Embarking on the UK-EU negotiations

Following Prime Minister May’s triggering of article 50, the European Council has published the draft guidelines for the negotiations, and the UK and EU are entering the withdrawal negotiation process. While it is impossible to predict the outcome at this stage – there are simply too many unknowns – it is possible to say what will take place next: how the negotiations will be started and what will be on the menu at each stage.

Orderly withdrawal

The first principle is that the EU will aim to reach an agreement on an orderly withdrawal. Article 50 includes a danger that the UK will simply fall out of EU membership: if the withdrawing state and the remaining EU member states do not reach an agreement within two years from triggering article 50, and they do not agree unanimously to extend the time for negotiations, the EU treaties shall cease to apply to the withdrawing state.

This is the cliff-edge scenario, where the UK simply ceases to be an EU member state, without a separate formal exit agreement, transitional provisions or new trading relationship having been agreed.

The problem with this disorderly withdrawal is that it will hit hardest those people and businesses who have been able to benefit from free movement, and who have forged cross-border lives or trading relationships. They are those EU citizens living in the UK, UK citizens living in the EU – including those who work at the EU institutions – or those businesses who are engaged in cross-border trade. Including them and their family members, a disorderly withdrawal impacts the lives of tens of millions of people. 

Phased approach

The second principle is that the negotiations will be conducted with a phased approach. This means that there will be no negotiations in parallel about the exit and the possible new relationship: the purpose is first to set an orderly exit, and after that establish a new framework.

This corresponds to article 50 TEU, which establishes a process for an exit agreement and simply mentions that those arrangements may take account of the new relationship, which is to be negotiated under the article 218 TFEU process. This means that there will be at least two treaties with the EU: one on exit, another on the new relationship.

Exit agreement ending UK membership

The exit agreement will be about institutional issues surrounding the finalising of the UK’s EU membership. The crucial issue here is to settle the final budgetary contributions – those that the UK has agreed to make as an EU state.

Further issues in this category will be setting dates for ending the various posts that the UK holds in the EU institutions: the Commissioner, judges at the Court of Justice, and what will happen to the UK citizens employed by the EU institutions, their rights to employment and pensions.

The European Council envisages that the exit agreement will also contain provisions on the rights of EU and UK citizens and businesses. Furthermore, the agreement will aim to ensure that these businesses or individuals are not left in a legal vacuum once the UK’s membership ends.

These parts of the agreement are likely to set out cut-off dates, e.g. who gets to benefit from EU citizenship laws and who no longer does so, and for cases pending before the Court of Justice and national courts with UK and EU parties, or for Commission investigations.

Finally, it is possible that parts of the agreement aim also to settle more permanently some aspects for the future. The draft guidelines recognise the special circumstances surrounding the Northern Irish border, and provide that the EU and UK should seek flexible and creative solutions in order to avoid a hard border between Northern Ireland and the Republic.

Agreement on the new relationship

A separate agreement on the new relationship will be needed in order to determine the new legal framework between the UK and EU. This may take the form of a free trade agreement (FTA) or something more ambitious, including areas beyond just trade in goods.

Both the UK and EU are going to be seeking a special relationship or partnership. The UK Government is seeking an agreement on trade, but also on issues such as security and the fight against crime or terrorism.

The EU draft guidelines remind us simply that the new deal cannot be expected to provide the same benefits as EU membership, and must not undermine the proper functioning of the internal market. It furthermore needs to set a level playing field and include competition and state aid, with safeguards against fiscal, social or environmental dumping.

Transitional agreement

The likelihood of an agreement on the new relationship being reached within the two-year period prescribed for the exit is small, in particular if the parties are looking to include areas not normally covered by FTAs, such as criminal justice or access to intelligence sharing in the fight against terrorism and crime, but seriously limit the present framework in relation to trade in services or free movement of persons.

This means in turn that there may be a need for a third agreement, a transitional agreement, which allows a continued legal framework to be applied between the UK and EU, without the UK being formally a member of the EU any longer.

The draft guidelines suggest that this is likely to take the form of preserving the status quo on the legal framework that is applied to individuals or businesses. This makes sense in that if there were to be major amendments to the present framework, it would be a new agreement, which needs to be negotiated and agreed by the parties.

What’s next

The Commission’s draft mandate for the negotiations, submitted early this month, once adopted by the Council will bind the EU both as to the scope of the negotiations and the team that the UK Government will be negotiating with.

