Friday, December 08, 2017 11:58 AM
from the European Union and UK Government have made a breakthrough in Brexit
A joint report setting out progress during phase one of the divorce deal
has been published. Here is the 7,200-word document in full:
Joint report from EU and UK Brexit
This report, presented jointly by the negotiators of the European Union (Union)
and the United Kingdom of Great Britain and Northern Ireland (UK), records the
progress made in the first phase of negotiations under Article 50 of the Treaty
on European Union (TEU) on the UK's orderly withdrawal from the Union.
Both Parties have reached agreement in principle across the following three
areas under consideration in the first phase of negotiations, on which further
detail is set out in this report:
1. protecting the rights of Union
citizens in the UK and UK citizens in the Union;
2. the framework for addressing the unique circumstances
in Northern Ireland; and
3. the financial settlement.
was also made in achieving agreement on aspects of other separation issues.
The positions detailed in this report form a single and coherent package.
Agreement in principle has been reached on the package as a whole, as opposed
to individual elements.
Under the caveat that nothing is agreed until everything is agreed, the joint
commitments set out below in this joint report shall be reflected in the
Withdrawal Agreement in full detail. This does not prejudge any adaptations
that might be appropriate in case transitional arrangements were to be agreed
in the second phase of the negotiations, and is without prejudice to
discussions on the framework of the future relationship.
The overall objective of the Withdrawal Agreement with respect to citizens'
rights is to provide reciprocal protection for Union and UK citizens, to enable
the effective exercise of rights derived from Union law and based on past life
choices, where those citizens have exercised free movement rights by the
To date, both Parties have reached a common understanding on the following.
The specified date should be the time of the UK's withdrawal.
The use of Union law concepts in the citizens’ rights Part of the Withdrawal
Agreement is to be interpreted in line with the case law of the Court of
Justice of the European Union (CJEU) by the specified date;
Union citizens who in accordance with Union law legally reside in the UK, and
UK nationals who in accordance with Union law legally reside in an EU27 Member
State by the specified date, as well as their family members as defined by
Directive 2004/38/EC who are legally resident in the host State by the
specified date, fall within the scope of the Withdrawal Agreement (for personal
scope related to frontier workers, see paragraph 15, and for social security,
see paragraph 28);
Within the scope of application of this Part of the Withdrawal Agreement and
without prejudice to any special provisions therein, any discrimination on
grounds of nationality will be prohibited in the host State and the State of
work in respect of Union citizens and UK nationals, and their respective family
members covered by the Withdrawal Agreement;
Irrespective of their nationality, the following categories of family members
who were not residing in the host State on the specified date will be entitled
to join a Union citizen or UK national right holder after the specified date
for the life time of the right holder, on the same conditions as under current
family members as referred to in Article 2 of Directive 2004/38/EC, provided
they were related to the right holder on the specified date and they continue
to be so related at the point they wish to join the right holder; and
born, or legally adopted, after the specified date, whether inside or outside
the host State, where:
a} the child is
born to, or legally adopted by, parents who are both protected by the
Withdrawal Agreement or where one parent is protected by the Withdrawal
Agreement and the other is a national of the host State;
or the child is born to, or legally adopted by, a parent who is
protected by the Withdrawal Agreement and who has sole or joint custody of the
child under the applicable family law of an EU27 Member State or the UK and
without prejudging the normal operation of that law, in particular as regards
the best interests of the child;
The UK and EU27
Member States will facilitate entry and residence of partners in a durable
relationship (Article 3(2)(b) of Directive 2004/38/EC) after the UK’s
withdrawal in accordance with national legislation if the partners did not
reside in the host state on the specified date, the relationship existed and
was durable on the specified date and continues to exist at the point they wish
to join the right holder;
The right to be joined by family members not covered by paragraphs 12 and 13
after the specified date will be subject to national law;
Those who on the specified date are working as frontier workers, as defined
under Union law, fall within the scope of the Withdrawal Agreement;
The UK and EU27 Member States can require persons concerned to apply to obtain
a status conferring the rights of residence as provided for by the Withdrawal
Agreement and be issued with a residence document attesting to the existence of
that right. Where the host State requires persons concerned to apply for a
status, no status is obtained if no successful application is made, subject to
paragraph 17e. The UK and EU27 Member States can also continue with the present
system under which entitlement of rights under the Withdrawal Agreement may be
attested by any other means of proof than a residence document;
Administrative procedures for applications for status will be transparent,
smooth and streamlined,2 in particular:
1. The Withdrawal Agreement
will specify that the host State cannot require anything more than is strictly
necessary and proportionate to determine whether the criteria have been met.
