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Brexit negotiations are taking place between the United Kingdom and the European Union for the withdrawal of the United Kingdom from the European Union following the United Kingdom European Union membership referendum on 23 June 2016. The negotiating period began on 29 March 2017 when the United Kingdom served the withdrawal notice under Article 50 of the Treaty on European Union. The period for negotiation stated in Article 50 is two years from notification, unless an extension is agreed. In March 2019, Prime Minister of the United Kingdom Theresa May and European Leaders negotiated a two week delay for the Parliament of the United Kingdom to agree upon The Government's Brexit Treaty, moving the date from 29 March 2019 to 12 April 2019.
Negotiations on the withdrawal agreement (which includes a transitional period and an outline of the objectives for a future relationship between the UK and the EU) were concluded in November 2018, with the European Union indicating that no further negotiation or changes before the UK legally leaves will be possible. If the withdrawal agreement is ratified by the UK and other EU state governments and comes into force, future negotiations might also need to address Free Trade Agreement treaties between the European Union and its members (including the UK) for one part and third countries for the other part, and the tariff-rate quota, which might be split or renegotiated.
- 1 Background
- 2 Preparatory work, and intentions
- 3 Negotiation policy
- 4 Negotiation for withdrawal agreement
- 5 Legality of payments by the UK to the EU
- 6 UK citizens elsewhere in the EU and other EU citizens in the UK
- 7 Migration
- 8 European Court of Justice (ECJ)
- 9 Sectoral issues
- 10 British Overseas Territories and Crown dependencies
- 11 The "no deal" scenario
- 12 The deep and special relationship scenario
- 13 Possibility of an extended transitional period
- 14 Future trade deal between the UK and EU
- 15 See also
- 16 References
- 17 External links
|articles on the British exit from the European Union|
2015 United Kingdom general election
Preparatory work, and intentions
According to the European parliament, "For the moment, it appears that the two sides have different views on the sequencing and scope of the negotiations, and notably the cross-over between the withdrawal agreement and the structure of future relations, and this divergence itself may be one of the first major challenges to overcome."
- Theresa May, Prime Minister of the United Kingdom
- Oliver Robbins, Europe advisor to the Prime Minister
- David Davis (until 9 July 2018), Secretary of State for Exiting the European Union.
- Dominic Raab (from 9 July 2018 until 15 November 2018), Secretary of State for Exiting the European Union.
- Sir Tim Barrow, UK Permanent Representative to the EU
The Department for Exiting the European Union is responsible for overseeing the negotiations to leave the EU and for establishing the future relationship between the UK and EU.
The United Kingdom's proposed principles were set out in the Article 50 notification:
- Constructive discussions
- Citizens first
- Comprehensive agreement
- Minimise disruption
- Ireland/Northern Ireland position
- Technical talks on detailed policy
- Work together on European values
The Prime Minister's formal letter of notification was delivered in Brussels on 29 March 2017. It included withdrawal from the European Atomic Energy Community. The letter recognised that consequences for the UK of leaving the EU included loss of influence over the rules that affect the European economy, and UK companies trading within the EU aligning with rules agreed by institutions of which the UK would no longer be part. It proposed agreeing to seven principles for the conduct of the withdrawal negotiation. These are for:
- engaging with one another constructively and respectfully, in a spirit of sincere cooperation.
- aiming to strike an early agreement about the rights of the many EU citizens living in the United Kingdom, and UK citizens living elsewhere in the European Union.
- working towards securing a comprehensive agreement, taking in both economic and security cooperation, and agreeing the terms of our future partnership alongside those of our withdrawal from the EU.
- working together to minimise disruption and giving as much certainty as possible, letting people and businesses in the UK and the EU benefit from implementation periods to adjust in an orderly way to new arrangements.
- in particular, paying attention to the UK's unique relationship with the Republic of Ireland and the importance of the peace process in Northern Ireland.
- beginning technical talks on detailed policy areas as soon as possible, including a Free Trade Agreement covering sectors crucial to our linked economies such as financial services and network industries.
- continuing to work together to advance and protect our shared liberal, democratic values of Europe, to ensure that Europe remains able to lead in the world, projecting its values and defending itself from security threats.
Role of the countries of the United Kingdom
The constitutional lawyer and retired German Supreme Court judge Udo Di Fabio has stated his opinion that separate negotiations with the EU institutions by Scotland or Northern Ireland would constitute a violation of the Lisbon Treaty, according to which the integrity of a member country is explicitly put under protection.
UK general election
The start of negotiations was delayed until after the United Kingdom general election, which took place on 8 June 2017. Antonio Tajani, speaking on 20 April said that the early election should bring stability to the UK, which would have been good for negotiations. In the event, the election led to a hung parliament which has reduced the Prime Minister's room for manoeuvre; in particular in respect of the Irish border question due to her dependency on a confidence and supply agreement with Northern Ireland's Democratic Unionist Party.
