Barnier a new mandate to look at the framework for a future relationship. Theresa May wants the terms of the future part
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things we have learned about the Brexit negotiations
1. Timing: 15 months to find a deal EU leaders will adopt their negotiating guidelines on 29 April but talks won’t start until May or June, with any political decisions left until after the German elections on 24 September. Barnier wants a draft deal reached by October 2018 to allow time for ratification. That leaves about 15 months to reach an exit deal, agree on transition arrangements and the framework of a future partnership. Phew!
2. Sequencing: Divorce first, then let’s talk about the future The EU will push a 2-phased approach. The European Council wants “sufficient progress” made on the 3 core issues of citizens’ rights, the exit bill and the Irish border, before giving Barnier a new mandate to look at the framework for a future relationship. Theresa May wants the terms of the future partnership discussed “alongside” the exit talks. She’s unlikely to get her way and it is in EU leaders’ hands to determine what “sufficient progress” means – a political rather than legal judgement. The carrot will be: deal with the exit arrangements quickly, don’t play politics with the exit bill and we’ll get onto the future partnership quicker.
3. Transition period: EP limits it to 3 years The EU acknowledges transitional arrangements may be needed as a bridge to the future relationship, but want it clearly defined, limited in time and subject to enforcement mechanisms. The EP is more precise, limiting it to 3 years and with the European Court of Justice (ECJ) settling any legal challenges. The UK also wants to avoid the “cliff-edge” scenario and calls for “implementation periods” to help business and people adjust, with the possibility of different time periods for different issues.
4. No special deals for the City or individual sectors The EU makes clear that the integrity of the single market will not allow a sector-by-sector approach, so no special deals for the City or the car industry. The unity of the EU27 is their key objective and they will not tolerate any separate negotiations between individual Member States and the UK . The EP goes as far as to call this illegal under the Treaty. The negotiations will be conducted as a single package –“nothing is agreed until everything is agreed” – so individual items cannot be settled separately. The UK for its part acknowledges that they will lose influence over the rules and cannot indulge in any “cherry picking”.
5. Exit deal: An orderly withdrawal risks being hijacked by the exit bill The EU states that an orderly withdrawal will require agreement on the rights of citizens; settlement of financial obligations and avoiding a hard Irish border. The UK accept the need for a “fair settlement” of the UK’s rights and obligations “in accordance with the law and in the spirit of the UK’s continuing partnership with the EU”. There seems little difference between them on citizen’s right and the border issue but the exit bill has the potential of souring the talks. Take for example the EPP’s position: “Why should a Croatian nurse, whose country has only been a member since 2013, pay the bill for the UK’s liabilities since 1973 so as to make a tax cut for a London City banker possible?”
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things we have learned about the Brexit negotiations
6. No dumping please! The EPP red lines on Brexit state “we will not allow the emergence of a Singapore on our doorstep .. a fiscal and social dumping paradise”. EU leaders are more diplomatic when they state any future agreement must “encompass safeguards against unfair competitive advantages through fiscal, social and environmental dumping”. Theresa May’s letter reassuringly looks at how to manage the “evolution of our regulatory frameworks to maintain a fair and open trading environment, and how we resolve disputes”. The latter point will be a major talking point if the UK refuses to accept a role for the ECJ.
7. Preparing for failure Much has been made of Theresa May’s comment that no deal is better than a bad deal. David Davis admitted that a full economic assessment on the UK leaving without a deal had not been done and the House of Commons Brexit Committee has called on the PM to substantiate her claims. EU leaders state that while they will work had to achieve a good outcome, they will also prepare to handle the situation if talks fail. Both sides claim the other will be hurt more by a break-down.
8. No trade deal can be better than membership One of the EU’s mantras has been that no future trade deal can offer better terms and benefits than membership. The EU wants the future partnership to go beyond trade, to include security, defence and the fight against terror. Theresa May’s letter repeats seven times that the UK wants “a deep and special partnership, that takes in both economic and security cooperation”. Some have interpreted this as a threat to scale back security cooperation if the trade deal falls short of expectations and the EP stresses that there can be no “trade-off” between the two. The Sun headline of “Your money or your lives” illustrates the difficulty of the task ahead.
9. The EU will look after its own interest Obvious though it may seem, the EU has stressed that it will look after its own interests, and not the UKs. One of the clearest examples of this is in the reference to Gibraltar in the EU leader’s guidelines, making clear they have Spanish not British interests at heart. No preferential access for financial services is another clear example of how the EU feels Brexit should benefit cities like Frankfurt over London. No punishment but Brexit should hurt.
10. Barnier good cop: Verhofstadt bad cop Each of the three EU institutions will play its own role but all are united in their view that the unity of the EU27 is paramount. The EP will play bad cop, with the most uncompromising language coming from EPP leader Manfred Weber. Michel Barnier will play good cop, conciliatory in tone to the British but telling them he can only follow the limited guidelines given to him by the European Council, and warning of the risks of upsetting the EP. Barnier has reassured MEPs of their pivotal role – their resolution is the first formal position of an EU institution and the 2 years will end with their vote. “You will have, honourable members, the last word”.
