Yahoo Finance Eight key points you need to know about the Brexit negotiations
It promises to be one of the most complicated negotiations in history. Whitehall civil servants are said to have identified 700 different issues of administrative overlap that need to be untangled before Britain can cut itself loose from the European Union. But cutting through the legal verbiage, it is possible to reduce them to eight main political sticking points:
Timing
As with any good meeting, much of the opening energy is likely to be expended on talks about talks. “The first conversation between Michel [Barnier] and myself will almost certainly be about this subject,” British negotiator David Davis recently told MPs about contact with his EU counterpart.
It is more than just throat clearing. European negotiators insist they can only deal first with the terms of Britain’s departure, rather than the nature of its future status. For the Brits this violates the spirit of article 50’s instruction to “take account of the framework for [the] future relationship” and they would like to hold discussions about trade in parallel with the departure talks. They would prefer everything to be on the table up front, fearing that otherwise they will have no leverage when it comes to compromises over money.
Legally, London may have a point, but the European commission and parliament are adamant that this is impossible in practical terms, not least because trade talks will take far longer and require a far broader ratification process than the two years set aside to deal with the mechanics of Brexit itself.
Currently neither side is budging, and without agreement about whether talks are consecutive or concurrent, nothing can move forward on any front. London will be hoping for help from other member state governments to break the deadlock.
The ‘divorce’ bill
Until recently, the size of the European alimony request was the subject of conjecture. The unofficial talk in Brussels was of around €60bn (£52bn) to settle all of Britain’s outstanding financial commitments, a figure that was met with amused derision in London.
One Conservative backbencher, Peter Bone, was only half-heartedly dismissed by Theresa May when he claimed instead that the EU actually owes Britain £184bn, which is a full refund of its total net contributions since joining in 1973.
But things are getting real. Asked about the €60bn demand last week, the European commission president, Jean-Claude Juncker, confirmed it was “around that”. Davis has acknowledged that Britain will have to pay something; the question is how much.
Some estimates emerging from Brussels have reached as high as €85.2bn, but a lot depends on which accounting principles are applied. The French style of public accounts factors in projects that have been agreed but not yet paid for.
Whitehall insists it is only the threat of non-payment that keeps runaway EU spending in check. Throw in similar disagreements over pensions, buildings and even the assets of the European Investment Bank, and you have a recipe for months of haggling, followed by an agreed figure of anywhere between €0 and €60bn.
Citizenship
The second issue Barnier has insisted must be dealt with before anything else is discussed is the fate of the 4 million EU citizens stranded on either side of the widening Channel.
Britain’s refusal to give any guarantee about the ongoing residency rights of EU citizens living in the UK before receiving similar assurances about the rights of Britons in the EU has been the source of genuine anger in Europe, where it is seen as tantamount to holding foreigners hostage.
Privately, however, many officials regard this as one of the easier issues to resolve. Even hardline Brexiters acknowledge that EU citizens already in the country have a strong claim to be “grandfathered in” to the immigration rules once they change. With many more such individuals in the UK than there are Brits in the EU, there should be political pressure for a reciprocal deal from the continent, too, as long as abandoning the principle of free movement of people still comes with costs in other areas.
There are even signs of British softening over the need to allow some degree of ongoing immigration for economic reasons. Details, such as healthcare rights, will still be tricky, but if both sides want to get off on a good footing this a good place to start.
Borders
In contrast, the fate of border controls, especially the sensitive Northern Ireland land border, is one where recent warm words in the political realm belie a number of tough practical challenges.
The British and Irish governments are adamant that they do not wish to see any border controls introduced that would jeopardise the Northern Ireland peace process, a principle enthusiastically endorsed by Barnier and his negotiators in Brussels.
The trouble is that if the UK is outside the single market and customs union – as May has insisted is inevitable – then the land border between it and the rest of the EU takes on an economic and legal importance that may be impossible to ignore.
Whether, as some hope, there are technological ways of introducing a degree of customs enforcement and migration checks without a physical border post remains to be seen. The alternative would be to treat Northern Ireland as if it were still in the EU, or the republic as if it were part of the UK – neither of which are likely to help the peace process.
Trade
These intertwined questions over customs, immigration and borders are another reason why Brits would like to see the issue of their future relationship dealt with at the same time as the narrower Brexit discussions. But trade is an area many Europeans fear will be a long, painful awakening for an over-optimistic prime minister who still wants to have her cake and eat it.
For most Europeans, the issue is simple: for the sake of the future cohesion of the union it is paramount that the principle of no shortcut access to the single market without free movement of people remains inviolate. Why should they allow Britain preferential access to their markets on anything approaching the same terms as today unless Britain is prepared to abide by at least most of the current social and political rules that define what EU membership is supposed to be about?
Subsequent Downing Street talk of special carve-outs for prized industries, such as financial services and car manufacturing, is seen as even more irrational, not least because it would be in flagrant breach of World Trade Organization rules governing comprehensive free trade agreements.
Another non-starter in Brussels is the British idea of a bespoke customs union, which gives unfettered access as well as freedom to negotiate independent trade deals elsewhere. Until Britain acknowledges that this will be seen as a dangerous economic backdoor, these talks may go nowhere fast.
European court of justice
There are some totemic issues for Britons that could be easier to resolve as long as there is something to show for it at the end of the talks.
One such apparently intractable problem at the moment is the British reluctance to have anything to do with the European court of justice after it leaves. Much of the opposition to the ECJ is born of media disinformation and a lack of understanding about how all international agreements require arbitration arrangements.
Unlike the unpopular, but unrelated, European court of human rights, the ECJ has done little to offend the average Brexit voter. If Britain signs up to any trade deal worth its name it is likely to have to accept the authority of some sort of supranational body to adjudicate disputes.
Taking back control is one thing, but pretending that Britain can have 100% sovereignty while still being a member of the international community may not be sustainable. That the British are already suggesting simply rebranding such arrangements so they do not have the word European in the title means there may be room for compromise.
Transition
One area where some sort of ECJ involvement seems increasingly inevitable is in governing a transition phase between Britain leaving in March 2019 and the introduction of a future free trade deal.
The Europeans are adamant that if the transition continues to offer the benefits of single market access it ought to remain subject to the authority of the ECJ so that disputes can be settled fairly.
This would be a painful concession for May to make if it means going into the next general election without keeping her promise of severing all ties, but it could be a necessary compromise if no lasting trade deal is in place.
Ministers have already bowed to strong pressure from business and the City to cushion the blow of leaving by acknowledging it is important to go slowly. The only concession to politics so far has been the rebranding of this as an “adoption phase” rather than the more open-ended concept of transition.
Expect to see more such spin as Downing Street seeks to soften any cliff edge without looking as if it is backtracking.
Ratification
Unless talks break down completely and Britain walks away without a single deal, all agreements reached between Barnier and Davis will be subject to ratification by the European and Westminster parliaments.
May has successfully argued that British MPs will have a limited choice when it comes to a vote on her deal: take it, or leave anyway. The glowering presence of the European parliament is already having more of an impact as it insists Barnier takes a hard line.
But at least the provisions of article 50 allow for the agreement on departure to be subject to qualified majority voting, both among EU governments and MEPs. There is little danger of a rogue protest from an individual member state disrupting any hard-won deal at the last minute.
When it comes to trade, however, EU law insists on a much wider consultation for any deal deemed to be “mixed”, ie, affecting both national and European institutions. The need to secure support from every national parliament in the EU, including some regional ones, would be a huge obstacle to British hopes of securing a generous trade deal and will be fought at all costs by its negotiators.