- Michel Barnier, Chief negotiator
- Guy Verhofstadt, representative of the European Parliament in the negotiations
- Donald Tusk, President of the European Council
- Antonio Tajani, President of the European Parliament
- Jean-Claude Juncker, President of the European Commission
Following the United Kingdom's notification under Article 50, draft guidelines for the negotiations were sent to EU delegations of the 27 other member states (the EU27). The draft, prepared by the President of the European Council, states that the guidelines define the framework for negotiations under Article 50 and set out the overall positions and principles that the Union will pursue throughout the negotiation. It states that in the negotiations the Union's overall objective will be to preserve its interests, those of its member states, its citizens and its businesses, and that, in the best interest of both sides, the Union will be constructive throughout and strive to find an agreement. The draft sets out two core principles:
- The European Council will continue to base itself on the principles set out in the statement of Heads of State or Government and of the Presidents of the European Council and the European Commission on 29 June 2016. It reiterates its wish to have the United Kingdom as a close partner in the future. It further reiterates that any agreement with the United Kingdom will have to be based on a balance of rights and obligations, and ensure a level-playing field. Preserving the integrity of the European Single Market excludes participation based on a sector-by-sector approach. A non-member of the Union, that does not live up to the same obligations as a member, cannot have the same rights and enjoy the same benefits as a member. In this context, the European Council welcomes the recognition by the British Government that the four freedoms of the Single Market are indivisible and that there can be no "cherry picking".
- Negotiations under Article 50 TEU (Treaty on European Union) will be conducted as a single package. In accordance with the principle that nothing is agreed until everything is agreed, individual items cannot be settled separately. The Union will approach the negotiations with unified positions, and will engage with the United Kingdom exclusively through the channels set out in these guidelines and in the negotiating directives. So as not to undercut the position of the Union, there will be no separate negotiations between individual member states and the United Kingdom on matters pertaining to the withdrawal of the United Kingdom from the Union."
According to the European Parliament, the withdrawal agreement and any possible transitional arrangement(s) should enter into force "well before the elections to the European Parliament of May 2019", and the negotiations should focus on:
- The legal status of European Union citizens living or having lived in the United Kingdom and of United Kingdom citizens living or having lived in other member states, as well as other provisions concerning their rights;
- The settlement of financial obligations between the United Kingdom and the European Union;
- The European Union's external border;
- The clarification of the status of the United Kingdom's international commitments taken as a Member of the European Union, given that the European Union of 27 member states will be the legal successor of the European Union of 28 member states;
- Legal certainty for legal entities, including companies;
- The designation of the Court of Justice of the European Union as the competent authority for the interpretation and enforcement of the withdrawal agreement.
On 18 April 2017, a spokesman for Donald Tusk said "We expect to have the Brexit guidelines adopted by the European Council on 29 April and, following that, the Brexit negotiating directives ready on 22 May". On 29 April, the EU27 unanimously endorsed the draft guidelines with no debate.
In a speech to a plenary session of the European Committee of the Regions in Brussels on 22 March 2017, Barnier, as EU Chief Negotiator for the Preparation and Conduct of the Negotiations, said that the EU wanted to succeed by reaching a deal with the British, not against them.
On 22 May the European Commission Council, following the approval of negotiating directives which had been adopted by strong qualified majority (72% of the 27 member states, i.e. 20 member states representing 65% of the population of the EU27), authorised the opening of Article 50 discussions with the Commission appointed as the negotiator. It further confirmed that all agendas, EU position papers, Non-papers and EU text proposals will be released to the public and published on line.
Intergovernmental organisations also involved in Brexit uncertainty considerations include the World Trade Organization (WTO) and the International Air Transport Association (IATA). IATA expects an agreement to avoid disruption.
EU27 guidelines include:
- Agreement on the so-called "divorce bill";
- Agreement on rights of EU citizens living in the UK;
- Agreement on the border between Northern Ireland and the Republic
within the withdrawal phase.
The second phase, covering the post-Brexit relationship between the EU27 and the UK, was to begin "as soon as the European Council decides that sufficient progress has been made in the first phase towards reaching a satisfactory agreement on the arrangements for an orderly withdrawal". The earliest opportunity for this decision was 19 October 2017, at a summit of EU leaders. although at that meeting it was agreed to start negotiations during the December meeting.
"The United Kingdom's exit from and new partnership with the European Union" (PDF). UK Government. February 2017. p. 9.
Some effects of the UK withdrawal could emerge before the UK and the EU27 conclude the Article 50 negotiation, as a result of policies existing when the negotiation begins, or some change of policy later. At the outset policy provisions binding on the EU include principles, aspirations and objectives set out in the TEU (Treaty on European Union) Preamble and Articles, of which
- Article 3 mentions the promotion of "scientific and technological advance" in a context governed by "The Union's aim is to promote peace, its values and the well-being of its peoples", the Union's internal market, "work for the sustainable development of Europe based on balanced economic growth and price stability, a highly competitive social market economy, aiming at full employment and social progress", and the requirement that "The Union shall pursue its objectives by appropriate means commensurate with the competences which are conferred upon it in the Treaties",
- Article 4 mentions "competences not conferred upon the Union in the Treaties remain with the Member States".
Policies mentioned in the Preamble include:
- Achieve the strengthening and convergence of member states' economies and establish an economic and monetary union including a single and stable currency,
- Promote economic and social progress for their peoples, taking into account the principle of sustainable development and within the context of the accomplishment of the internal market and of reinforced cohesion and environmental protection, and implement policies ensuring that advances in economic integration are accompanied by parallel progress in other fields,
- Establish a citizenship common to nationals of their countries,
- Implement a common foreign and security policy including the progressive framing of a common defence policy, thereby reinforcing the European identity and its independence in order to promote peace, security and progress in Europe and in the world,
- Facilitate the free movement of persons, while ensuring the safety and security of their peoples, by establishing an area of freedom, security and justice.
- Continue the process of creating an ever-closer union among the peoples of Europe, in which decisions are taken as closely as possible to the citizen in accordance with the principle of subsidiarity.