The Withdrawal Agreement will contain provisions that follow a similar approach
to the provisions on evidential requirements in Directive 2004/38;
2. The host State will avoid
any unnecessary administrative burdens;
3. Application forms will be
short, simple, user friendly and adjusted to the context of the Withdrawal
Agreement. The host State will work with the applicants to help them prove
their eligibility under the Withdrawal Agreement and to avoid any errors or
omissions that may impact on the application decision. Competent authorities
will give applicants the opportunity to furnish supplementary evidence or
remedy any deficiencies where it appears a simple omission has taken place. A
principle of evidential flexibility will apply, enabling competent authorities
to exercise discretion in favour of the applicant where appropriate;
4. proportionate approach
will be taken to those who miss the deadline for application where there is a
good reason. Applications made by families at the same time will be considered
5. and where an application is
required to obtain status, adequate time of at least two years will be allowed
to persons within the scope of the Withdrawal Agreement to submit their
applications. During this time period, they will enjoy the rights conferred by
the Withdrawal Agreement. Residence documents under the Withdrawal Agreement
will be issued free of charge or for a charge not exceeding that imposed on
nationals for the issuing of similar documents;
Pending a final decision by the competent authorities on any application made
for status under the Withdrawal Agreement, as well as a final judgment handed
down in case of judicial redress sought against any rejection of such
application, the citizens' rights Part of the Withdrawal Agreement will apply
to the applicant. The host State may remove applicants who submitted fraudulent
or abusive applications from the territory under the conditions set out in
Directive 2004/38/EC, in particular Articles 31 and 35, even before a final
judgment has been handed down in case of judicial redress sought against any
rejection of such application;
Decisions taken under the procedure for obtaining status under the Withdrawal
Agreement will be made in accordance with the objective criteria established in
the Withdrawal Agreement (i.e. no discretion, unless in favour of the
applicant). There will be safeguards in the Withdrawal Agreement for a fair
procedure, and decisions will be subject to the redress mechanisms and judicial
controls provided in Directive 2004/38/EC;
The conditions for acquiring the right of residence under the Withdrawal
Agreement are those set out in Articles 6 and 7 of Directive 2004/38/EC,
including the right to change status;
The conditions for acquiring the right of permanent residence under the
Withdrawal Agreement are those set out in Articles 16, 17 and 18 of Directive
2004/38/EC, with periods of lawful residence prior to the specified date included
in the calculation of the conditions set out in Articles 16 and 17 of Directive
The UK and EU27 Member States can apply more favourable national provisions in
accordance with Article 37 of Directive 2004/38/EC;
In order to obtain status under the Withdrawal Agreement by application, those
already holding a permanent residence document issued under Union law at
the specified date will have that document converted into the new document free
of charge, subject only to verification of identity, a criminality and security
check and confirmation of ongoing residence;
Systematic criminality and security checks can – in the specific context of
acquiring status under the Withdrawal Agreement – be carried out on all
applicants for status under the Agreement and applicants can be asked to
declare criminality. Any consequences arising from such checks and declarations
shall be subject to the procedures in paragraphs 17 to 19;
Persons who acquired the permanent residence rights in the host State under the
Withdrawal Agreement can be absent from its territory for a period not
exceeding five consecutive years without losing their residence right under the
Any restrictions on grounds of public policy or security related to conduct
prior to the specified date of persons covered by the Withdrawal Agreement will
be in accordance with Chapter VI of Directive 2004/38/EC;
Any restrictions on grounds of public policy or security related to conduct
after the specified date will be in accordance with national law;
