The Article 50 letter

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On March 29 2017 the Prime Minister issued the UK’s Article 50 notification letter, triggering the process of its exit from the EU. The letter provides further details about the UK’s desired Brexit deal, and the process that it expects for the negotiations.

What the Prime Minister said

What this means

“The decision was no rejection of the values we share as fellow Europeans”

In the opening paragraph, the Prime Minister sets a conciliatory tone; the letter has many references to shared interests and common values throughout.

“I hereby notify…”

This is the key piece of business in the letter – notice of our intention to leave the EU and Euratom, as foreshadowed in the Article 50 legislation. The Prime Minister needed to do no more than this, so the rest of the letter is what the Government has chosen to elaborate at the start of the Article 50 process.

“The United Kingdom wants to agree with the European Union a deep and special partnership that takes in both economic and security cooperation”

Both sides have spoken of the desire to maintain an economic as well as a security relationship. What is interesting is that trade is paired with security throughout the document.

The European Parliament, in a leaked draft of a resolution, says that it does not want to see the UK’s security cooperation traded for economic access.

“I should update you on the process we will be undertaking at home...”

In this section, the Prime Minister makes clear the Government’s intention to convert the EU acquis into UK law to give certainty (though does not call it the Great Repeal Bill). She also trails further legislation, and makes clear the legislation will not take effect until we leave. 

“We believe it is necessary to agree the terms of our future partnership alongside those of our withdrawal from the EU”

This is the predicted – and key – UK pitch on process for parallel negotiations on divorce and the future. The EU has so far made it clear that it believes they must be sequential – so this is a potential big point of contention.

“If, however, we leave the European Union without an agreement, the default we would be that we would have to trade on World Trade Organization terms. In security terms a failure to agree would mean out cooperation in the fight against crime and terrorism would be weakened.“

The UK could be seen as playing the security card in favour of an exit deal – rather than the ‘Singapore’ option (establishing the UK as a low-tax territory on the EU’s frontier), which was floated earlier by the Chancellor. 

“we understand and respect your position that ...there can be no “cherrypicking”. We also understand… that we will lose influence over the rules that affect the European economy. We also know that UK companies will, as they trade with the EU, have to align with rules agreed by institutions of which we are no longer a part"

This is in the section on “constructive and respectful engagement” and looks like an attempt to show we understand that we accept we are losing something by choosing to leave the Single Market.

“There are, for example, many citizens of the remaining member states living in the United Kingdom, and UK citizens living elsewhere in the European Union, and we should aim to strike an early agreement about their rights”

Both sides have signalled citizens’ rights as something that they want to make early progress on. But there are a lot of complicated issues to be resolved and real certainty can only be achieved when there are firm legal texts agreed and translated into law. ‘In principle’ agreements may not be enough to deal with the complexity of the issue.

“we will need to discuss how we determine a fair settlement of the UK’s rights and obligations as a departing member state”

This is an oblique reference to the so-called exit bill. The Prime Minister did not mention this in her Lancaster House speech, nor did it appear in the Brexit White Paper. This suggests that the UK is open to talks about the process to determine the final bill – something President of the European Commission, Jean-Claude Juncker says could be the subject of “scientific calculation”.

“In order to avoid any cliff-edge… the UK and the EU would benefit from implementation periods to adjust in a smooth and orderly way to new arrangements. It would help both sides to minimise unnecessary disruption if we agree this principle early in the process”

A decision on whether to negotiate for an implementation phase could come as early as June, when the UK and EU meet to discuss the process of negotiations.

“we also propose a bold and ambitious Free Trade Agreement between the United Kingdom and the European Union. This should be of greater scope and ambition than any such agreement before”

The Prime Minister knows that historic examples of Free Trade Agreements (FTAs) have been weak in some of the areas that are most important to the UK, notably financial services, intellectual property and government procurement.

“both sides have regulatory frameworks and standards that already match. We should therefore prioritise how we manage the evolution of our regulatory frameworks to maintain a fair and open trading environment, and how we resolve disputes.”

Even if UK and EU standards are the same two years from now, any future diverge in the regulations either side of the English Channel will make it harder to trade.

The UK will therefore seek a “living” trade agreement that can keep UK and EU regulations in correspondence.

The UK side is planning to take the initiative by putting forward “detailed proposals” for deep, broad and dynamic cooperation.

“We recognise that it will be a challenge to reach such a comprehensive agreement within the two-year period set out for withdrawal discussions in the Treaty”

Pascal Lamy, former head of the World Trade Organization, warns that a new trade deal would take five to six years.

The need to agree EU processes at the start of the two-year negotiation window, and to leave time for sign-off at the end, means that there may be just 12-14 months of actual negotiations.

But the Prime Minister at the end of her letter sets out her reasons for why this might be feasible: “we start from a unique position – close regulatory alignment, trust in one another’s institutions and a spirit of cooperation stretching back decades”.

“When it comes to the return of powers back to the United Kingdom, we will consult fully on which powers should reside in Westminster and which should be devolved to Scotland, Wales and Northern Ireland. But it is the expectation of the Government that the outcome of this process will be a significant increase in the decision-making power of each devolved administration.”

Many issues currently run by the EU are notionally devolved in the UK. When the UK leaves the EU, Theresa May wants some of these powers to revert to Westminster, although she is committed that others will be passed on to the devolved administrations.

This will lead to an increase in the number of decisions made by the devolved administrations, but means that Westminster will seek to centralise aspects of these policy areas to preserve the UK Single Market.

How the Government proposes dealing with these issues may be addressed in the White Paper on the Great Repeal Bill.