UK policy was stated in a white paper published in February 2017: The United Kingdom's exit from and new partnership with the European Union. In the white paper, UK negotiating policy was set out as twelve guiding principles:
- Providing certainty and clarity, including a "Great Repeal Bill" to remove the European Communities Act 1972 from the statute book and convert existing EU law into domestic law.
- Taking control of the UK statute book and ending the jurisdiction of the Court of Justice of the European Union in the UK.
- Strengthening the Union of all parts of the Kingdom, and remaining fully committed to the Belfast Agreement and its successors.
- Working to deliver a practical solution that allows for the maintenance of the Common Travel Area whilst protecting the integrity of the UK immigration system, and which protects the strong ties with Ireland.
- Controlling the number of EU nationals coming to the UK.
- Securing the status of EU citizens who are already living in the UK, and that of UK nationals in other member states.
- Protecting and enhancing existing workers' rights.
- Forging a new partnership with the EU, including a wide reaching free trade agreement, and seeking a mutually beneficial new customs agreement with the EU.
- Forging free trade relationships across the world.
- Remaining at the vanguard of science and innovation and seeking continued close collaboration with the UK's European partners.
- Continuing to work with the EU to preserve European security, to fight terrorism, and to uphold justice across Europe.
- Seeking a phased process of implementation, in which both the UK and the EU institutions and the remaining EU member states prepare for the new arrangements.
On 28 June 2016, five days after the referendum, Chancellor of Germany Angela Merkel announced to the German parliament the forthcoming EU negotiation position: the UK could only remain in the European Single Market (ESM) if the UK accepted EU migrants. There would be no cherry picking of the ESM's four conditions (free movement of goods, capital, services and labour). While she expected the UK to remain an important NATO partner, the EU's priority was unity and self-preservation. She warned the UK not to delude itself. The next day, Tusk confirmed that the UK would not be allowed access to the ESM unless they accepted its four freedoms of movement for goods, capital, services, and people.
In contrast, at her October 2016 party conference, Prime Minister Theresa May emphasised that ending the jurisdiction of EU law and free movement from Europe were priorities. She wished "to give British companies the maximum freedom to trade with and operate in the Single Market – and let European businesses do the same here", but not at the expense of losing sovereignty.
In November 2016, May proposed that Britain and the other EU countries mutually guarantee the residency rights of the 3.3 million EU immigrants in Britain and those of the 1.2 million British citizens living on the Continent, in order to exclude their fates being bargained during Brexit negotiations. Despite initial approval from a majority of EU states, May's proposal was blocked by European Council President Tusk and German Chancellor Merkel.
In January 2017, the Prime Minister presented 12 negotiating objectives and confirmed that the UK government would not seek permanent single market membership. The European Parliament's lead negotiator Guy Verhofstadt responded that there could be no "cherry picking" by the UK in the talks.
The statutory period for negotiation began on 29 March 2017, when the letter notifying withdrawal, signed by the British Prime Minister, was handed to the president of the European Council. The letter called for a "deep and special relationship" between the UK and the EU, and warned that failure to reach an agreement would result in EU-UK trade under World Trade Organisation terms, and a weakening of the UK's cooperation in the fight against crime and terrorism. The letter suggested prioritising an early deal on the rights of EU citizens in the UK and vice versa. In the letter, the Prime Minister reasoned that, as the EU leaders did not wish "cherry picking" of the ESM, the UK would not seek to remain within the ESM. Instead, the UK would seek a free trade agreement with the EU. In response, Merkel insisted that the EU would not discuss future cooperation without first settling the divorce, Verhofstadt referred to the letter as "blackmail" with regard to the point on security and terrorism, and EU Commission president Jean-Claude Juncker said the UK's decision to quit the block was a "choice they will regret one day".
A meeting at 10 Downing Street took place on 6 April 2017 between Theresa May and Donald Tusk to discuss "the way ahead on Brexit". Another meeting took place in London on 20 April 2017, this time between Theresa May and Antonio Tajani to discuss the rights of EU citizens. After 20 April meeting, Antonio Tajani said that the UK and EU27 timetables fitted well together, with a two-year exit deal negotiation followed by a three-year transition phase. A 10 Downing Street meeting between Theresa May, Michel Barnier and Jean-Claude Juncker took place on 26 April to discuss the withdrawal process. May reiterated the UK's aim for a "deep and special partnership" after Brexit.
On 29 April 2017, immediately after the first round of French presidential elections, the EU27 heads of state unanimously accepted, without discussion, negotiating guidelines prepared by the President of the European Council. The guidelines take the view that Article 50 permits a two-phased negotiation, whereby the UK first needs to agree to a financial commitment and to lifelong benefits for EU citizens in Britain, before the EU27 will entertain negotiations on a future relationship. In the requested first phase of the withdrawal negotiation, the EU27 negotiators demand the UK pay a "divorce bill", initially estimated as amounting up to £52bn and then, after additional financial demands from Germany, France, and Poland, amounting to £92bn.
Nevertheless, a 4 March 2017 report of the European Union Committee of the House of Lords, states that if there is no post-Brexit deal at the end of the two-year negotiating period, the UK could withdraw without payment. Similarly, the Prime Minister insisted to EU Commission President Juncker that talks about the future UK-EU relationship should start early and that Britain did not owe any money to the EU under the current treaties.
