Brexit: The State of Play

IIEA31st March 20174min
On Wednesday, 29 March 2017, UK Prime Minister Theresa May notified the European Council of the UK’s intention to withdraw from the EU under Article 50 of the Treaty on European Union.

Introduction

On Wednesday, 29 March 2017, UK Prime Minister Theresa May notified the European Council of the UK’s intention to withdraw from the EU under Article 50 of the Treaty on European Union. In response, the European Council’s draft guidelines for the negotiations, taking into account the UK’s positions, became available to the press within 48 hours.

Taken in isolation, neither document provides significant detail beyond what was already known, or assumed, about the likely negotiating positions of the two parties. Nonetheless, both have notably re-emphasised the Irish and Northern Irish concerns, and both provide a modicum of clarity on some of the broader questions, such as the parties’ preferred sequencing for the negotiations over the UK withdrawal and its future relationship with the EU, and the question of reciprocal guarantees for UK and EU citizens.

 

The Preliminary Negotiating Positions

A side-by-side comparison of some of the key points can be seen below.

Below are some brief observations regarding the above (noting of course that the Council guidelines are in draft form, and still subject to change):

·         There is a great deal of common ground in these two positions, in particular on the Irish issues (dealt with in the next section) but the differences are also significant. In addition, these broad negotiating points belie the complexity of the upcoming talks – each ‘basket’ contains dozens or hundreds of sub-issues, which will have to be resolved in an exceedingly short timeframe.

·         It remains clear that the most contentious point will be the question of the UK’s liabilities, estimated variously at between €40 billion and €60 billion. The UK has not expressed a formal position on this point, possibly due to domestic political sensitivities, but if it is to uphold its contractual commitments there is indeed likely to be a significant one-time settlement associated with Brexit. Meanwhile, the EU position is that this must be agreed early and could be a precondition for opening of talks on the future relationship.

·         The question of the sequencing of the negotiations remains uncertain. The UK would doubtless prefer a swift resolution to the question of the future relationship, and is of the view that the existing regulatory closeness between the EU and UK should facilitate this. The EU is more cautious, and will not entertain a beginning of these talks until sufficient progress has been made on the withdrawal issues – including the UK’s liabilities. The two positions are not irreconcilable, but much will depend on the tone of the early phases of the negotiations.

·         In either case, transitional arrangements will be necessary to serve as a bridge between EU membership and the future relationship, in order to avoid a ‘cliff edge’ of uncertainty for business and citizens alike. The allowance in the draft Council guidelines for a transition phase structured around a prolongation of the EU acquis is noteworthy, and would be the ideal outcome if the UK domestic situation were to allow for it.

 

 

Ireland and Northern Ireland

The documents that have emerged from the UK and European Council this week have many similarities in content, but one commonality in particular stands out: the focus on the island of Ireland. This is something of a testament to the efforts of the Irish Government, which has engaged in extensive outreach efforts to the Member States, including the UK, and the EU institutions since the referendum last June.

The European Council’s draft guidelines, which commit to helping to uphold the Good Friday Agreement, and note the need for creative and flexible solutions to Ireland UK issues are greatly encouraging.

But there remains a great deal of ground to cover between now and the conclusion of the negotiations. Creative solutions will surely be required for issues such as border customs controls and the protection of the trading relationship with the UK. What shape this might take is unknown, but various parties, including the IIEA, have suggested that some flexibility regarding Northern Ireland and the EU’s Customs Union might facilitate a more fluid transition.

The mention of upholding bilateral arrangements between the UK and Ireland can be read as a reference to the Common Travel Area. The CTA is presently protected by Ireland and the UK’s joint opt-out from the Schengen zone, and some new provision for the CTA may yet be required. However, if these draft guidelines hold, it should subsequently be possible for the UK and Ireland to come to bilateral arrangements to preserve the CTA, provided these arrangements are consistent with Ireland’s own obligations under EU law.

It is also noteworthy that the draft guidelines make it clear that the principle of ‘nothing is agreed until everything is agreed’ will apply in these negotiations – and the Irish concerns can only be addressed as part of a successful withdrawal agreement.