Brexit: EU, UK Prepare for New Chapter in Bilateral Relationship

30 March 2017

UK Prime Minister Theresa May officially triggered “Article 50” – the legal provision necessary to begin the Brexit negotiations – on Wednesday 29 March, kicking off the next phase in the EU-UK relationship.

The UK premier signed the relevant letter the night before, with her ambassador submitting it to Brussels during the early afternoon on Wednesday. The move now launches a two-year window for the United Kingdom and the European Council to conduct the talks for extricating the former from the bloc, a complicated procedure that some analysts predict could take longer than the envisioned timeframe.

Officials from both sides have said that they want the negotiations to go as smoothly as possible, mindful of the deep economic, trade, legal, financial, and historical ties between all countries involved – as well as the risks to all should efforts to clinch an agreement fail.

“It is in the best interests of the United Kingdom and the European Union that we should use the forthcoming process to deliver these objectives in a fair and orderly manner, and with as little disruption as possible on each side,” said May in the letter, which was addressed to European Council President Donald Tusk.

“We want to succeed by reaching a deal. Succeed with the British, not against them. That is why, on behalf of the 27 and of my team, our priority is to reach an agreement on the orderly withdrawal of the United Kingdom, and to prepare the way for a new partnership,” said Michel Barnier, the official tasked with leading the EU’s side in the negotiations, during a 27 March speech.

Brexit bill, trade, rights of citizens

As the negotiations kick into gear, some of the initial questions that have emerged include how the UK will settle an estimated €60 billion “exit bill,” mainly for discharging the UK’s pending commitments under the European Union.

Meanwhile, May said this week that her government will not be aiming to end immediately the full rights of EU citizens coming to her country and indicated in her letter that an early deal on this subject would be among her government’s priorities.

Barnier had similarly raised the need to end uncertainty for those EU citizens who work or study in the UK, and vice versa.

Officials have suggested, meanwhile, that should the two sides not reach a final trade deal within the coming year and a half, they could instead have a transitional version in place that would buy more time for concluding the final version.

“We know that this new partnership will need time, whether it involves a free trade agreement or any other form of cooperation. A certain number of transitional arrangements may be necessary. It is too early to say,” said Barnier on the EU’s position.

Meanwhile, May said in her letter to Tusk that the her side “believe[s] it is necessary to agree the terms of our future partnership alongside those of our withdrawal from the EU.”

“If, however, we leave the European Union without an agreement the default position is that we would have to trade on World Trade Organization terms,” she added, suggesting such an outcome would be manageable for both sides, if not ideal.

Another key area will be determining how the two sides address regulatory coherence and cooperation, given their current relationship. Along with determining what will form the “bold and ambitious free trade agreement” that they will work to reach, Barnier has warned that a final trade deal must work to avoid “regulatory divergence” given that the two sides currently have “perfectly integrated” standards and rules.

Describing the UK government’s approach on the subject, May said in her letter that they would need to “prioritise how we manage the evolution of our regulatory frameworks to maintain a fair and open trading environment, and how we resolve disputes.”

EU-27 adopts “Rome Agenda”

The official launch of Brexit came just days after leaders from the other 27 EU member states met in Rome for a summit commemorating the 60th anniversary of the “Rome Treaties,” which established the European Economic Community, a precursor of the European Union in place today.

“Only by staying united can we pass on to future generations a more prosperous, a more social, and a safe Europe. A Union of solidarity, that is strong, that is generous both at home and in the wider world. A Europe that takes up the major challenges of the day and that does not lose itself in the detail,” said European Commission President Jean-Claude Juncker on Saturday 25 March.

The summit was also set up to conclude a process of “political reflection” on the EU’s future, which officially kicked off at a similar meeting in Bratislava, Slovakia, last autumn. (See Bridges Weekly, 22 September 2016)

The resulting declaration issued in Italy on Saturday include a so-called “Rome Agenda” that would cover various areas, namely how to ensure that EU borders are more secure and its citizens safe; how to boost the bloc’s economic growth, strengthen the single market, and adapt to an ever-changing technological and economic environment; how to support social progress, including gender equality and cultural diversity; and how to make the bloc an even stronger player in the international arena.

“In the ten years to come we want a Union that is safe and secure, prosperous, competitive, sustainable, and socially responsible, and with the will and capacity of playing a key role in the world and of shaping globalisation,” said the Rome Declaration on behalf of the “EU-27,” as well as the Commission and the Parliament.

The EU’s executive arm will prepare so-called “reflection papers” on these issues, which will be outlined in a speech by the Commission chief in September; discussed at the European Council meeting in December; and serve as the basis for a “course of action” that will unfold before European voters go to the polls to vote in the next batch of EU parliamentarians in mid-2019.

Days later in Zagreb, the EU’s top trade official similarly called for unity, both internally and on the international stage for hammering out new agreements with key partners.

“In EU trade policy, as in other areas, unity brings strength. Twenty-eight countries negotiating individually would be a disaster,” said European Trade Commissioner Cecilia Malmström on 28 March in the Croatian capital.

She also encouraged Europeans to get involved in the upcoming debate over the EU’s future and what form this could take. “I don’t know if 500 million can unite around one answer but we do need to have a debate,” she said, bringing to a close a speech touting both internal cohesion as well the value of a “progressive” foreign trade policy that values an open, rules-based international trading system.

ICTSD reporting; “UK says cut-off date for EU citizens’ rights will be negotiated,” FINANCIAL TIMES, 28 March 2017; “May ready to compromise as Brexit letter heads for Brussels,” FINANCIAL TIMES, 28 March 2017.

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