At 29 April summit, a meeting took place between Michel Barnier and both houses of the Irish parliament on 11 May, where Barnier assured members of Dáil Éireann and Seanad Éireann that Europe would "work with you to avoid a hard border". Barnier went on to say that "the Irish border issue would be one of his three priorities in the negotiations", and that "there is always an answer".
In May 2017, unflattering details of a four-way meeting between Prime Minister Theresa May, Brexit Minister David Davis, EU Commission President Juncker and his chief-of-staff Martin Selmayr were leaked to the German newspaper Frankfurter Allgemeine Sonntagszeitung, presumably by Martin Selmayr. According to the leaked description, Juncker claimed that Theresa May was "living in another galaxy" when suggesting that British and EU migrant rights could be rapidly negotiated and agreed in the course of June 2017. German Chancellor Angela Merkel concurred the next day by stating that there were "illusions" on the British side. A few days later, Juncker disclaimed responsibility and called the leak a mistake, Der Spiegel magazine reported that Angela Merkel was annoyed with Juncker for the leak, while European Council President Tusk admonished participants to use discretion during the negotiations. The background for German nervousness allegedly is the possibility that Britain may veto EU budget increases, which for example in the immediate term amount to 4 billion euros. A continued British veto would have far-reaching consequences and "will hurt us" according to German MEP Jens Geier.
On 22 May 2017, the Council of the EU authorised its negotiators to start the Brexit talks and it adopted its negotiating directives. The first day of talks took place on 19 June, where Davis and Barnier agreed to prioritise the question of residency rights, while Davis conceded that a discussion of the Northern Irish border would have to await future trade agreements.
Negotiation for withdrawal agreement
Legality of payments by the UK to the EU
Two different but incompatible legal approaches would be considered for the Brexit. The EU approach is top down while the British approach is bottom-up. This difference of approach raises a serious problem of confidence. From Michel Barnier's point of view, what was decided by 28 member states, has to be paid by 28 member states till the end.
The issue of payments by the UK to the EU as part of the exit agreement is subject to much conjecture and has been divided into two broad questions. Firstly, whether a leaving state is legally obligated to contribute to the EU budget beyond its membership period or compensate for any financial losses that EU may suffer on account of withdrawal, given that Article 50 does not concern itself with financial ramifications of a withdrawal; and secondly – if the United Kingdom is legally obligated to pay – what should be the due amount.
The leaders of France and Germany have both stated that the UK would need to agree to terms regarding the departure before discussing future relationships. This has been reinforced by EU27 guidelines issued to the remaining 27 countries. The UK has signalled that it may consider paying the EU to attain preferential access to the economic Single Market and may offer to pay liabilities, even if not legally obligated, on a moral and co-operative basis to secure a preferential working relationship with the EU.
The highest reported claim by the EU is around €60 billion (£50 billion[when?]). In March 2017 the Bruegel think tank estimated that the UK would need to pay at least €25.4 billion, but the method of calculation is debatable and their calculations using seven different methods produced estimates between €30 and €45 billion. However this £50 billion bill includes the United Kingdom's annual EU contribution (approximately £13 billion annually) for the two years from 2020 and 2021 as agreed in the Multiannual Financial Framework (MFF). The United Kingdom, in accordance with Article 50 and unless otherwise extended, will cease to be a member of the EU from 29 March 2019 and the MFF does have a provision for "unforeseen circumstances".
EU27 is expected to ask the UK to pay its liabilities in euros, including the relocation costs associated with the two EU bodies currently based in London.
Speaking on 20 April, Antonio Tajani said that it was too early to quantify the amount the UK would need to pay and that it was not a bill to leave the EU, it was money needed for farmers and small businesses.
House of Lords report
HL Paper 125, 4 March 2017, European Union Committee 15th sessional report, Brexit and the EU budget , Chapter 3, Potential demands.
A March 2017 House of Lords report acknowledges that the EU may claim for (1) part of the current budget (which runs from 2014 to 2020) post March 2019, because it was approved by the UK (2) part of the EU future commitments which amount to €200 billion and (3) a contribution if the UK is to continue with access to some EU programmes. The report concluded that the UK had no legal obligation to make "exit" payments to the EU if there was no post Brexit deal.
Discussing financial and legal complexities involved in negotiating withdrawal, including settlement of outstanding financial liabilities and division of assets, the report mentions (paragraph 15) that the EU budget is funded by revenue drawn from various sources, governed by the EU's Own Resources Decision (ORD), which was made part of UK law by the European Union (Finance) Act 2015. The revenue includes contributions from import duties and VAT collected by member states. The report also mentions the EU Multiannual Financial Framework for controlling the annual expenditure.
Assets and liabilities
The EU has considerable assets including buildings, equipment and financial instruments, and there is a potential claim by the UK for a portion of these assets. Boris Johnson, the UK's Foreign Secretary, commenting on the Brexit "divorce bill" in May 2017 stated that the valuable EU assets the UK has paid for over the years should be properly valued, and that there were good arguments for including them in the negotiations.
The Bank of England (BoE) has invested in the European Central Bank (ECB) amounting to 13.6743%, representing paid up capital of €55.5 billion. The BoE does not participate in any profits (or losses) of the ECB. The BoE has also made loans to the ECB. The ECB set up the European Financial Stability Facility in 2010, which has a borrowing facility of €440bn and in addition used a guarantee from the European Commission and the Budget of the European Union as collateral to borrow a further €60bn. The UK withdrawal will affect the ECB.
The EU has a pension liability of €64 billion.