Social security coordination rules set out in Regulations (EC) No 883/2004 and
(EC) No 987/2009 will apply. Social security coordination rules will cover
Union citizens who on the specified date are or have been subject to UK legislation
and UK nationals who are or have been subject to the legislation of an EU27
Member State, and EU27 and UK nationals within the scope of the Withdrawal
Agreement by virtue of residence. Those rules will also apply, for the purposes
of aggregation of periods of social security insurance, to Union and UK
citizens having worked or resided in the UK or in an EU27 Member State in the
Rules for healthcare, including the European Health Insurance Card (EHIC)
scheme, will follow Regulation (EC) No 883/2004. Persons whose competent state
is the UK and are in the EU27 on the specified date (and vice versa) – whether
on a temporary stay or resident – continue to be eligible for healthcare
reimbursement, including under the EHIC scheme, as long as that stay, residence
or treatment continues;
For rights and obligations set out in Regulations (EC) No 883/2004 and (EC) No
987/2009 on the coordination of social security systems, a mechanism will be
established to decide jointly on the incorporation of future amendments to
those Regulations in the Withdrawal Agreement;
Equal treatment will apply within the limits of Articles 18, 45 and 49 TFEU,
Article 24 of Directive 2004/38/EC and Regulation (EU) No 492/2011 including
rights of workers, self-employed, students and economically inactive citizens
with respect to social security, social assistance, health care, employment,
self-employment and setting up and managing an undertaking, education
(including higher education) and training, social and tax advantages;
Decisions on recognition of qualifications granted to persons covered by the
scope of the Withdrawal Agreement before the specified date in the host State
and, for frontier workers, the State of work (either the UK or an EU27 Member
State) under Title III of Directive 2005/36/EC (recognition of professional
qualifications where the person concerned was exercising the freedom of
establishment), Article 10 of Directive 98/5/EC (lawyers who gained admission
to the host State profession and are allowed to practise under the host State
title alongside their home State title) and Article 14 of Directive 2006/43/EC
(approved statutory auditors) will be grandfathered. Recognition procedures
under these Directives that are ongoing on the specified date, in respect of
the persons covered, will be completed under Union law and will be
Legal effects of the citizens' rights part
It is of paramount importance to both Parties to give as much certainty as
possible to UK citizens living in the EU and EU citizens living in the UK about
their future rights. The Parties have therefore reached agreement on the
following specific set of arrangements to implement and enforce the citizens’
rights Part of the agreement.
Both Parties agree that the Withdrawal Agreement should provide for the legal
effects of the citizens' rights Part both in the UK and in the Union. UK
domestic legislation should also be enacted to this effect.
The provision in the Agreement should enable citizens to rely directly on their
rights as set out in the citizens' rights Part of the Agreement and should
specify that inconsistent or incompatible rules and provisions will be
The UK Government will bring forward a Bill, the Withdrawal Agreement &
Implementation Bill, specifically to implement the Agreement. This Bill will
make express reference to the Agreement and will fully incorporate the
citizens' rights Part into UK law. Once this Bill has been adopted, the
provisions of the citizens' rights Part will have effect in primary legislation
and will prevail over inconsistent or incompatible legislation, unless
Parliament expressly repeals this Act in future. The Withdrawal Agreement will
be binding upon the institutions of the Union and on its Member States from its
entry into force pursuant to Article 216(2) TFEU.
Consistent interpretation of the citizens'
The Agreement establishes rights for both UK citizens living in the EU and EU
citizens in the UK. To protect those rights and give citizens legal certainty,
a consistent interpretation and application of the citizens' rights Part is in
the interest of both Parties to the Agreement and therefore appropriate
mechanisms should be established to ensure this.
