Brexit and business: Q&A on the UK's withdrawal process

#Brexit talks difficult enough. If emotions get out of hand, they’ll become impossible. Discretion, moderation & mutual respect needed – Donald Tusk, President of the European Council, 4 May 2017

Article 50 has been triggered, the European Council has issued its negotiation guidelines – and we wait for the UK general election on 8 June 2017 before the UK and the EU can put aside the posturing and start the bargaining.

Following our look at the UK and the EU’s negotiating positions, this Q&A summarises how the process for the UK withdrawal from the EU may work.

When will negotiations start?

After the UK general election, so some time in June 2017.  If there is a change of UK government, perhaps the incoming administration would want to push that date back whilst it gathers its thoughts.

When will the negotiations finish?

Article 50 of the Lisbon Treaty was triggered by UK Prime Minister Theresa May on 29 March 2019.  It requires that the UK will leave the EU from the date of any withdrawal agreement or, failing that, two years after the trigger date (unless the European Council unanimously agrees to extend that two year period).

A European Commission document of 3 May 2017 helpfully clarifies that two years after the trigger date is ‘30 March 2019 at 00:00 (Brussels time)’.

Once a withdrawal agreement is settled between the negotiating teams, it has to be approved by:

• a simple majority vote of the European Parliament;
• a vote of the European Council by a qualified majority; and
• both UK Houses of Parliament, which as matters stand would be a ‘take-it-or-leave-it’ vote.

Given the requirement to secure these approvals, there needs to be some time between the end of negotiations and the ‘drop dead’ date of 29 March 2017.

So the European Commission expects that ‘the negotiations themselves will last approximately 18 months (early June 2017 – October/November 2018)’.

Where will the negotiations take place?

The European Commission has said that the negotiations will take place in Brussels. No word from London on that.

What language will be the negotiations be in?

Slowly but surely, English is losing importance in Europe – Jean-Claude Juncker, 5 May 2017

This will be ‘agreed jointly between the EU and UK negotiators’, according to the Commission.

Who will be doing the negotiating?

From the UK side, the lead is David Davis, Secretary of State for Exiting the European Union. The Permanent Secretary at DExEU is Oliver Robbins CBE and the Director General is Sarah Healey, the 1998 winning captain on the BBC quiz show ‘University Challenge’ and so expert in drawn-out processes involving tricky questions and well-informed opponents.

For the EU, the chief negotiator is French politician Michel Barnier.  M. Barnier is familiar to the UK financial services industry as a former European Commissioner for Internal Market and Services. The Deputy Chief Negotiator is Sabine Weyand, a German career EU bureaucrat – and trade negotiator.

The roles to be played by Prime Minister May and Commission chief Jean-Claude Juncker remain to be determined.

How will the negotiations be conducted?

Some have created the illusion that Brexit…negotiations can be concluded quickly and painlessly. This is not the case – Michel Barnier

The UK and the EU have not yet agreed on the format for the talks.  The Politico website reported on 4 May 2017 that the suggestion from Brussels is that the talks be held over four week cycles on each topic: a week of internal preparation; a week of the sides exchanging views; a week of negotiation; and a week of reporting back to principals.

What those topics will be has not yet been agreed, and nor do we know London’s view on that suggestion.

What will be covered in the initial negotiations?

Before discussing EU-UK future, we must first sort out our past. This is the only possible approach to Brexit talks – Donald Tusk, 28 April 2017

We believe it is necessary to agree the terms of our future partnership alongside those of our withdrawal from the EU – Theresa May, 29 March 2017

The EU’s views

The European Council and Commission in their recent communications (see the Council’s guidelines, and draft negotiating directives from the Commission) are determinedly emphatic that the negotiations will follow a two-phase approach.

The first phase should:

‘provide as much clarity and legal certainty as possible to citizens, businesses, stakeholders and international partners on the immediate effects of the United Kingdom’s withdrawal’ from the EU; and

‘settle the disentanglement of the United Kingdom from the Union and from all the rights and obligations the United Kingdom derives from commitments undertaken as a Member State’ (that’s the UK’s so-called ‘exit bill’).

Only once that first phase has made ‘sufficient progress’ (in the eyes of the European Council) on the withdrawal agreement will the EU move to a second phase of identifying an ‘overall framework’ for the future UK-EU relationship – but any agreement on that relationship can only be concluded once the UK has left the EU and, crucially, is a ‘third country’. (Of course, the UK will likely be a third country at 00:01 (Brussels time) on 30 March 2019, so – in theory at least – it could be possible to enter into a future agreement and still satisfy this ‘third country’ requirement immediately after Brexit.)

The UK’s stance

The UK government takes a rather different view.  The UK does not want a phased approach; it would like to conduct the negotiations on a future UK-EU free trade agreement at the same time as the talks over the terms of withdrawal.  Indeed, the UK government still sticks to its hope that the terms of a future free trade relationship can be agreed within the two year exit period, although this currently seems unlikely.

This is an important point of disagreement between the two sides.  Both in terms of timing – the EU’s approach means a final resolution of Brexit (i.e. settling the future UK-EU relationship, as well as the terms of withdrawal) is likely to take longer than the UK’s approach – and also in terms of philosophy.

For the EU, the most important thing is to emerge from Brexit as a unified group with a clean, if unwanted, divorce from the UK.  Hence its emphasis on settling the terms of withdrawal.

For the UK, the priority is not the terms of divorce (though it retains a close interest in those terms) but in settling the future terms of trade between the UK and the EU – and hence its emphasis on getting those talks about the future started now.