UK Prime Minister Theresa May Outlines Brexit Negotiating Goals

19 January 2017

UK Prime Minister Theresa May outlined her government’s objectives for the expected “Brexit” negotiations on Tuesday 16 January, making clear that she plans to take the United Kingdom out of the EU’s single market and instead craft a free trade agreement (FTA) with the bloc’s remaining 27 members.

“We are leaving the European Union, but we are not leaving Europe. And that is why we seek a new and equal partnership – between an independent, self-governing, global Britain and our friends and allies in the EU,” she said as she prepared to outline a 12-point list of negotiating goals.

“Not partial membership of the European Union, associate membership of the European Union, or anything that leaves us half-in, half-out. We do not seek to adopt a model already enjoyed by other countries. We do not seek to hold on to bits of membership as we leave,” said the UK leader.

European Council President Donald Tusk responded to the speech on social media site Twitter, saying that this marks a “sad process, surrealistic times but at least more realistic announcement on Brexit.”
Tusk further stated that the other EU member states – referred to as the “EU27” – are “united and ready to negotiate after Art.50,” referring to the formal article under the Lisbon Treaty under which the UK will need to notify formally its intent to leave and begin exit talks.

May’s highly anticipated speech also clarified several other issues that had been cause for speculation and debate in recent months: that a final Brexit deal will face votes in both the UK House of Commons and House of Lords and that the UK is aiming to complete the talks within a two-year timeframe.

Regarding the latter, May warned against reaching a “cliff-edge for business or a threat to stability” in the exit process, while noting that she is not advocating for “some form of unlimited transitional status.”

“Instead, I want us to have reached an agreement about our future partnership by the time the two-year Article 50 process has concluded,” followed by a period where implementation will be gradually enacted to allow all players to adjust to the new system.

The EU’s chief negotiator for Brexit, Michel Barnier, has said that the process of negotiating a new deal would take 18 months in practice, rather than two years, given the time needed to then secure legislative approval of the final outcome. He has, however, suggested that some period of transition could be possible. (See Bridges Weekly, 15 December 2016)

May: EU success “in Britain’s national interest”

While US President-elect Donald Trump suggested this week that other EU member states should follow suit in leaving the bloc – deriding the current structure of the 28-nation grouping as a “vehicle for Germany” – May said repeatedly on Tuesday that it is not in her country’s interest for the bloc to unravel.

“We want the EU to be a success and we want its remaining member states to prosper. And of course we want the same for Britain,” she said on Tuesday.

In the days leading up to May’s speech, other officials from her government have similarly sought to counter the suggestion that the move towards Brexit is an endorsement of inward-looking policy approaches. Both May in her speech on Tuesday and others have suggested that the process to leave the EU is meant to make the UK a better player on the international stage while also responding to domestic needs.

“In my judgement it would be a mistake to read the Brexit vote as being part of the same strand of thinking that has formed in the US,” said UK Chancellor of the Exchequer Philip Hammond in an interview with German newspaper Welt am Sonntag on 15 January. “If you look at the media and the reporting during the Brexit referendum campaign, there was no anti-trade rhetoric. It was the exact opposite.”

Models of integration

The weeks leading up to Tuesday’s speech already saw heightened expectations that the UK government would be deciding against trying to keep membership in the EU’s single market.

The UK leader made clear that, in light of the “four freedoms” required by the EU’s single market – free flow of goods, services, capital, and people – her country’s government will not be pursuing continued membership in that configuration.

Leaders of the other 27 EU member states have repeatedly stressed in recent months that these four freedoms are an essential tenet of the single market, and that the UK will not be able to pick which of these it would like to keep or lose.

Within that context, May called for obtaining the “greatest possible access” to the single market under a new free trade deal, “on a fully reciprocal basis.”

Foreign trading partners

The UK prime minister also indicated that her government has a keen interest in reaching new trade agreements with non-EU countries, including both advanced and emerging economies.

Currently as an EU member, the UK cannot conclude individual trade agreements with non-EU countries. One of the questions raised by experts will be how the UK will navigate its future relationship with the EU’s customs union, of which it is currently a member, in a way that allows the island nation to negotiate new accords after leaving the EU.

“Now, I want Britain to be able to negotiate its own trade agreements. But I also want tariff-free trade with Europe and cross-border trade there to be as frictionless as possible,” said May on Tuesday, acknowledging that customs union requirements such as a common commercial policy and external tariff would prevent the UK from “full membership” in that structure.

She suggested instead coming together with a new customs arrangement with the existing EU customs union, while affirming that she remains open as to the setup of such a scheme. The UK leader also listed a series of countries that could be on the agenda for future UK-led trade deals.

“We want to get out into the wider world, to trade and do business all around the globe,” said May, listing early interest or preliminary discussions with Australia, Brazil, China, India, New Zealand, and countries in the Persian Gulf.

Earlier this week, May met with New Zealand Prime Minister Bill English, who took over from John Key in December. Both leaders referred to their shared interest in increased trade ties, both now and following the UK’s exit from the European Union.

“We are here to work with both the UK and the EU and we’re ready to negotiate a high quality free trade agreement with the UK when it is in a position do so so,” said English at the time. New Zealand is also expected to start negotiations with the EU on a future FTA later this year.

On Tuesday, Theresa May also referred to the interest expressed by US President-elect Donald Trump in reaching a bilateral trade deal.

During the lead-up to the “Brexit” vote, outgoing US President Barack Obama had warned that the UK could find itself at the back of the line should it move forward with leaving the EU, given his administration’s preference for concluding trade deals with country groupings rather than individually, though officials afterward said they would be open to further discussions on the subject. (See Bridges Weekly, 28 April 2016)

The EU and the US have spent the past three and a half years negotiating a bilateral trade according known as the Transatlantic Trade and Investment Partnership (TTIP); however, those talks are for the moment on hold pending additional clarity on the approach of the incoming Trump administration. The two trading partners did release on Tuesday 17 January a four-page summary of the negotiations so far in, both in terms of market access, regulatory issues, and rules.

ICTSD reporting; “Donald Trump takes swipe at EU as ‘vehicle for Germany’,” FINANCIAL TIMES, 16 January 2017; “Philip Hammond issues threat to EU partners,” WELT, 15 January 2017; “Michel Barnier: UK will have 18 months to negotiate Brexit deal,” POLITICO, 6 December 2016.

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