EU Leaders Adopt Final Brexit Guidelines, Prepare for Next Steps

4 May 2017

Leaders from the EU 27 adopted final guidelines for the upcoming Brexit discussions during their 29 April summit, setting the stage for formal talks with the UK to kick off as early as next month.

Overall, the guidelines closely mirror those circulated in April, and were adopted unanimously during a special meeting of the European Council in Brussels, Belgium. (See Bridges Weekly, 6 April 2017)

“Throughout these negotiations the Union will maintain its unity and act as one with the aim of reaching a result that is fair and equitable for all member states and in the interest of its citizens. It will be constructive and strive to find an agreement. This is in the best interest of both sides,” said the final guidelines.

United on “phased” approach

As before, the EU is insisting on a “phased” approach, maintaining that the negotiating parties will need to make “sufficient progress” in separating the UK from the EU before they can start discussing a framework for post-Brexit relations, including on trade.

This stance is markedly differently from that of UK Prime Minister Theresa May, who has advocated for these issues to be taken up in tandem.

Specifically, the EU guidelines reaffirm that two issues will be essential components of the first phase of talks: financial commitments and citizenship uncertainty. The EU 27’s leaders have stressed that they will remain steadfast on splitting the talks into multiple phases, and that a resolution on these initial issues is paramount.

“We are united not only on the substance, but also on the method of conducting the Brexit talks. I am referring here to the so-called phased approach, accepted by the leaders today,” said European Council President Donald Tusk following the leaders’ meeting.

The first subject, financial commitments, is commonly referred to as the “divorce bill.” EU Commission officials previously estimated that the UK owes approximately €60 billion to the EU, calculated from previous commitments including the Multiannual Financial Framework (MFF), the European Investment Bank (EIB), the European Development Fund (EDF), and the European Central Bank (ECB).

However, recent estimates released by the Financial Times suggest that this number may increase up to €100 billion, accounting for additional factors such as the UK’s farm payments after Brexit – as requested by some EU member states.

The second topic involves citizenship status, specifically for the estimated three million EU citizens living in the UK, as well as 1.2 million British nationals residing in the EU – a concern that has been cited repeatedly by all parties involved.

Another issue that the EU 27 has raised under the context of an “orderly withdrawal” is the need for transitional arrangements once the UK is out of the bloc, in order to avoid unintended shocks to business trading between the two sides. They have also questioned what Brexit will mean for various pending court cases before the EU’s Court of Justice that involve the UK or its citizens.

When asked about the newly adopted guidelines, May responded that any requests agreed to by the other EU leaders reflect that group’s negotiating position, and that she would follow her own stance, as outlined earlier this year.

Single market, trade deal approach

The EU 27 guidelines also reaffirm the views of the group’s leaders regarding the single market – a central feature of the EU, allowing for free movement and trade of goods, services, capital, and people within the bloc’s borders.

“Any free trade agreement should be balanced, ambitious, and wide-ranging. It cannot, however, amount to participation in the single market or parts thereof, as this would undermine its integrity and proper functioning,” said the final leaders’ guidelines on the single market.

Furthermore, it rules out future UK participation in the single market on a “sector by sector” basis, and says that an EU-UK trade deal would need to include certain components.

“It must ensure a level playing field, notably in terms of competition and state aid, and in this regard encompass safeguards against unfair competitive advantages through, inter alia, tax, social, environmental, and regulatory measures and practices,” the guidelines add.

The language here has been slightly revised from the draft, which referred to “unfair competitive advantages through, inter alia, fiscal, social, and environmental dumping.”

UK Prime Minister Theresa May has already confirmed that her government will not be seeking to remain in the single market, in light of the inability to separate these four freedoms, and will instead be aiming to ink an “ambitious free trade agreement” with the remaining 27 EU members. (See Bridges Weekly, 19 January 2017)

Also in that section, the final version includes the addition of “foreign policy” to the paragraph listing other areas of potential future cooperation aside from trade, which includes security and defence.

Another change from the draft is a new paragraph that stresses any future EU-UK relationship should “safeguard financial stability in the Union and respect its regulatory and supervisory regime and standards and their application.”

Coming up

Next up on the agenda is a meeting of the EU’s General Affairs Council, a body made up of EU affairs ministers from the individual member states.

During that event on 22 May, the General Affairs Council is slated to move forward on a series of procedural steps, such as affirming the Commission’s official role as negotiator and signing off on a formal negotiating mandate for the EU’s executive arm.

The European Commission released a draft version of these negotiating directives on Wednesday 3 May. Approval of these under the General Affairs Council will be done under a “strong qualified majority,” according to the EU executive.

Within the EU 27, a strong qualified majority involved approval of 20 member states, which together make up 65 percent of the overall population of the full 27 members.

Given the timing of the UK’s general election, scheduled for 8 June, officials say that formal talks will likely begin later that month. At that stage, the result of the French presidential election will be known, and will provide some clarity over the Brexit stance of the EU’s second-largest economy. (See Bridges Weekly, 27 April 2017)

ICTSD reporting: “In full: The EU’s draft guidelines for Brexit negotiations,” THE TELEGRAPH, 31 March 2017; “European Union Leaders, Gathering Without May, Endorse Guidelines on Brexit Talks” THE NEW YORK TIMES, 29 April 2017; “EU Brexit guidelines: What’s in the document, and what it really means,” THE TELEGRAPH, 29 April 2017; “EU Brexit guidelines annotated,” THE FINANCIAL TIMES, 29 May 2017; “Brussels hoists gross UK exit ‘bill’ to €100 billion,” FINANCIAL TIMES, 3 May 2017.  

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