EU, UK Debate Transition Period Terms as Brexit Negotiations Continue

15 February 2018

The latest formal round of Brexit negotiations drew to a close last Friday, covering issues related to the Irish border, the governance of the withdrawal agreement, and the transition period after the UK leaves the European Union. The meetings in Brussels also saw officials afterward note significant substantive differences across these areas, with some concerns over what this could mean for the timing of the process. 

The current phase of the Brexit talks began after London and Brussels struck an interim deal in December. The new phase involves determining the terms of the transitional arrangement and the future relationship between the two sides, including on trade. (See Bridges Weekly, 13 February 2018)

Negotiations for the UK’s withdrawal from the EU formally began last June, over two months after the United Kingdom invoked Article 50 of the Treaty of the European Union. That article provides for two years to negotiate a full exit accord, unless all parties agree to extend it. (See Bridges Weekly, 28 September 2017 and 5 October 2017)

Transition period: negotiators warn of significant differences in approach

The transition period refers to a phase that is due to kick off from when the UK exits the bloc in March 2019, and whose terms will have implications for the timing of the UK’s post-Brexit trading relationships, along with the UK’s access to the bloc’s single market and customs union, among various other areas.

Earlier this month, UK Prime Minister Theresa May told the BBC that a deal on transition terms would be agreed in time for the next European Council summit, scheduled for 22-23 March. “In seven weeks’ time, we will have an agreement with the European Union, that is the timetable they have said on an implementation period,” she said. 

However, the EU’s chief Brexit negotiator, Michel Barnier, cautioned that substantive differences between the two sides could put the deal at risk. “Taking into account these disagreements, and to be frank, the transition period today is not a given,” Barnier said in a press statement on Friday. 

The EU’s executive arm has circulated a draft version of proposed legal text on the withdrawal, which must be approved by member states and EU parliamentarians. The UK will then receive it. Barnier noted on Friday that this text would include a provision outlining what would happen if the UK is deemed to have infringed on EU rules during that time.

“It is absolutely normal that, in an international agreement, effective implementation and conflict resolution mechanisms are foreseen. This is the case, for example, with our agreements with Switzerland,” he said.

David Davis, the UK’s Secretary of State for Exiting the European Union, said that London is hoping to see a transition that would involve “a time-limited period that maintains access to each other’s markets on existing terms,” according to comments reported by the Financial Times. He added that the ultimate aim was “to build a new comprehensive partnership between the UK and the EU that sees us stay as the closest of friends and allies.” 

Davis also suggested on social media site Twitter earlier this month that his team and Barnier’s would aim to finalise the terms of the transition period by late March, a goal that is reportedly shared by both sides. 

Among the challenging issues ahead are how to resolve citizens’ rights during the transition period itself, in other words how to deal with citizens that move from the EU to the UK during that timeframe. Other questions include the UK’s ability to enter into new trading arrangements in that period, as well as the application of EU rules and how to avoid setting up a physical border on the Irish isle. 

Previously, Davis has said that the UK “will once again have its own trading policy” in this transition phase. “This is a vital aspect of this period. For the first time in more than 40 years, we will be able to step out and sign new trade deals with old friends – and new allies – around the globe.” 

On citizens’ rights, the UK is pushing to limit future residency rights of those EU citizens who move to the country during the transition, a position that the EU has disagreed with on the grounds that these should be the same as what has been agreed for those citizens who arrive in the UK prior to Brexit. 

Along with other requests on justice and security policies, the UK is also requesting the right to oppose new EU rules or laws passed during the transition – another ask that has drawn pushback from EU negotiators. 

“By asking to benefit from the advantages of the single market, the customs union and common policies, the UK must accept all the rules and obligations until the end of the transition,” said Barnier on Friday. 

Meanwhile, the EU published its own position paper last week on what it foresees for transitional arrangements, which includes references to Union law remaining binding on the UK during that time unless indicated otherwise. It also notes the scope for participation of UK experts or representatives on some meetings of the EU institutions, subject to invitation and without voting rights. 

In the section on EU “external action” policies, these is a provision that would not allow the UK to “become bound by international agreements entered into in its own capacity in the areas of exclusive competence of the Union, unless authorised to do so by the Union.” Trade policy falls under the bloc’s exclusive competence. 

That section would also bind the UK to the terms of the EU’s existing international accords, and says that UK representatives “shall not participate in the work of any bodies set up by international agreements concluded by the Union, or member states action on its behalf, or by the Union and its member states acting jointly.” 

The position paper clarifies that the EU would like to see this transition period end on 31 December 2020, less than two years after the UK’s scheduled exit.

Irish border, single market questions

The situation of Northern Ireland remains a high-profile sticking point in the Brexit talks, including what the ultimate solution would mean for participation in the EU customs union and single market.

Barnier said on Friday that the EU needs to see “precise, clear, and unambiguous” proposals from the UK, or to accept that there is no other way to avoid the establishment of a “hard border” between the Republic of Ireland, which is an EU member state, and Northern Ireland, which is part of the United Kingdom. 

“A UK decision to leave the single market and leave the customs union would make border checks unavoidable,” he added.

The EU official noted that in December, the two sides had envisioned three possible approaches to resolve the issue: addressing the issue under the wider agreement on the UK-EU “future relationship” and avoid a hard border; a UK-proposed solution designed for Ireland’s particular needs; or a guarantee of “full regulatory alignment” between Northern Ireland and the EU’s single market and customs union. 

On Monday, Irish Taoiseach Leo Varadkar met with Theresa May in Belfast, the capital of Northern Ireland. Speaking after the meeting, Varadkar told reporters that the two leaders prefer the first option going forward.

“That is the best way we can avoid any new barriers, north and south, and also east and west, and we have agreed to work together at official levels to see if we can explore solutions to see how that can be achieved in the coming weeks and months,” he said.

ICTSD reporting; “UK PM May says Brexit transition deal will be agreed in seven weeks,” REUTERS, 2 February 2018; “Barnier warns UK intransigence putting Brexit transition at risk,” FINANCIAL TIMES, 9 February 2018; “Brexit: Varadkar and May to work on plan for frictionless Irish border,” THE GUARDIAN, 12 February 2018.

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