The draft mandate is likely to follow closely the guidelines set by the European Council, particularly as the draft guidelines repeat quite faithfully what the Commission lead negotiator, Michel Barnier, has already proposed. He has asked for a staged approach; whether he will ask for the starting of only exit negotiations in the mandate, at this stage, will be one of the issues to watch for. After the mandate is adopted and the team appointed, the EU side will be ready to start.

For the rest, time will tell how these negotiations will go, how long will they take and how many stages we will see.

Negotiating positions

Helena Raulus sets out some of the formal and informal influences that will operate between the EU institutions during negotiations

Article 50 TEU, together with article 218 TFEU, set out the main procedures to follow. These follow closely the other EU procedures: the Commission will present a mandate, form a team, report to the Council, and the Council and the European Parliament will accept. The mandate proposal is likely to be tabled by the Commission in April. Meanwhile, the European Council has published draft negotiation guidelines.

From the above, three things stand out: First is the question of what is really the power balance between the Commission and the Council; secondly, how does the European Council fit into this; and thirdly, how the Parliament seems to have quite a weak role as it will only be engaged at the very last stage, when the agreement is to be accepted.

Commission-Council balance

The Commission will start the procedure by asking for a negotiation mandate. This mandate will provide the scope of the negotiations: what topics are going to be under the negotiation, whether there will first be a negotiating mandate for exit and later one for a new relationship, and who will be in the negotiation team. This mandate will need to be adopted by the Council and it will bind the EU negotiating team.

Even though the Commission will be acting under the watchful eye of the Council throughout the negotiations, as it will need to report to it periodically and take instructions from it, it has certain advantages over the Council.

One is internal cohesion: the exit deal, or any change in the negotiations, will need to be approved by a qualified majority of member states. One member state cannot rock the boat.

On an agreement on the new relationship, it depends on how ambitious the agreement will be. If the agreement will be a simple free trade agreement on goods, the EU can ratify the agreement on behalf of the member states, with the Council adopting the agreement by qualified majority.

However, if the agreement goes any deeper, it will be subject to a unanimity requirement, or it may be that it will need to be ratified at national level. As the latter is likely, one member state, or even one national parliament, can rock the boat. This is one reason why a good transitional framework will be needed.

Another advantage for the Commission is that it has also a wealth of expertise at its disposal. Michel Barnier and his team can reach out to the different Directorates General for specialist knowledge, whereas it is unlikely that every member state will have a big team dedicated for Brexit.

Position of the European Council

The European Council, institutionally a different body from the Council of Ministers, and its President, Donald Tusk, have been in the limelight after publishing draft negotiation guidelines. These are not the same thing as the mandate above, and will not be binding: the European Council does not have the power to propose or adopt the mandate, but can provide impetus and high level instructions as to what it would like the Union to do.

The European Council is important as it consists of representatives at the highest national political level: the Heads of State and Government. Furthermore, it adopts its positions by unanimity.

This means that when the European Council adopts its guidelines for the negotiations on 29 April, these will provide clear instructions for the Commission and the Council to proceed, having been endorsed unanimously by the highest national political leaders. Consequently, any future statements, or important omissions, by the European Council will also have a special meaning.

Hidden strengths of the Parliament

Although the European Parliament has officially a role only at the end of the process, as it has the power to accept or reject the final agreements, it has also other tools in its disposal to influence the result. The Parliament will be the only institution discussing the negotiations in public.

In fact, it has already started the work through the AFCO Committee and by setting up a European Parliament negotiating team, which is led by Guy Verhoefstad. It can, and intends to, exert public pressure on the negotiating parties. It may be argued that it has already done so. The Parliament has been very vocal on the need to reach an agreement on the EU and UK citizens’ rights. This has been now fully recognised by the European Council draft conclusions.

Furthermore, a measure of the early and active role of the Parliament can be found in the Motion for a Resolution published on 29 March. This resolution welcomes the appointment of Barnier, whilst reminding the other institutions that the “full involvement of the European Parliament is a necessary precondition for it to give its consent to any agreement reached between the European Union and the United Kingdom”.

During the negotiations Parliament can also ensure that it has the Commission’s ear. It has the power to ask questions from the Commission and request that the Commission will take part in the Parliament’s hearings. 

The Commission has, in fact, already pledged to act transparently throughout the negotiations. This is likely to mean that negotiation texts will be published, questions answered, and more regular updates given to both the Council and the Parliament than is normally the case. This may seem an unusual step for negotiations such as these, and presumably reflects both the intense public interest in this case, as well as the criticism previously borne by the Commission during the CETA/TTIP negotiations.

All this, in turn, means that the European Parliament may prove an influential platform for other organisations needing further information, and trying feed into the negotiations.