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.