This Part of the Agreement establishes rights for citizens following on from
those established in Union law during the UK’s membership of the European
Union; the CJEU is the ultimate arbiter of the interpretation of Union law. In
the context of the application or interpretation of those rights, UK courts
shall therefore have due regard to relevant decisions of the CJEU after the
specified date. The Agreement should also establish a mechanism enabling UK
courts or tribunals to decide, having had due regard to whether relevant
case-law exists, to ask the CJEU questions of interpretation of those rights
where they consider that a CJEU ruling on the question is necessary for the UK
court or tribunal to be able to give judgment in a case before it. This
mechanism should be available for UK courts or tribunals for litigation brought
within 8 years from the date of application of the citizens' rights Part.
Consistent interpretation of the citizens' rights Part should further be
supported and facilitated by an exchange of case law between the courts and
regular judicial dialogue. In the same vein, it is envisaged to give the UK
Government and the European Commission the right to intervene in relevant cases
before the CJEU and before UK courts and tribunals respectively.
The implementation and application of the citizens' rights Part will be
monitored in the Union by the Commission acting in conformity with the Union
Treaties. In the UK, this role will be fulfilled by an independent national
authority; its scope and functions, including its role in acting on citizens'
complaints, will be discussed between the parties in the next phase of the
negotiations and reflected in the Withdrawal Agreement. There should be regular
exchange of information between the UK Government and the Commission.
The approach agreed in the context of the citizens' rights Part of the
Withdrawal Agreement reflects both Parties’ desire to give those citizens
certainty. It in no way prejudges discussions on other elements of the
Withdrawal Agreement, including governance, other separation issues or any possible
transitional arrangements, nor discussions on the future relationship.
Ireland and Northern Ireland
Both Parties affirm that the achievements, benefits and commitments of the
peace process will remain of paramount importance to peace, stability and reconciliation.
They agree that the Good Friday or Belfast Agreement reached on 10 April 1998
by the United Kingdom Government, the Irish Government and the other
participants in the multi-party negotiations (the '1998 Agreement') must be
protected in all its parts, and that this extends to the practical application
of the 1998 Agreement on the island of Ireland and to the totality of the
relationships set out in the Agreement.
The United Kingdom’s withdrawal from the European Union presents a significant
and unique challenge in relation to the island of Ireland. The United Kingdom
recalls its commitment to protecting the operation of the 1998 Agreement,
including its subsequent implementation agreements and arrangements, and to the
effective operation of each of the institutions and bodies established under
them. The United Kingdom also recalls its commitment to the avoidance of a hard
border, including any physical infrastructure or related checks and controls.
Both Parties recognise the need to respect the provisions of the 1998 Agreement
regarding the constitutional status of Northern Ireland and the principle of
consent. The commitments set out in this joint report are and must remain fully
consistent with these provisions. The United Kingdom continues to respect and
support fully Northern Ireland's position as an integral part of the United
Kingdom, consistent with the principle of consent.
The United Kingdom respects Ireland's ongoing membership of the European Union
and all of the corresponding rights and obligations that entails, in particular
Ireland's place in the Internal Market and the Customs Union. The United
Kingdom also recalls its commitment to preserving the integrity of its internal
market and Northern Ireland's place within it, as the United Kingdom leaves the
European Union's Internal Market and Customs Union.
The commitments and principles outlined in this joint report will not
pre-determine the outcome of wider discussions on the future relationship
between the European Union and the United Kingdom and are, as necessary,
specific to the unique circumstances on the island of Ireland. They are made
and must be upheld in all circumstances, irrespective of the nature of any
future agreement between the European Union and United Kingdom.
Cooperation between Ireland and Northern Ireland is a central part of the 1998
Agreement and is essential for achieving reconciliation and the normalisation
of relationships on the island of Ireland. In this regard, both Parties recall
the roles, functions and safeguards of the Northern Ireland Executive, the
Northern Ireland Assembly, and the North-South Ministerial Council (including
its cross-community provisions) as set out in the 1998 Agreement. The two
Parties have carried out a mapping exercise, which shows that North-South
cooperation relies to a significant extent on a common European Union legal and
policy framework. Therefore, the United Kingdom’s departure from the European
Union gives rise to substantial challenges to the maintenance and development
of North-South cooperation.
