As Brexit Talks Continue, Debate on European Integration Future Heats Up

28 September 2017

UK Prime Minister Theresa May gave her highly-anticipated speech on her government’s vision for post-Brexit relations with the European Union on Friday, suggesting that the two sides determine a new type of economic partnership once the UK leaves the bloc and requesting a “transition period” for the first couple of years.

The speech, delivered on Friday 22 September in the Italian city of Florence, came just days before the fourth round of formal Brexit negotiations. That round kicked off on Monday 25 September and remains underway.

It also followed on European Commission President Jean-Claude Juncker’s “State of the European Union” speech from earlier this month, which outlined his vision and proposals for the bloc going forward, while making only a few overt references to Brexit itself. (See Bridges Weekly, 14 September 2017)

“There is a vibrant debate going on about the shape of the EU’s institutions and the direction of the Union in the years ahead. We don’t want to stand in the way of that. Indeed, we want to be your strongest friend and partner as the EU, and the UK, thrive side by side,” May said, referring to Juncker’s speech.

May was not the only European leader in recent days to issue suggestions and predictions for where the bloc – and the UK – could potentially go from here. Her comments come just one month ahead of a European Council summit that has been touted as a potential date for concluding the first phase of the Brexit talks and advancing to negotiations on the future UK-EU relationship, so long as sufficient progress has been made.

On Tuesday 26 September French President Emmanuel Macron outlined his own “initiative” for the bloc’s remaining 27 members, proffering various policy ideas for a European future, including the option of a “multi-speed” EU where “those who want to go further and faster need to be able to do so unhindered” – and one that could allow for the UK to return at a later date. The speech also included a proposal for a common eurozone budget.

The two speeches also came within days of the German federal election, which saw Chancellor Angela Merkel’s party hold onto power, while at the same time shaking up past partnerships among legislative parties and prompting an unprecedented gain in seats for the far-right “Alternative for Germany.” Efforts to finalise a coalition government are ongoing, and the final outcome, which will probably include a partnership with the German Free Democrats (FDP), is expected to colour the debate on the EU-27’s future direction during and after Brexit.

Economic relationship, Brexit transition period request

While May did refer to the exit issues of Ireland, citizens’ rights, and the “divorce” bill, she argued in Florence that the negotiating partners must also “move on to talk about our future relationship,” and focused her remarks mainly on what this would look like in the fields of economy and security.

While confirming that the UK does not expect to remain a member of the EU’s single market, given that it cannot sign onto that system’s “four freedoms” in the post-Brexit era, she did argue that the “new framework” that both sides would need going forward would need to be customised to the special circumstance of the bilateral relationship.

She ruled out options such as joining the European Economic Area or negotiating a “traditional” free trade agreement, calling that a “stark and unimaginative choice.”

May instead suggested that the two sides should be “creative” and “practical” in developing a new option, and added that they should avoid introducing tariffs, but focus instead on how to address regulations, given that the UK may wish to change its own regulatory standards once it is outside the EU framework.

Another issue that she flagged as key for a future bilateral accord is determining how dispute settlement would work, suggesting that neither the UK and EU judicial systems are appropriate venues.

“It wouldn’t be right for one party’s court to have jurisdiction over the other. But I am confident we can find an appropriate mechanism for resolving disputes,” she said.

Notably, May also called for a “transition period” from when the UK leaves the EU in March 2019, buying time for everyone involved to prepare for the “new relationship” to take effect.

“Clearly people, businesses, and public services should only have to plan for one set of changes in the relationship between the UK and the EU,” she said, advocating for that transition period to keep the current economic terms in place.

“The framework for this strictly time-limited period, which can be agreed under Article 50, would be the existing structure of EU rules and regulations,” she added, forecasting that this time period could potentially take two years. Article 50 refers to the provision in the Lisbon Treaty regarding exiting the European Union.

EU: Cautious welcome, more details needed

The EU’s chief Brexit negotiator, Michel Barnier, referred to the “spirit” of the UK leader’s speech as “constructive” in a response issued on 22 September from Brussels, while suggesting that the bloc’s remaining 27 members would need more details on several of the proposed items.

He also indicated that, even with these ideas on the future EU-UK relationship, issues such as the UK’s “divorce bill” for settling its financial obligations to the EU, as well as citizens’ rights and safeguarding the Irish peace process must be clarified further and resolved first.

“The sooner we reach an agreement on the principles of the orderly withdrawal in the different areas – and on the conditions of a possible transition period requested by the United Kingdom – the sooner we will be ready to engage in a constructive discussion on our future relationship,” he said.

He also indicated potential openness to the suggestion of a “transition period,” while indicated that it would need to meet guidelines agreed by the EU-27 leaders this past April.

“Should a time-limited prolongation of Union acquis be considered, this would require existing Union regulatory, budgetary, supervisory, judiciary, and enforcement instruments and structures to apply," he said, quoting the guidelines.

An update on the fourth Brexit round and related EU developments will be featured in the next edition of Bridges Weekly.

ICTSD reporting; “Macron lays out vision for 'profound' changes in post-Brexit EU,” THE GUARDIAN, 26 September 2017.

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