The EU drafted a 10-page position document regarding the single bill. This position does not define the final cost of the divorce.
UK citizens elsewhere in the EU and other EU citizens in the UK
Concerns have been raised by UK citizens who live in other EU countries, and by citizens from those countries who live in the UK. In May 2017, Michel Barnier stated: "Currently around 3.2 million EU citizens work and live in the UK, and 1.2 million British citizens work and live in the EU."
Issues include rights of movement, citizenship, abode, education, social support and medical treatment, and the payment of pensions; and the extent to which these rights apply to family members. Considerations for UK citizens resident in an EU27 country include their rights to work or live in a different EU27 country. Beyond the 27 EU countries, workers have certain freedom of movement rights to/from Norway, Iceland, Liechtenstein and Switzerland.
"Associate citizenship", suggested by EU27 negotiator Guy Verhofstadt, would allow UK nationals to volunteer individually for EU citizenship, enabling them to continue to work and live on the continent. Jean-Claude Juncker, president of the European Commission, is not opposed to the idea.
Antonio Tajani spoke after a meeting with Theresa May on 20 April 2017, saying "the issue of reciprocal EU citizen rights should be negotiated 'immediately' with a view to getting an agreement by the end of the year." The European Commission published a position paper on "Essential Principles on Citizens' Rights" on 12 June 2017, proposing that current and future family members of European nationals in the UK would keep their rights to settle in their residence country at any time after Britain's withdrawal. Speaking in advance of publication of the paper, David Davis described the demands as "ridiculously high". The UK government published their policy paper "Safeguarding the position of EU citizens in the UK and UK nationals in the EU" on 26 June. The policy paper proposed that EU citizens living in Britain will be required to apply for inclusion on a "settled status" register if they wish to remain in the country after Brexit.
By the end of September 2017 progress had been made on several of the 60 points which became green, while 13 out of the 60 points remain red. Three points (points #14, #15, and #16 related to monitoring and CJEU) have to be addressed at governance level. Few points remain to be clarified (that is yellow). On this basis European parliament will have to assess if sufficient progress has been made.
As of October 2018, UK residents in the EU have not yet had their fates decided on: On 16 October 2018, just before departing for the EU27–UK summit in Brussels, German Chancellor Angela Merkel, speaking to the German parliament, asked "How do we treat the 100,000 British citizens in Germany on the day after Brexit if there is no deal?", without supplying an answer.
The general rule for losing EU citizenship is that European citizenship is lost if member state nationality is lost, but the automatic loss of EU citizenship as a result of a member state withdrawing from the EU is the subject of debate. The situation of a person acquiring EU citizenship when the UK joined the EU in 1973 compared to a person born in the UK after 1973 and was therefore born into EU citizenship, may differ. It may be necessary for the ECJ to rule on these issues.
In a 2017 decision, the ECJ ruled that the parent(s) of a child with EU nationality are entitled to rights of residence, even if both are non-EU citizens. This may have consequential effects for UK residents who have young children and wish to live in the EU27 territory post Brexit, but this remains to be tested.
Immigration and mobility
Until the UK effectively withdraws from the EU in 2019 or at another agreed date, the current system of free movement of labour between the EU27 and the UK remains in place.
The report of the House of Commons Exiting the European Union Committee on The Government's negotiating objectives, published in April 2017, proposed (paragraphs 20 and 123) that the future system for EU migration should meet the needs of different sectors of the UK economy, including those employing scientists, bankers, vets, care workers, health service professionals and seasonal agriculture workers.
Theresa May, answering press questions on 5 April 2017, commented that the free movement of labour would not end in March 2019; an implementation period of possibly five years would give business and government time to adjust.
The UK currently charges an annual levy of up to £1,000 for each non-EU citizen employed within the UK. Proposals are under consideration to increase this 'immigration skills charge' to £2,000 p.a. and to implement a similar levy on EU citizens employed in the UK.
According to an unconfirmed newspaper report, a leaked Home Office paper has a proposal that the UK will end the free movement of labour of low-skilled workers immediately after Brexit, focusing on highly skilled EU workers instead. The proposal would limit lower-skilled EU migrants' residency permits to a maximum of two years, and the implementation of a new immigration system ending the right to settle in Britain for most European migrants while placing tough restrictions on their rights to bring over family members. Those in "high-skilled occupations" could be given permission to work in the UK for a period of three to five years.
Immigration is one topic requiring partnership between EU and UK, as according to Theresa May, "Mass migration and terrorism are but two examples of the challenges to our shared European interests and values that we can only solve in partnership".
In the context of Brexit, the question of migration might contain two subtopics: on one hand migrations between EU including UK and third countries which might be dealt with at a local level; and on the other hand migration between EU and UK once UK has become a third country which was discussed for the withdrawal agreement.
European Court of Justice (ECJ)
The concept of European Court of Justice competence creates complications. Some pro-Brexiteers believe the Court of Justice might be completely removed from the UK landscape. Various other opinions consider that the Court of Justice or some equivalent should be able to rule on remaining issues after Brexit (for instance between a European and a British stakeholder), at least in respect of the TEU (Treaty on European Union), European Union citizens, or access to the European Single Market.
After the 2017 negotiations, in February 2018 the European Commission Draft Withdrawal Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community consider for instance that:
- "The Court of Justice of the European Union shall continue to have jurisdiction for any proceedings brought before it by the United Kingdom or against the United Kingdom before the end of the transition period. That jurisdiction shall extend to all stages of proceedings, including appeal proceedings before the Court of Justice and proceedings before the General Court after a case has been referred back to it."