The United Kingdom remains committed to protecting and supporting continued
North-South and East-West cooperation across the full range of political,
economic, security, societal and agricultural contexts and frameworks of cooperation,
including the continued operation of the North-South implementation bodies.
The United Kingdom remains committed to protecting North-South cooperation and
to its guarantee of avoiding a hard border. Any future arrangements must be
compatible with these overarching requirements. The United Kingdom's intention
is to achieve these objectives through the overall EU-UK relationship. Should
this not be possible, the United Kingdom will propose specific solutions to
address the unique circumstances of the island of Ireland. In the absence of
agreed solutions, the United Kingdom will maintain full alignment with those
rules of the Internal Market and the Customs Union which, now or in the future,
support North-South cooperation, the allisland economy and the protection of
the 1998 Agreement.
In the absence of agreed solutions, as set out in the previous paragraph, the
United Kingdom will ensure that no new regulatory barriers develop between
Northern Ireland and the rest of the United Kingdom, unless, consistent with
the 1998 Agreement, the Northern Ireland Executive and Assembly agree that
distinct arrangements are appropriate for Northern Ireland. In all
circumstances, the United Kingdom will continue to ensure the same unfettered
access for Northern Ireland's businesses to the whole of the United Kingdom
Both Parties will establish mechanisms to ensure the implementation and
oversight of any specific arrangement to safeguard the integrity of the EU
Internal Market and the Customs Union.
Both Parties acknowledge that the 1998 Agreement recognises the birth right of
all the people of Northern Ireland to choose to be Irish or British or both and
be accepted as such. The people of Northern Ireland who are Irish citizens will
continue to enjoy rights as EU citizens, including where they reside in
Northern Ireland. Both Parties therefore agree that the Withdrawal Agreement
should respect and be without prejudice to the rights, opportunities and
identity that come with European Union citizenship for such people and, in the
next phase of negotiations, will examine arrangements required to give effect
to the ongoing exercise of, and access to, their EU rights, opportunities and
The 1998 Agreement also includes important provisions on Rights, Safeguards and
Equality of Opportunity for which EU law and practice has provided a supporting
framework in Northern Ireland and across the island of Ireland. The United
Kingdom commits to ensuring that no diminution of rights is caused by its departure
from the European Union, including in the area of protection against forms of
discrimination enshrined in EU law. The United Kingdom commits to facilitating
the related work of the institutions and bodies, established by the 1998
Agreement, in upholding human rights and equality standards.
Both Parties recognise that the United Kingdom and Ireland may continue to make
arrangements between themselves relating to the movement of persons between
their territories (Common Travel Area), while fully respecting the rights of
natural persons conferred by Union law. The United Kingdom confirms and accepts
that the Common Travel Area and associated rights and privileges can continue
to operate without affecting Ireland’s obligations under Union law, in particular
with respect to free movement for EU citizens.
Both Parties will honour their commitments to the PEACE and INTERREG funding
programmes under the current multi-annual financial framework. Possibilities
for future support will be examined favourably.
Given the specific nature of issues related to Ireland and Northern Ireland,
and on the basis of the principles and commitments set out above, both Parties
agree that in the next phase work will continue in a distinct strand of the
negotiations on the detailed arrangements required to give them effect. Such
work will also address issues arising from Ireland’s unique geographic
situation, including the transit of goods (to and from Ireland via the United
Kingdom), in line with the approach established by the European Council
Guidelines of 29 April 2017.
Both Parties have agreed a methodology for the financial settlement.
This methodology consists of:
1. a list of components;
2. a set of principles for
calculating the value of the financial settlement and payment modalities;
3. arrangements for continued
participation of the UK in the programmes of the current Multiannual Financial
Framework (MFF) until their closure;
4. and financial and related
arrangements for the European Investment Bank, the European Central Bank,
European Union trust funds, the Facility for Refugees in Turkey, Council
agencies and also the European Development Fund.
Components of the settlement
UK participation in Union annual budgets to 2020
The UK will contribute to, and participate in, the implementation of the Union
annual budgets for the years 2019 and 2020 as if it had remained in the Union
(including revenue adjustments ), on the basis of the applicable Union
legal provisions including the Own Resources legislation. By derogation, any
amendments to the Multiannual Financial Framework Regulation or Own Resources
Decision adopted after the date of withdrawal, having an impact on the UK’s
financial obligations, will not apply to the UK.
