necessary to safeguard
financial stability in the EU27.
The Commission has therefore adopted today the following acts:
- A temporary and conditional equivalence decision for a fixed,
limited period of 12 months to ensure that there will be no immediate
disruption in the central clearing of derivatives.
- A temporary and conditional equivalence decision for a fixed,
limited period of 24 months to ensure that there will be no disruption
in central depositaries services for EU operators currently using UK
operators.
- Two Delegated Regulations facilitating novation, for a fixed period
of 12 months, of certain over-the-counter derivatives contracts, where a
contract is transferred from a UK to an EU27 counterparty.
Transport
The Commission has today adopted two measures that will avoid full
interruption of air traffic between the EU and the UK in the event of no
deal. These measures will only ensure basic connectivity and in no
means replicate the significant advantages of membership of the Single
European Sky. This is subject to the UK conferring equivalent rights to
EU air carriers, as well as the UK ensuring conditions of fair
competition.
- A proposal for a Regulation to ensure temporarily (for 12 months)
the provision of certain air services between the UK and the EU.
- A proposal for a Regulation to extend temporarily (for 9 months) the validity of certain aviation safety licences.
The Commission has also adopted a proposal for a Regulation to allow
UK operators to temporarily (nine months) carry goods into the EU,
provided the UK confers equivalent rights to EU road haulage operators
and subject to fair competition conditions.
Customs and the export of goods
In a no deal scenario, all relevant EU legislation on the importation
and exportation of goods will apply to goods moving between the EU and
the UK. The Commission has today adopted the following technical
measures:
- A Delegated Regulation to include the seas surrounding the UK in the
provisions on time-limits within which entry summary declarations and
pre-departure declarations have to be lodged prior to leaving or
entering the Union's customs territory.
- A proposal for a Regulation to add the UK to the list of countries
for which a general authorisation to export dual use items is valid
throughout the EU.
It is essential, however, that Member States take all the necessary
steps to be in a position to apply the Union Customs Code and the
relevant rules regarding indirect taxation in relation to the United
Kingdom.
EU climate policy
The Commission has today adopted the following acts in the area of EU
climate legislation in order to ensure that a "no-deal" scenario does
not affect the smooth functioning and the environmental integrity of the
Emissions Trading System.
- A Commission Decision to suspend temporarily for the UK the free
allocation of emissions allowances, auctioning, and the exchange of
international credits with effect from 1 January 2019.
- An Implementing Decision to allow an appropriate annual quota
allocation to UK companies for accessing the EU27 market (until 31
December 2020).
- An Implementing Regulation to ensure that the reporting by companies
differentiates between the EU market and the UK market to allow a
correct allocation of quotas in the future.
PEACE Programme
The Commission has today reiterated its commitment to ensuring the
current programmes between the border counties of Ireland and Northern
Ireland can continue in all scenarios. Given its importance, the
Commission has today made a proposal for a Regulation to continue the
PEACE programme in Northern Ireland until the end of 2020, in the event
of a no deal scenario. As for the period after 2020, the Commission has
already proposed as part of its proposals for the next Multi-annual
Financial Framework to continue and strengthen cross-border support for
peace and reconciliation in the border counties of Ireland and Northern
Ireland.
Other
The Commission has also adopted a Delegated Regulation on the listing
of the UK in statistics on the balance of payments, international trade
in services and foreign direct investment.
Next steps
The Commission calls on the European Parliament and the Council to
ensure the adoption of the proposed legislative acts so that they are in
force by 29 March 2019. The Commission also highlights to the European
Parliament and the Council that it is important for delegated acts to
enter into force as rapidly as possible. For Delegated Acts, the normal
scrutiny period by the European Parliament and Council is, as a rule,
two to three months (two months for the Delegated Regulation on summary
declarations and pre-departure declarations; three months for the
Delegated Regulation on the listing of the UK in EU statistics; a
maximum of three months for the Delegated Regulations on certain types
of contracts, including over-the-counter derivatives. For more
information on the minimum timelines for adoption of such legal acts,
see
here
under Annex 5. Delegated acts can enter into force earlier if the
European Parliament and the Council both inform the Commission, before
the end of the scrutiny period, that they will not object to the act.
Background
On
14 November 2018,
the negotiators of the Commission and the United Kingdom agreed on the
terms of the Withdrawal Agreement. On 22 November 2018, the Commission
approved the completed Withdrawal Agreement. On 25 November 2018, the
European Council (Article 50) endorsed the Withdrawal Agreement and
invited the Commission, the European Parliament and the Council to take
the necessary steps to ensure that the agreement can enter into force on
30 March 2019 to provide for an orderly withdrawal.
On 5 December 2018, the Commission adopted two proposals for Council decisions on the
signature and
conclusion
of the Withdrawal Agreement. For the Withdrawal Agreement to enter into
force the Council must now authorise the signature of the text on
behalf of the Union and the European Parliament must then give its
consent before being concluded by the Council. The Withdrawal Agreement
will have to be ratified by the United Kingdom, in accordance with its
own constitutional requirements.
The ratification of the Withdrawal Agreement continues to be the
objective and priority of the Commission. As emphasised in the
Commission's first Brexit preparedness Communication of 19 July 2018,
irrespective of the scenario envisaged, the United Kingdom's choice to
leave the European Union will cause significant disruption.
Stakeholders, as well as national and EU authorities, therefore need to prepare for two possible main scenarios:
- If the Withdrawal Agreement is ratified before 30 March 2019, EU law
will cease to apply to and in the UK on 1 January 2021, i.e. after a
transition period of 21 months.
- If the Withdrawal Agreement is not ratified before 30 March 2019,
there will be no transition period and EU law will cease to apply to and
in the UK as of 30 March 2019. This is referred to as the "no deal" or
"cliff-edge" scenario.
Over the past year, the Commission has published 78 sector-specific
preparedness notices to inform the public about the consequences of the
UK's withdrawal in the absence of any Withdrawal Agreement. These are
available in all official EU languages. The Commission has also held
technical discussions with the EU27 Member States both on general issues
of preparedness and on specific sectorial, legal and administrative
preparedness steps. The slides used in these technical seminars are
available
online.