- "The Court of Justice of the European Union shall continue to have jurisdiction to give preliminary rulings on requests from courts and tribunals of the United Kingdom referred to it before the end of the transition period."
Documents setting out how the Brexit will affect parts of the British economy were set up for the government, "the most comprehensive picture of our economy on this issue" containing "excruciating detail" according to Brexit Secretary David Davis. The ministers were reluctant to publish them but in November 2017, a vote in Parliament allowed lawmakers to read them under controlled conditions to avoid news leaks. They were released online on 21 December 2017 but lawmakers were unimpressed: "Most of this could be found on Wikipedia or with a quick Google search", said Labour's David Lammy, "these documents [were made] in a couple of weeks. They look like copy and paste essay crises."
Without a trade agreement in place, UK trade with the EU would be governed by the World Trade Organisation's Bali Package. This would lead to common tariffs and non-tariff barriers being imposed by the EU27 upon the UK's access to the European Single Market, because the Market is also a customs union. However, the UK would then have an opportunity to control immigration as well as develop its own trade regulations.
The UK is not permitted to hold trade talks until after Brexit is concluded, however the UK can do preparatory work with other countries regarding the UK's future trading relationships; this is not to the liking of some EU27 countries. Before Britain leaves the EU, they may put trade agreements in place with non-EU countries.
Only the EU can act in areas where it has exclusive competence, such as the customs union and common commercial policy. In those areas member states may not act independently. The UK can still negotiate its own bilateral investment protection treaties subject to Commission authorisation.
Strategic controls on military goods are primarily a member state competence. As a result, member states themselves negotiate multilateral or bilateral agreements on the strategic aspects of trade in defense goods.
The EU27 wish to exclude the UK from sitting in on trade negotiations held by the EU during the period ending March 2019, seeing the UK as a competitor. Theresa May rejected this idea, saying "While we're members of the European Union we would expect our obligations but also our rights to be honoured in full."
The Geographical indications and traditional specialties in the European Union, known as protected designation of origin (PDO) is applied internationally via bilateral agreements. Without an agreement with the EU27, UK producers of products such as the Cornish pasty, Scotch whisky and Jersey Royal potatoes are at risk of being copied.
The EU27 have stated that UK fish suppliers could lose tariff-free access to the continent unless EU countries have continued access to UK waters after Brexit.
The Irish agricultural sector is heavily dependent on UK markets for its exports.
Investment banks may want to have new or expanded offices up and running inside the EU27 bloc before the UK's departure in March 2019, with Frankfurt and Dublin the possible favourites. Ireland's investment arm, IDA Ireland, witnessed an increase in inquiries from London-based financial groups considering to open up on an office in Dublin by the end of 2016, mostly coming from North American companies. In May 2017, JP Morgan became the first major bank to officially choose Dublin to transfer some of its personnel and operations from its London office.
Asset management companies
The situation may be different when it comes to the fund management industry, as British asset owners, notably UK pension funds, often constitute an incommensurate share of total turnover for German, French, Dutch and other Continental European asset managers.
This imbalance could potentially give Britain some negotiating leverage e.g. power of retorsion in case the EU attempts to impose an abrupt cancellation of the mutually-binding obligations and advantages pertaining to the Markets in Financial Instruments Directive 2004 ("fund passporting"). Research conducted by the World Pensions Council (WPC) shows that
"Assets owned by UK pension funds are more than 11 times bigger than those of all German and French pension funds put together […] If need be, at the first hint of threat to the City of London, Her Majesty's Government should be in a position to respond very forcefully."
The London Stock Exchange issued a warning over a proposal by the EU to allow euro-denominated transactions to be cleared only within the EU eurozone, claiming it would increase business costs by €100bn over 5 years and isolate the euro capital market.
The letter of 29 March 2017 giving the UK's notice of intention to withdraw from the EU stated "In security terms a failure to reach agreement would mean our cooperation in the fight against crime and terrorism would be weakened." This was seen by some as a threat. On 31 March, Boris Johnson, the UK Foreign Secretary, confirmed that the "UK commitment to EU security is unconditional".
The call by the United States to other members of NATO to increase their defence expenditure to the 2% of GDP level coincides in timing with Brexit. The UK is the second largest contributor to NATO defence, one of only five to meet the 2% level and one of only two EU members who have nuclear weapons. The possibility of a new Franco-German partnership to fill the vacuum left by Britain has been raised as a possibility and post Brexit an EU military headquarters, previously vetoed by the UK, may be created. The UK is fully committed to NATO.
The UK government's negotiating policy when the negotiating period started on 29 March 2017 included remaining at the vanguard of science and innovation, and seeking continued close collaboration with the UK's European partners.
British Overseas Territories and Crown dependencies
In the Great Repeal Bill white paper published on 30 March 2017, the UK government stated "The Government is committed to engaging with the Crown Dependencies, Gibraltar and the other Overseas Territories as we leave the EU.":ch.5
Robin Walker MP, a junior minister at the Department for Exiting the European Union, is responsible for managing the relationship between the overseas territories and Parliament in their discussion with the EU27.
Brexit raised issues around sovereignty for Gibraltar, the only British Overseas Territory in the EU. Gibraltarians voted to stay in the European Union by 96%. Spain claims sovereignty over Gibraltar; however, in 2002 Gibraltarians voted 99% to keep British sovereignty.
