Jean-Claude Juncker, European Commission president and Theresa May, British prime minister © AP
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The EU’s Brexit negotiator has finally recommended that the bloc recognise that the UK has made “sufficient progress” in divorce talks.
That opens the way for the second phase of Brexit negotiations. Big decisions now need to made over trade talks, a transition period and how quickly to proceed.
What will happen at this month’s EU summit?
Only EU leaders can take a formal decision to open the next phase of Brexit talks on future trade and transition terms. This is expected at the Brussels summit on December 14-15.
To accelerate those talks, Britain has demanded that the EU quickly issue “guidelines” on future relations, which could help provide the content for the negotiations.
Why is this controversial?
The guidelines will be used by the other 27 EU states to instruct Michel Barnier, their negotiator, on what they want from the relationship with Britain after Brexit takes place on March 29 2019. While the broad principles of the EU’s approach are established — the bloc adopted its opening position in April — the details matter.
The EU27 will now begin to debate negotiating tactics and priorities. Many capitals are unwilling to hurry this preparation just because Britain took its time to close the divorce talks. “They took nine months [on divorce], so why should we not take a little time on the future?” asked one senior EU official.
What will the guidelines say?
The draft outline the basis for the decision on sufficient progress, repeats longstanding EU principles on future relations, and offers some more detail about the terms of a “standstill” transition after Brexit, in which the UK would remain under the EU’s legal regime but lose its voting rights as a member.
The text is brief. A more lengthy, detailed document had been considered. But the stuttering pace of divorce talks convinced the EU to push much of that work into 2018. Brussels did not want to give Britain the impression that trade talks had begun before divorce discussions were over.
In practical terms this means there will need to be another summit next year, probably in March, when EU leaders approve a more comprehensive position on the future relationship. This month’s summit discussion will inform that work.
Will the UK be satisfied?
Probably. Opening trade discussions is a victory in itself for London. The EU side also expects to send a positive, relatively upbeat message about the future talks now that divorce matters are largely settled.
The lack of detail may also help London. Britain has quietly urged the EU to avoid precise, prescriptive guidelines on the future relationship — especially if they explicitly narrow the options available to Britain. “They do not want bad news in December,” said one senior EU government official handling Brexit issues.
Theresa May, Britain’s prime minister, has maintained a studious ambiguity over the future relationship, saying Britain will be able to negotiate a unique and special relationship. If the EU were to offer a binary choice between Norway-like access to the EU’s single market and a free trade deal similar to the bloc’s recent agreement with Canada, it may not help her cause at home as she prepares for a historic UK cabinet debate over how closely to align with the EU economy.
But Downing Street wants to build up momentum in talks. According to senior officials involved, by spring the UK wants to reach agreement on a “model” for trade relations — which would provide assurance about what sort of trade deal it is headed for. The EU side is more doubtful such rapid progress is possible. “We need to know what they want first,” said one senior EU negotiator.
So what else does the UK want from next week’s summit?
One of the UK’s top priorities is starting transition negotiations as early as possible. Although Britain is willing to largely sign up to EU terms for a two-year Brexit transition — including the continuation of EU law, budget contributions and free movement — negotiating the legal details will take time.
If talks drag on, it will have real economic effects. Companies are on the cusp of taking decisions and the more uncertainty about the transition, the more likely some of them are to act on contingency plans.
March is seen as an important deadline by both the UK and EU sides, as many boards will feel a duty to make a call as they come within 12 months of Brexit day.
Will the EU move fast to agree a transition?
That is an open question. Once he receives instructions from the EU leaders next week, Michel Barnier, the EU’s chief negotiator, will propose his own “negotiating directive” for transition talks.
This legal document will need sign off from EU ministers. That will take a month or more, according to EU officials. As a result, substantial transition negotiations may not start until February.
If Britain accepts all the terms, the negotiations could be short. But some countries — including France and Germany — are still reluctant to offer Britain too much, too early.
Paris in particular sees a potential advantage in maintaining uncertainty. Germany is also unconvinced that a meaningful agreement can be reached by March — when business need it — because the transition depends on a deal on the future relationship and final withdrawal treaty, which may take until autumn 2018.