The normal process of annual revenue adjustment in respect of the year 2020
will be completed in accordance with the Own Resources Decision and the other
relevant Union provisions. Amounts to be returned to, or returned by, the UK
will be calculated as if the UK had remained in the Union. The UK will also
participate in the surplus exercise with respect to 2020. In the second phase
of negotiations, some simplification of the revenue adjustment procedure
including time limitation could be agreed between the UK and the Union.
Outstanding commitments at the end of 2020 – Reste à liquider (RAL)
The UK will contribute its share of the financing of the budgetary commitments
outstanding at 31 December 2020 (RAL).
Liabilities, contingent liabilities and corresponding assets
The UK will contribute its share of the financing of the Union's liabilities
incurred before 31 December 2020 except for liabilities with corresponding
assets and any assets and liabilities which are related to the operation
of the budget and the Own Resources Decision.
The UK will remain liable for its share of the Union’s contingent liabilities
as established at the date of withdrawal. For those related to guarantees given
by the Union budget to support financial operations (e.g. back-to-back loans
for financial assistance, financial operations managed by the EIB such as EFSI
or the external lending mandate, financial operations managed by other
financial institutions, Union budgetary financial instruments), the UK
liability will be limited to decisions on each financial operation adopted
prior to the date of withdrawal. By derogation, for contingent liabilities
related to legal cases as a result of participation in the budget, programmes
and policies, the cut-off date will be 31 December 20208 . In the event of triggering
of the Union contingent liabilities for which the UK is liable, the UK will
receive its share of any subsequent recoveries.
As the provisioning needs for the financial operations associated with these
contingent liabilities decline, the UK share of the paid-in guarantees
constituted from the budget until the end of 2020 will be returned to the UK,
provided that it has not been used for covering losses on the underlying
financial operations, as well as any gains from these financial operations to
be returned to all Member States, even if such funds would be recommitted.
Similarly, as the financial operations supported by the net asset of the
European Coal and Steel Community in liquidation and of the European Investment
Fund decided before the withdrawal date, mature, the UK will receive its share.
Union assets relating to Union space programmes (EGNOS, Galileo &
Copernicus) are not part of the financial settlement. The UK’s past
contribution to the financing of space assets could be discussed in the context
of possible future access to the services offered.
Principles for calculating the value of the financial settlement
The implementation of the agreed methodology and the schedule of payments will
be based on the following principles:
1. The UK will not finance any
commitments that do not require funding from Member States, and will receive a
share of any financial benefits that would have fallen to it had it remained a
Member State. In particular, the value of the RAL, as audited by the European Court
of Auditors, will be adjusted to take into account the actual implementation of
the Union’s commitments, taking into account decommitments and assigned
revenue. The UK opt-outs leading to non-participation in Union programmes
existing at the date of withdrawal will continue to apply in respect of the
2. Except for the UK payments
relating to UK participation to Union annual budgets to 2020 as set out in
paragraphs 59 and 60, the UK share in relation with the Union budget will be a
percentage calculated as the ratio between the own resources made available by
the UK from the year 2014 to 2020 and the own resources made available by all
Member States, including the UK, during the same period.
3. Payments arising from the
financial settlement will become due as if the UK had remained a Member State.
In particular, the UK will not be required to incur expenditures earlier than
would be the case had it remained a Member State unless agreed by both sides.9
It may be appropriate for the UK and the Union to agree on a simplified
procedure for settling some elements of the payment schedule in the second
phase of negotiations. Such a procedure should be based on an agreed forecast
and, where appropriate, provision for subsequent review and correction.
financial settlement will be drawn up and paid in euro.
Data for the calculation of UK obligations will be drawn up from publicly
available sources where possible, and audited by the European Court of
Auditors. Additional information necessary for the calculation of the UK’s
share of Union obligations will be transmitted to the UK. The Union will
provide the UK with the management and accounting information necessary to
verify the components of the financial settlement in a timely manner.
