New Brexit phase as talks open on UK’s transition out of EU

EU foreign ministers will on Monday open a new phase in the Brexit process by setting in train a talks strand on how the UK's transition out of the union will happen.

They are expected to approve unanimously transition negotiating guidelines (“directives”) for Michel Barnier’s team that will propose the UK formally relinquishes EU membership and its place in EU decision-making in March next year, but then retains the rights and obligations of members until the end of December 2020, the end of the EU’s current budget round.

With the UK's Brexit secretary David Davis on Friday acknowledging that the UK was on the same page on transition, the talks are expected to be completed by the end of March, providing an important certainty and continuity for businesses and citizens about the next two years – the approach will avoid a double transition for the UK, i.e. from membership to interim arrangements, and then again to the new relationship.

In parallel, several other strands of talks will continue or are in preparation, including, in the medium term, those on trade, the “future relationship”. The commission is currently hosting a series of seminars with member states to flesh out their preoccupations and priorities on the future relationship which will shape negotiating guidelines expected in March.

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The major impediment to that work, however, and the big frustration to member state diplomats in Brussels, remains the lack of clarity from London about what model of trade relationship it aspires to.

Scepticism

There is considerable scepticism about how recent thinktank ideas, apparently given London’s imprimatur, and involving a system of multiple UK regulatory regimes reflecting different degrees of convergence with the union would work in practice. Not least in meeting undertakings on the Irish Border.

The new directives reiterate the EU insistence that the imperative to preserve “the integrity of the single market” “excludes participation [by the UK] based on a sector-by sector approach”, and that the “four freedoms” remain indivisible – there will be no watering down of free movement/internal migration obligations.

Elements of the phase-one withdrawal agreement (“divorce agreement”) signed in December also still need to be completed, and work is well under way on turning it into legally-binding commitments in a withdrawal treaty to be put to member states for approval before the UK leaves. The lengthy ratification process means the treaty must be ready by October. A first draft is expected shortly.

The UK’s commitment to the treaty text is seen in Brussels as an important means of preventing slippage or “backsliding” on the commitments made in phase one, in particular over the formula agreed on maintaining the invisibility of the Irish Border.

Widespread scepticism about the eventual willingness of the UK ever to deliver a deal with the EU involving the required close regulatory alignment of its economy with the EU has led to suggestions by observers that the Border formula agreed in December was a “fudge”, kicking the ball down the road, a conditional, largely aspirational agreement dependent on a future deal that would not be done.

Not so, Irish officials are understood to be arguing forcefully. The December deal is an “overarching” commitment, they say, that, when enshrined in treaty language, will impose legally-binding obligations on the UK to see through its undertakings.

The “Irish issues” strand of talks will also continue separately in parallel.

Full Monty

The model for the “status quo” transition to be endorsed on Monday has been described by the EU’s former legal services chief Jean-Claude Piris as a “full Monty”: taking the UK out of the decision-making system – including MEPs, commissioner and representation in Council meetings – but otherwise maintaining current involvement in all the EU’s activity – the rights and responsibilities of members, including paying their share of the bills and adhering to EU  free-movement provisions.

Davis on Friday suggested that although the UK will not be inside formal decision-making “we will still make our voice heard....we will have to agree a way of resolving concerns if [new EU] laws are deemed to run contrary to our interests and we have not had our say, and we will agree an appropriate process for this temporary period”.

EU negotiators will certainly agree to a “dialogue” in this context, but any suggestion of a legal “process” with an implied or real UK veto will not be acceptable.

The EU will, however, allow the UK during transition to begin to negotiate bilateral trade agreements with “third countries”, normally the prerogative of the commission. Such talks will have to be approved by the union, and agreements made will only come into force at the end of the period.

Trade deals

While required during transition to accept and implement the import provisions of any  trade deals signed by the EU, as the UK will no longer be a member state it will also now have to seek approval from each of the third countries to continue availing during transition of  the terms of EU access to their markets.

The EU has up to 40 external trade agreements, including recent treaties with such major economies as Korea, Japan and Canada. Their willingness to continue to regard the UK as an EU member state is by no means automatic.