The EU27 draft guidelines allow Spain a veto over any effect that the Brexit agreement has as regards Gibraltar. The guidelines state: "After the United Kingdom leaves the Union, no agreement between the EU and the United Kingdom may apply to the territory of Gibraltar without the agreement between the Kingdom of Spain and the United Kingdom."
The Crown dependencies are not part of either the UK or the EU. They have a unique constitutional relationship both with the UK and, as encapsulated in Protocol 3 to the UK's Treaty of Accession, with the EU. They have no voting rights in EU or UK referenda or elections and no international voice, the UK government having the responsibility to act for the dependencies on foreign matters. Oliver Heald QC MP is responsible for managing the relationship between the Islands and Parliament in their discussion with the EU27.
The "no deal" scenario
The European Union (Withdrawal) Act 2018 which became law in June 2018 allows for various outcomes including no negotiated settlement. It authorises the government to bring into force, by order made under section 25, the provisions that fix "exit day" and the repeal of the European Communities Act 1972, but exit day must be the same day and time as when the EU Treaties are to cease to apply to the UK.
If no withdrawal agreement is in place on 30 March 2019 at midnight European central time (23h on 29 March, British time) —the end of the two-year period under Article 50 — the EU Treaties will cease to apply to the UK. In such a "no deal" scenario, there will be no transition period and EU law (in particular, the Single Market and Customs Union) will cease to apply to the UK/EU relationship.
On 28 February 2019, Parliament approved by 502 votes Labour former minister Yvette Cooper's bid to pin Theresa May to commitments including allowing MPs to delay Brexit if her deal is rejected again.
"No deal": possibility and likelihood
In June 2017, a Parliamentary inquiry concluded that "the possibility of 'no deal' is real enough to justify planning for it. The Government has produced no evidence, either to this inquiry or in its White Paper, to indicate that it is giving the possibility of 'no deal' the level of consideration that it deserves, or is contemplating any serious contingency planning. This is all the more urgent if the Government is serious in its assertion that it will walk away from a 'bad' deal."
The UK government has consistently said that it will aim for the "best possible deal" but that "no deal is better than a bad deal". This position was restated in the Conservative Party manifesto for the 2017 general election. In July 2017, Michel Barnier said that "a fair deal is better than no deal", because "In the case of Brexit, 'no deal' is a return to a distant past".
French Prime Minister Édouard Philippe said in July 2018: "The more we think the worst should be avoided, the more we think it's not impossible it could eventually happen". That same month, the British (UK) white paper began both sides wondering if the no deal scenario is more likely rather than possible.
"No deal": adverse consequences
In June 2017, a "no-deal" Brexit was likened by General Council of the Bar, a lawyers' interest body, to "falling over the cliff-edge". According to the IMF, the no deal Brexit could create economic pain across Europe, with no winner. The most affected country would be UK, according to the IMF: the IMF consider that UK and Ireland could lose 4% of their GDP, while close countries such as the Netherlands, Denmark and Belgium could lose 1% of GDP.
In September 2017, the BBC reported that there was little evidence of UK government preparations for a "No Deal" scenario: "our government is not behaving like it is really preparing for No Deal – and the EU27 can surely see it."
In her 4 October 2017 speech at the Conservative Party Conference, UK Prime Minister Theresa May repeated her position that "no deal is better than a bad deal" and emphasized that "It is our responsibility as a government to prepare for every eventuality. And let me reassure everyone in this hall – that is exactly what we are doing." In her 9 October 2017 statement in the House of Commons, May said that Britain could operate as an "independent trading nation" after Brexit if no trade deal is reached with the EU.
The no deal scenario has been described by Nick Timothy as leaving the EU [with Britain] in "chaos" or not leaving the bloc at all, which he says would be a "national humiliation" on a par with the Suez Crisis.
Sir Martin Donnelly feels that no deal would be dangerous: while no deal makes trade only dependent on World Trade Organisation terms which do not include services—80% of the British economy—he believes that no deal "could mean an awful lot of legal uncertainty and that's very bad for businesses, for jobs, for investment in Britain".
In the Scottish Centre on European Relations paper "Brexit Uncertainty, Scotland and the UK in 2018", a conclusion is reached that the delivery of a no deal Brexit could raise support for a second independence referendum in Scotland.
|* Source, Olivier Wayman report, La Tribune pounds have been converted to euros, on 12 March 2018|
Aviation would be particularly affected if the European Common Aviation Area and EU–US Open Skies Agreement no longer applied to the UK after a "no-deal" Brexit, since World Trade Organisation rules do not cover that sector, implying that the following day a British plane could not land at an EU airport. UK government said in September 2018 that in case of no deal on aviation, UK would allow EU airlines to use British airports anyway, and expect EU countries to reciprocate.
The no deal scenario could create a disruption in transport between the United Kingdom and the European Union: for instance, with delays generated by the customs, sanitary and phytosanitary controls for road transport and ports.
The National Police Coordination Centre has warned that no deal would result in civil disorder at the UK's ports and borders, a "real possibility" of calling upon military assistance, a rise in crime (particularly theft and robbery) and widespread illness and disease following food and drug shortages (including NHS supplies). Police officers who are EU nationals may potentially be unable to hold a warrant card (which would leave the Metropolitan Police 750 officers short), and the ability for the police to deal with criminality from non-UK residents would be undermined as the UK "falls out of the various treaties such as the European arrest warrant, Schengen information system and membership of Europol". Sara Thornton of the NPCC said, "Existing EU tools allow us to respond quickly and intelligently to crime and terrorism in the UK and the EU – they make us better at protecting the public. The alternatives we are planning to use, where they exist, are without exception slower, more bureaucratic and ultimately less effective." Finding out if a suspect has criminal convictions will take much longer.
