The sole purpose of the withdrawal agreement is to dismantle the cooperation based on the UK’s EU membership in a orderly manner. The future relationship between the EU and the UK must be renegotiated separately in each policy sector. A transition period will be in effect between the withdrawal and the future relationship, during which a new relationship will be negotiated. Provisions on the transition period are laid down in Articles 126–132 of the withdrawal agreement.
Despite the UK’s withdrawal, the current EU rules will continue to apply during the transition period. The aim is to enable citizens and businesses to move more smoothly, through one transition, to the arrangements of the future relationship.
The main premise is that during the transition period, the UK will still have all the rights and obligations of a Member State. EU and UK citizens and legal persons will be treated as if the UK were still a member of the EU.
During the transition period, for example:
- The UK will continue to fully respect the EU treaties, EU legislation and EU international treaties and adhere to EU trade, foreign and security policy.
- The UK will remain within the EU single market and customs union.
- The free movement of goods, services, capital and persons between the EU and the UK will continue.
- The Commission’s supervisory powers, the jurisdiction of the EU Court of Justice and the powers of EU bodies and agencies in relation to the UK will remain unchanged.
- The UK's obligations vis-à-vis the EU budget will remain unchanged.
The only significant exception is that the UK will no longer participate in the activities of EU institutions, bodies, offices and agencies as of the day of the withdrawal (from 1 February 2020), nor will it take part in EU decision-making during the transition period.
The transition period will begin on the day the withdrawal agreement takes effect (1 February 2020) and end on 31 December 2020. Under the withdrawal agreement, it is possible to extend the transition period once by joint decision of the EU and the UK until 31 December 2022 at the latest. According to the withdrawal agreement, this decision must be made by 1 July 2020. In the same context, it will also be necessary to agree on the UK’s contribution to the EU budget for the duration of the extension. However, the UK government has already announced that it will not accept the extension of the transition period. In this case, the negotiations on the future relationship should be concluded in about ten months. This is an extremely short time for international negotiations on an agreement of this kind. It is therefore possible that, by 1 January 2021, an agreement will not have been reached for certain sectors. Businesses in particular should be prepared for this possibility.