The second phase of the negotiations will address the practical modalities for
implementing the agreed methodology and the schedule of payments.
UK participation in programmes of the MFF 2014-2020
Following withdrawal from the Union, the UK will continue to participate in the
Union programmes financed by the MFF 2014-202010 until their closure (excluding
participation in financial operations which give rise to a contingent liability
for which the UK is not liable as from the date of withdrawal). Entities located
in the UK will be entitled to participate in such programmes. Participation in
Union programmes will require the UK and UK beneficiaries to respect all
relevant Union legal provisions including co-financing. Accordingly, the
eligibility to apply to participate in Union programmes and Union funding for
UK participants and projects will be unaffected by the UK’s withdrawal from the
Union for the entire lifetime of such projects.
In the second phase of negotiations it could be agreed that some rules related
to Union programmes that would be considered as not relevant in relation to a
departing Member State would not apply. As part of the second phase of
negotiations, the Union and the UK could also decide to agree to simplified
procedures so as to avoid unnecessary administrative burdens extending well
beyond the end of the current multiannual financial framework, provided that
they respect the sound financial management of the Union budget and do not
result in discrimination in favour of the UK or UK beneficiaries. The UK and
the Union could also agree on administrative procedures to facilitate the
management of specific programmes.
The UK states that it may wish to participate in some Union budgetary
programmes of the new MFF post-2020 as a non-Member State.
Other components of the settlement – Union bodies and funds related to Union
European Investment Bank (EIB)
The financial settlement should not disrupt the operational functioning of the
EIB as a result of the UK withdrawal in relation to the stock of operations
(i.e. loans and other financial instruments) at that point.
In this context, the UK will provide a guarantee for an amount equal to its
callable capital on the day of withdrawal. This guarantee will be decreased in
line with the amortisation of the stock of EIB operations at the date of
withdrawal, starting on the date on which the outstanding stock reaches an
amount equal to the total subscribed capital on the date of withdrawal and
ending on the date it equals the total paid-in capital on the date of
withdrawal, both as defined in the EIB statute.
The UK share of the paid-in capital will be reimbursed in twelve annual
instalments starting at the end of 201911. The UK remains liable for the
reimbursed amount of paid-in capital until the outstanding stock of EIB
operations equals the total paid-in capital on the date of withdrawal, at which
point the liability will start to be amortised in line with the remaining
Apart from these reimbursements, the EIB will not make any other payment,
return or remuneration on account of the withdrawal of the UK from the EIB or
on account of the provision by the UK of a guarantee.
Any call to the callable guarantee or the paid-in (cash or guarantee) will be
“paripassu” with calls on or payments made by the Member States provided that
it is used for covering operations at the withdrawal date or for covering risks
(such as ALM (Asset-Liability management) risks or operational risks)
attributable to the stock of operations at the date of withdrawal. For other
such risks not associated with specific loans and not attributable to the stock
of operations built after the date of withdrawal, the UK responsibility will be
proportional to the ratio between the stock of outstanding operations and the
total amount of operations at the date of the event.
The UK will maintain the EIB's privileges and immunities under Protocols 5 and
7 annexed to the Treaties throughout the amortisation of the EIB's stock of
operations at the date of withdrawal.
The UK considers that there could be mutual benefit from a continuing
arrangement between the UK and the EIB. The UK wishes to explore these possible
arrangements in the second phase of the negotiations.
After the date of withdrawal, UK projects will not be eligible for new
operations from the EIB reserved for Member States, including those under Union
European Central Bank (ECB)
The paid-in capital of the UK in the ECB will be reimbursed to the Bank of
England (BoE) after the date of withdrawal. Modalities and other practical
arrangements will be established by the ECB Governing Council following the
rules of the Treaties and its Protocol 4.
Facility for Refugees in Turkey, European Union trust funds
The UK will honour the commitments it made before withdrawal for participating
in the Facility for Refugees in Turkey and the European Union Emergency Trust
Fund for stability and addressing root causes of irregular migration and
displaced persons in Africa. The existing modalities of payments will be
maintained unless otherwise agreed in the second phase.
