Negotiating Brexit in 2018

Brexit began in earnest in 2017 with the start of the divorce negotiations, and the year ends on a high with the European Council agreeing that ‘sufficient progress’ has been made on the first phase. Early 2018 will usher in the start of the next stage of negotiations: the transition and the future relationship.

Where are we going?

Transitional arrangements will be the first item on the agenda for the next round of negotiations. The UK wants a standstill transition (or implementation period) of “around two years”. The draft Commission mandate published on 20 December suggested that the transition should last until 31 December 2020, the end of the current EU budgeting period.

Both the draft guidelines of Donald Tusk, President of the European Council, and the mandate of the European Commission propose that the UK abide by all EU laws during the transition period and accept new laws and the jurisdiction of the European Court of Justice. The PM will need to sell this to her Brexit-supporting backbenchers, and it is unclear if this period will be long enough to conclude the negotiations on the future relationship.

The UK is also seeking to roll-over hundreds of EU agreements with non-EU countries, which cover everything from trade in nuclear goods and transatlantic flights to fishing quotas. Given the scale of the challenge, the Government will have to prioritise these roll-overs to avoid major disruption to the UK’s relationships with the rest of the world.

And that’s before future relationship negotiations even begin. The UK wants a “deep and special partnership” but the Cabinet only recently started to discuss in detail what it wants from this relationship. Meanwhile, the EU is clear that the future relationship cannot be finalised until the UK is no longer a member state and that the most it will agree before the UK leaves is a ‘framework’ for the future.

In 2018, we can expect the unity of the 27 member states to be strained as different countries’ competing demands come to the fore. Michel Barnier is holding discussions with all the member states to understand their priorities in advance of European Council guidelines on the future relationship, expected in March.

Meanwhile, sufficient progress on the withdrawal agreement needs to be converted into agreed legal text for the withdrawal treaty. Michel Barnier’s target has always been to complete this by October 2018 to allow time for ratification. But there are still outstanding issues on both citizens’ rights and what the agreed text on Ireland really means.

How did we get here?

The UK triggered Article 50, the formal process for leaving the EU, on 29 March 2017. The European Council set out guidelines for the negotiations which stipulated that the first phase of negotiations would focus solely on issues relating to the UK’s withdrawal. Only once ‘sufficient progress’ had been reached could talks begin on the future relationship.  

In late May the Council approved a more detailed mandate for the European Commission, identifying three key issues for phase one: the rights of EU citizens in the UK and UK citizens in the other member states; the UK’s financial settlement; and avoiding a ‘hard border’ between Ireland and Northern Ireland.

Because of the UK’s General Election, ‘divorce’ negotiations did not begin until 19 June. After a summer of press conferences, the action all happened in December. The UK and the Commission issued a ‘joint report’ on the three key issues, the Commission recommended ‘sufficient progress’ had been made, to which the European Council agreed at its final meeting of 2017.

The Council President, Donald Tusk, just published draft negotiating guidelines for the next phase of talks, focusing on transitional arrangements after the UK formally leaves the EU.

What did we learn?

The EU’s negotiating guidelines and mandate matter.

The Brexit Secretary, David Davis, initially said that the UK would reject the EU’s ‘phased’ approach to negotiations and claimed it would be "the row of the summer". But negotiations unfolded exactly as the EU set out. It stands to reason that the European Council guidelines, and the Commission’s mandate, for the next phase will be similarly influential.

The Government needs to have a clear and agreed position before starting negotiations.

When negotiations began, the UK Government played catch-up as it had not agreed its position on the key issues. The nitty-gritty discussions only began when both sides had formally set out their initial positions (or, in the case of the financial settlement, when the UK had interrogated the EU’s position and accepted the bulk of it). In this context, agreement at Cabinet level on the future UK-EU relationship is key.

Both sides have compromised – but the UK has moved more.

The UK appears to have given in on more areas than the EU: accepting continued ECJ jurisdiction over EU citizens’ rights; maintaining budget contributions for the rest of the current period and standing behind liabilities; and agreeing to stay aligned to certain Single Market and Customs Union regulations if no other solution can be found for the Irish border.

Both sides can take pride in their achievements in 2017. But there is a long way to go yet, and 2018 looks to be even more difficult. And as negotiations get more complicated, the UK should take care to make more realistic objectives for the next phase.