BREXIT BREAKTHROUGH: TRADE TALKS TO GO AHEAD




Robert Harneis –TDO-(FRANCE)  The UK and the European Commission today announced that there has been ‘sufficient progress’ in the first phase of the Brexit negotiations. The three issues the subject of phase one negotiations were the size of the cash settlement for continuing projects, the rights of expatriate citizens in the UK and the EU and the question of the Northern Ireland frontier. The substantive trade talks can now go ahead.

Speaking at a press conference, President of the European Commission Jean-Claude Juncker said, ‘Today’s result is of course a compromise…As in any negotiation, both sides have to listen to each other, adjust their position and show a willingness to compromise.’ He added, ‘The Commission’s negotiators have made sure that the choices made by the EU citizens living in the UK will be protected. We have made sure that their rights will remain the same after the UK has left the European Union. This is in particular the case for EU citizens’ right to live, work and study.’ 

On the Brexit financial settlement, Juncker said, ‘Prime Minister Theresa May said…before my speech that the United Kingdom would honor its commitments including beyond 2020.’ Also speaking at the press conference, May said, ‘I very much welcome the prospect of moving ahead to the next phase, to talk about trade and security and to discuss the positive and ambitious future relationship that is in all of our interests. I was clear in Florence that we are a country that honors our obligations; after some tough conversations we’ve now agreed a settlement that is fair to the British taxpayer. It means that in future we will be able to invest more in our priorities at home, such as housing, schools and the NHS.’

On the difficult and highly sensitive Irish border issue, the agreed Brexit withdrawal text says, ‘In the absence of agreed solutions, the United Kingdom will maintain full alignment with those rules of the internal market and the Customs Union which, now or in the future, support North-South cooperation, the all-island economy and the protection of the 1998 Agreement,’ and, ‘The United Kingdom will ensure that no new regulatory barriers develop between Northern Ireland and the rest of the United Kingdom, unless, consistent with the 1998 Agreement.’  Irish Prime Minister, Taoiseach Leo Varadkar, said that Ireland had ‘achieved all we set out to achieve’, and added that he was ‘satisfied that sufficient progress has now been made on the Irish issues.’ He said that Ireland would ‘remain fully engaged and vigilant throughout phase two’, noting that there will continue to be a ‘distinct strand’ on Northern Ireland in the next phase of talks. He stressed, ‘There is no question of us trying to exploit Brexit to move toward Irish unity without consent’.

Meanwhile, President of the European Council, Donald Tusk, proposed that following today’s agreement ‘we should start negotiating the transition period, so that people and businesses have clarity about their situation.’ He continued, ‘As you know, the UK has asked for a transition of about two years, while remaining part of the Single Market and Customs Union. And we will be ready to discuss this, but naturally, we have our conditions.’ Tusk proposed, ‘During this period, the UK will respect: the whole of EU law, including new law; it will respect budgetary commitments; it will respect judicial oversight; and of course, all the related obligations,’ adding, ‘Clearly, within the transition period following the UK’s withdrawal, EU decision-making will continue among the 27-member states, without the UK.’ Tusk called this ‘the only reasonable solution,’ adding, ‘it is in the interest of all our citizens that it is agreed as soon as possible. This is why I will ask the EU leaders to mandate our negotiators to start these talks immediately.’ However, he cautioned, ‘While being satisfied with today’s agreement … let us remember that the most difficult challenge is still ahead … to negotiate a transition arrangement and the framework for our future relationship, we have de facto less than a year.’

Both sides have a great deal to lose from a failure of negotiations. The UK needs commercial stability at a time when it is in some economic difficulty, particularly through a high level of indebtedness, both public and private. Despite their habit of making patronizing statements the EU also has much to lose if Britain walked away from negotiations. Germany and France in particular have a substantial favorable trade balance with the UK. Britain on the other hand has a trade surplus with the EU in financial services upon which, to some extent, the City of London depends.

The European Parliament has been quick to stress that it has to approve any deal. Nevertheless, in the end it is the nation states, particularly the larger ones, who have the most to lose from a bad Brexit divorce and will therefore make the final decisions. The Baltic states and the Visegrad Four, Poland, Hungary, Slovakia and the Czech Republic look to Britain as a natural ally, in or out of the EU.

The withdrawal of the UK from the EU will leave a substantial hole in the budget of the European commission. Britain is one of the few major contributors and has no legal obligation to pay any money to the European union on leaving. Equally as a nuclear power and United Nations Permanent Security Council member Britain is important to EU security and diplomacy. Whilst the process of negotiation tends to make Britain appear weak, Prime Minister May’s negotiating position is in fact strong.