Contingency and preparedness
An EU document on Preparedness outlines the plans related to various issues (with or without withdrawal agreement), and another on Contingency describes measures to answer the consequences of a No deal.
To answer the consequences of a no deal Brexit, some players are involved in contingency planning and preparedness (but not panic).
To limit the consequences of a no deal scenario, some companies, such as Airbus and Rolls-Royce, are stockpiling spares.
In the Netherlands, around 1,000 customs officials are being recruited to manage the border with UK after the no deal Brexit.
In the UK the need for new customs agents is estimated at 5,000.
In Ireland, the need for new customs agents is estimated at 1,000.
The UK is considering converting some part of the M20 motorway into a parking lot for trucks, to manage a possible 17-mile (around 25-kilometer) line of traffic, as planned by the Dover port authority.
The EU Commission has published 68 notices to help various players to be aware of the Brexit consequences. The Commission is also considering notifying its international partners for international agreements that involved the UK as a member state, in case of no deal.
Over the course of August, September and October 2018, the UK Government published a series of technical notices and further guidance on preparing for a "no deal" scenario. The UK Treasury department has used the code name "Operation Yellowhammer" for no-deal contingency planning. On 18 December 2018, the UK cabinet agreed to proceed with a further phase of "no deal" planning.
The deep and special relationship scenario
Possibility of an extended transitional period
Most of the major UK political parties support the idea of a two-year period for applying temporary trade arrangements after the end of the membership of the EU single market, customs union and other EU agreements and before a stand-alone UK.
According to Michel Barnier, the EU might have to define the conditions for a transitional period, if the UK requests one. Such a transition period would begin on 30 March 2019 (European time, as Brexit occurs at midnight the day before).
UK government's legal advice
Following an unprecedented vote on 4 December 2018, MPs ruled that the UK government was in contempt of parliament for refusing to provide to Parliament, the full legal advice it had been given on the effect of its proposed terms for withdrawal. The key point within the advice covered the legal effect of the "backstop" agreement governing Northern Ireland, the Republic of Ireland, and the rest of the UK, in regard to the customs border between the EU and UK, and its implications for the Good Friday agreement which had led to the end of the Troubles in Northern Ireland, and specifically, whether the UK would be certain of being able to leave the EU in a practical sense, under the draft proposals.
The following day, the advice was published. The question asked was, "What is the legal effect of the UK agreeing to the Protocol to the Withdrawal Agreement on Ireland and Northern Ireland in particular its effect in conjunction with Articles 5 and 184 of the main Withdrawal Agreement?" The advice given was that:
- The Protocol is binding on the UK and EU [para 3], and anticipates a final future resolution of the border and customs issues being reached [para 5,12,13]. But "the Protocol is intended to subsist even when negotiations have clearly broken down" [para 16] and "In conclusion, the current drafting of the Protocol ... does not provide for a mechanism that is likely to enable the UK lawfully to exit the UK wide customs union without a subsequent agreement. This remains the case even if parties are still negotiating many years later, and even if the parties believe that talks have clearly broken down and there is no prospect of a future relationship agreement." [para 30]
Future trade deal between the UK and EU
While negotiations between the United Kingdom and the European Union were in progress, Barnier, as the EU's chief negotiator, speaking in Rome to Committees of the Italian Parliament on 21 September 2017, stated that a future trade deal with the United Kingdom is the trade deal which will be negotiated after sufficient progress has been made on the withdrawal deal. Barnier commented that the EU will want to negotiate a future trade deal with the United Kingdom, because trade with the United Kingdom will continue. At the same time Barnier said "the future trade deal with the United Kingdom will be particular, as it will be less about building convergence, and more about controlling future divergence. This is key to establishing fair competition."
The United Kingdom's prime minister, in a speech at the Santa Maria Novella church in Florence on 22 September 2017, proposed an economic partnership between the UK and the EU which respects both the freedoms and principles of the EU, and the wishes of the British people. At the same time she re-affirmed that after the UK leaves the EU a period of implementation would be in their mutual interest, to be agreed under Article 50 for a strictly time-limited period.
The European parliament voted a Brexit resolution (the European Parliament resolution of 14 March 2018 on the framework of the future EU-UK relationship (2018/2573(RSP)) with 544 MEP against 110 (with 51 abstentions). The 14 page document states that an association agreement between EU and UK could be an adequate framework for the future. This resolution proposes that the agreement address four domains: trade, interior security, foreign and defense policy collaboration, and thematic cooperation (for instance for research and innovation). The resolution also urges the UK to present a clear position on all outstanding issues pertaining to its orderly withdrawal.
On 13 November 2018, the UK and EU reached an agreement on the wording of the trade deal. On 14 November 2018, May's Cabinet approved the draft agreement. Shortly after it was approved by the British Cabinet, the European Commission published the 585 pages draft withdrawal agreement.
In December 2018, Secretary for Work and Pensions Amber Rudd suggested that a Norway-plus model – the membership of the European Economic Area (EEA) – could be an alternative if Theresa May's Brexit deal is rejected.
- The European Atomic Energy Community (Euratom) – legally distinct from the EU but having the same membership, from which the United Kingdom is also withdrawing
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In order to succeed we need discretion, moderation and a maximum of goodwill.
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