European Development Fund (EDF)
The UK will remain party to the European Development Fund (EDF) which is
governed by a separate international agreement and is outside the Union budget
until the closure of the 11th EDF. The UK will honour its share of the total
commitments made under this EDF and the payments related to its share of the
outstanding commitments made under previous EDFs. The existing modalities of
payments will be maintained unless otherwise agreed in the second phase.
The UK share of the Investment Facility of the EDF from successive EDF periods
will be returned to the UK as the investment matures. Unless agreed otherwise,
the UK’s capital share will not be recommitted beyond the end of the 11th EDF
commitment period or rolled over into subsequent periods. Reflecting the
ongoing commitment in relation to the EDF, the UK and the Union will agree on
governance arrangements in the second phase, that take into account the continued
participation of the UK in the 11th EDF, that the EDF falls under a separate
international agreement and the UK’s withdrawal from the Union.
The Commission welcomes the UK Government's offer to discuss with Union
Agencies located in London how they might facilitate their relocation, in
particular as regards reducing the withdrawal costs.
Other separation issues
In the negotiations to date, both Parties have engaged in thorough discussion
of the other separation issues in scope in this phase. These discussions have
enabled good progress in identifying areas of convergence and divergence. The
below text records the progress made in achieving agreement on a number of
issues. There remain areas where further discussions will be required to reach
agreement during the next phase of negotiations.
The UK and the Commission have both proposed further issues for consideration
in this phase. However, where there was not mutual agreement that an issue
should be discussed in this phase of the negotiations, it has been agreed to
return to it later.
On Euratom-related (nuclear specific) issues both Parties have agreed
principles for addressing the key separation issues relating to the UK’s
withdrawal from Euratom. This includes agreement that the UK will be responsible
for international nuclear safeguards in the UK and is committed to a future
regime that provides coverage and effectiveness equivalent to existing Euratom
arrangements. Both sides have also agreed the principles of ownership for
special fissile material (save for material held in the UK by EU27 entities)
and responsibility for spent fuel and radioactive waste.
On ensuring continuity in the availability of goods placed on the market under
Union law before withdrawal both Parties recognise 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
On cooperation in civil and commercial matters there is a need to provide legal
certainty and clarity. There is general consensus between both Parties that
Union rules on conflict of laws should continue to apply to contracts before
the withdrawal date and non-contractual obligations where an event causing
damage occurred before the withdrawal date. There was also agreement to provide
legal certainty as to the circumstances under which Union law on jurisdiction,
recognition and enforcement of judgements will continue to apply, and that
judicial cooperation procedures should be finalised.
On police and judicial cooperation in criminal matters there is a need to
provide legal certainty and clarity. Both Parties broadly agree on the
principle that all structured and formalised cooperation procedures ongoing on
withdrawal date that have passed a certain threshold (to be defined) should be
completed under Union law.
On ongoing Union judicial procedures, both Parties have agreed that the CJEU
should remain competent for UK judicial procedures registered at the CJEU on
the date of withdrawal, and that those procedures should continue through to a
On ongoing Union administrative proceedings both Parties have deepened their
understanding of the respective positions, and explored some areas, such as
competition, state aid and examinations of the Community Plant Variety Office.
On issues relating to the functioning of the Union institutions, agencies and
bodies, both Parties agree that an arrangement which closely mirrors Union
privileges and immunities should remain applicable to activities that took
place before withdrawal and as regards new activities foreseen in the
Withdrawal Agreement; that both sides continue to ensure compliance with
obligations of professional secrecy; and that classified information and other
documents obtained by both sides whilst the UK was a Member State retain the
same level of protection as before withdrawal.
This report is put forward with a view to the meeting of the European Council
(Article 50) of 14 and 15 December 2017. It is also agreed by the UK on the
condition of an overall agreement under Article 50 on the UK's withdrawal,
taking into account the framework for the future relationship, including an
agreement as early as possible in 2018 on transitional arrangements.