Brexit Talks Begin: An Edelman Briefing by Edelman

BREXIT TALKS BEGIN Edelman

19 June 2017

Lucy Thomas Head of Brexit Advice

Pawel Swidlicki Brexit Analyst

Lucy.Thomas@Edelman.com

Pawel.Swidlicki@Edelman.com

AND WE’RE OFF … Given the build-up, today’s formal launch of the Brexit negotiations is distinctly anti-climactic – something which suits both sides at present. The mood in the UK is currently more subdued and reflective than combative in the wake of recent tragic events and Theresa May’s failure to obtain a solid mandate from the country for her vision for Brexit at the general election. As such, do not expect any breakthroughs at today’s meeting. Instead, it will be an opportunity for both sides to discuss the structure of the negotiations, to get the measure of each other, and to start building up trust and goodwill, both of which will be essential if the UK and EU are to successfully agree a “deep and special partnership” post-Brexit. The EU set out its three key negotiating priorities several months back and has not budged from them since. They are: • the rights of EU nationals in the UK and UK nationals in the EU; • the size and composition of the UK’s outstanding financial obligations towards the EU (the so-called ‘divorce bill’); and • the future status of Northern Ireland, specifically the UK/Ireland border question. The EU has also consistently insisted that talks can only move on to the second stage of considering the wider post-Brexit UK-EU relationship once “sufficient progress” has been made on these fronts. The UK has continued to insist these talks ought to be conducted in parallel,

but in practice it is more or less going to have to accept the EU’s sequencing (although in some areas, the withdrawal terms and future trading terms are intrinsically linked – for example, when it comes to the UK-Irish border). In principle, the rights of EU nationals in the UK (some three million people) and UK nationals in the EU (over a million people) should be easy to agree, given that this is the stated intention of both sides; last week, the media reported that the UK was planning on making a “very generous offer” in this area. However, the devil will be in the detail – will EU nationals in the UK have more or fewer rights than UK nationals? – while the EU’s opening demand that the European Court of Justice ought to police the agreement will be very difficult for the UK side to swallow. As far as the Brexit bill is concerned, this will be another thorny issue given the central role played by the UK’s budget contribution in winning the referendum for Leave; a situation in which the UK will continue to pay the EU billions will be widely seen as a betrayal. That said, Ministers – while dismissing out of hand reports about the bill being in the region of €100bn – have hinted they are willing to compromise. Getting the choreography right will be critical – a settlement allowing the UK to retain a high level of single market access can be spun as a negotiating success. Of all the issues in the Brexit talks, the Northern Irish dimension is the one currently shrouded in the greatest uncertainty. An equitable solution will require a high degree of creativity and flexibility on both sides. The UK’s departure from the Customs Union (in order to be able to strike its own free trade deals with other global economies) means that it will be hard to avoid some form of new border on the island of Ireland. However, in her Lancaster House speech, Theresa May did leave open the possibility of some form of associate or partial membership of the Customs Union; and the EU’s relatively open borders with Switzerland and Norway (neither of which are in the Customs Union) could provide some useful pointers.

THE FORMAT AND STRUCTURE OF THE TALKS

The negotiations will be broken up into four-week cycles, each focusing on a key issue of the separation agreement. Broadly speaking, the format will be as follows: Week 1: Internal preparation and consultations Week 2: Exchange of views between the two sides Week 3: Negotiations Week 4: Reporting back to principals and publishing information from the talks The talks will be overseen on the UK side by David Davis, Secretary of State for Exiting the EU; and for the EU, by Michel Barnier, the European Commission’s chief negotiator. However, the technical details will be hammered out by four-to-six member working groups composed of senior UK and EU officials. During the talks, the European Commission will continue to report back to the Council, so Member States will be kept up to date. The European Parliament will also be informed of the process and feed its position into the negotiations (while MEPs have no formal role during the negotiations, they must approve the final agreement).

With a team of consultants from across the political parties and straddling the EU Referendum divide, Edelman’s Public Affairs team is superbly placed to give you insight, analysis and advice on the Brexit negotiations and on the new Parliament. For more information or if you think we can help you, please get in touch with our Managing Director Will Walden at Will.Walden@Edelman.com and our Head of Brexit Advice, Lucy Thomas, at Lucy.Thomas@Edelman.com.

19 June 2017

WHO’S SAID WHAT SO FAR? Following the election, the debate about what exactly Brexit entails in practice has been dramatically re-opened. In principle, the Conservatives remain united behind the vision set out by Theresa May in her Lancaster House speech. However, its broadness allows significant latitude for interpretation in many key areas. With both the Tories and Labour backing an exit from the single market, the softest possible Brexit is off the table; but there is plenty of scope for a ‘softer Brexit’ which would entail an ambitious trading arrangement preceded by a lengthy and comprehensive transitional arrangement. Far from being sacked, as Mrs May had planned, Chancellor Philip Hammond has emerged emboldened as the leader of the softer Brexit faction within the Government. Appearing on the BBC’s Andrew Marr Show yesterday, he said that “no deal would be a very, very bad outcome for Britain” and that only a “deal that is deliberately structured to punish us, to suck the lifeblood out of our economy over a period of time” would be a worse outcome. He also stressed that it was “essential” that the future UK-EU FTA covers services as well as goods. However, proponents of a ‘harder Brexit’ have also been strengthened, with the appointments of prominent Vote Leave backers including Michael Gove, Dominic Raab and Steve Baker to frontbench positions. Appearing on BBC Radio 4’s Today Programme this morning, Mr Gove insisted that despite the election result the Government’s Brexit policy had not changed. Writing in the Sunday Times, Boris Johnson tried to strike a balance between the two factions with his call for an ‘Open Brexit’, arguing in favour of “a strong European Union buttressed by and supporting a strong UK — and still trading and co-operating closely with each other.” This morning, he dodged a question about the specificities of the divorce bill by calling for both sides to “raise their eyes to the horizon”. Meanwhile, Peter Mandelson is the latest to back the idea of a cross-party commission on the Brexit talks, possibly chaired by Sir John Major. Significant Conservative party voices such as William Hague, David Cameron and Michael Heseltine have also given this idea their backing – but it has been met with scepticism from the Brexit wing of the party. Finally, in terms of the noises coming from Brussels and the national capitals, the most significant statement came from German Foreign Minister Sigmar Gabriel, who said that “we hope that it will also become clear to Brits that they are working against the interests of their citizens if they don’t at least try to keep the UK in the single market.” However, given that the EU’s own position is that single market membership is impossible without adhering to free movement rules, that ship has sailed.