Brexit – But Not as We Know It

  • Infrastructure
  • 15.06.2017 06:30 am

Aspects of the Brexit negotiations due to start on Monday may be less fraught than some people imagine as they will be conducted under aegis of an Article of the Treaty on the Functioning of the European Union (TFEU) few people have heard about.

Sandra Strong, Lead Commentator for Wolters Kluwer’s Croner-i International Trade, discusses the implications of negotiations under Article 218 which may avoid the need to get every member state to agree every aspect of Brexit.

Article 218 sets out the EU’s rules for conducting negotiations with third parties. For example, it defined the way negotiations happened between the EU and Canada over the Comprehensive Economic and Trade Agreement (CETA) and between the EU and Singapore on the EU-Singapore Free Trade Agreement. Of course, the UK is not yet a third country, but a trade deal can only be negotiated under this Article and any agreement must be ratified by all remaining 27 EU countries and their national parliaments. (Belgium alone has seven of them.)

The majority of the negotiations covered by Article 218 are focused on trade and investment, but it can also apply to other areas such as negotiations over economic co-operation and development, and participation in EU programmes such as research funding.

There is no formal rule book for negotiations such as this and few informative precedents, but Article 218 does detail how negotiations are opened and concluded so it is possible to begin to set out a potential timeline.

Negotiations will have to conclude by autumn 2018 to give any chance of a deal being in place before the time limit of Article 50 comes into play (29 March 2019). The key point is that this timeline leaves just over 12 months for substantive negotiations. Naturally, issues such as French, UK and German elections could push things off course at any time.

The entire Article 218 is relevant to negotiations on the future UK-EU deal, but the key sections are as follows.

  • Article 218(3) sets out how negotiations will begin, with the Commission submitting a recommendation to the Council and the Council adopting that decision and appointing a negotiator.
  • Article 218(4) provides that the Council may address directives to its negotiator to guide the negotiations, and may also appoint a special committee to oversee the negotiations.
  • Article 218(6) sets out how negotiations are concluded — by a vote of the Council, following a recommendation from the negotiator.
  • Article 218(10) states that the European Parliament must be “immediately and fully informed at all stages of the procedure”.

Under the terms of Article 218(8) the final deal must be agreed by a qualified majority vote of the European Council. That means that 72% of the 27 Member States (representing at least 65% of the total population of the 27 Member States) need to vote in favour of the agreement. However, if the agreement covers certain areas — including EU accession, EU finances, or common foreign and security policy — then the Council must agree to the deal by a unanimous vote. Whether or not the final Brexit deal will require a unanimous vote therefore depends on the scope of the agreement.

The Heads of State/governments of the EU27 invited the Council to nominate the European Commission as the Union negotiator and Michel Barnier was appointed chief negotiator. Michel Barnier will keep the European Parliament closely and regularly informed throughout the negotiations which will take place in Brussels.

It is clear that Member States will be closely involved in preparing negotiations, giving guidance to the Union negotiator, and assessing progress. For this purpose, a dedicated Working Party will be created in the Council, with a permanent chair, to ensure that negotiations are conducted in line with the European Council guidelines (anonymously agreed by the Council on the 29 April 2017) and the Council’s negotiating directives.

It could be argued that to negotiate a trade agreement with a country with which there is already a trade agreement in place should be easy. However, this is not going to be the case with the UK and the EU as the two parties appear to be starting from opposing positions. PM Theresa May said in the Article 50 letter that the UK will leave the single market and the EU Customs Union, but the EU considers the UK remaining in the customs union or being part of the single market, such as is the case with Norway. The guidelines laid down by the Council will define the overall principles that the EU will pursue during the negotiations and, it must be remembered, be based on the common interest of the EU and of its (remaining) 27 Member States. These trade negotiations will not be about liberalising trade; which is the usual reason for trade deals. Uniquely, these negotiations will be to establish how far trade restrictions and controls will impact on the EU27 and the UK’s relationship.

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