EU leaders and the UK government agree to move the negotiations to the second phase

By Ioannis Karamarias∗

The experience of the past few months suggests, in fact, that the way ahead will be extremely fraught and the Prime Minister’s goal of a full functional agreement by March 2019 is still viewed as a rightful expectation, rather than something grounded on reality. 

EU leaders have agreed to proceed with Brexit negotiations straight to the second phase but urged the UK Government for “clear plan” as to the future trade relationship they wish to establish with the EU.

The first issue to be discussed, during the first weeks of 2018, will be the details of an expected two-year transition period after the UK’s exit, (also in accordance with Article 50 of Lisbon Treaty), stipulated for 29th March 2019. Further talks between the UK and the EU, on trade and security co-operation are due to follow from March 2018, onwards.

Theresa May pointed out that the said agreement is an “important step” on the road towards the future relationship between EU and the UK in the post-Brexit era, but the German Chancellor Angela Merkel said that the next steps forward are expected to be “a tough process“.

Donald Tusk, the president of the European Council, broke the news that the 27 EU leaders had reached an agrement on the three topics related to Article 50 of the Lisbon Treaty, (the rights of the EU citizens in the post-Brexit era, the Divorce Bill, related to the amount the UK has to pay back to the EU and which is linked with the financial commitments of the UK towards the EU until 2020 and the Common Travel Area matter, namely the movement of citizens, capitals and goods, as well as the trade regime across the border separating Northern Ireland-part of the UK from the Republic of Ireland, which is an EU Member State), to move on to the second stage. He congratulated Mrs May on reaching this stage and said the EU would begin internal preparations for the next phase right now as well as “exploratory contacts with the UK to get more clarity on their vision“.

Mr Tusk pointed out that while securing a deal in time for the UK’s exit of 29th March 2019 turned out to be a realistic target, nevertheless, he suggested that the next phase would be “more challenging and more demanding“. Moreover, speaking on behalf of the EU leaders, pointed out that the EU expects the UK Government to come up with a “clear plan and vision” in relation to the second phase of the negotiations; he also urged the UK goverment to incorporate the terms of the agreement reached on 16th December 2017 in Brussels, into a Statute that will be implementing all the above changes, (on the above-mentioned 3 topics), into the UK law.

Mrs May said the two sides would begin discussions on future relations straight away and stressed the need for “rapid progress” on a transitional phase to “give certainty” to business between the UK and the EU. “This is an important step on the road to delivering the smooth and orderly Brexit that people voted for in June 2016.  The UK and EU have shown what can be achieved with commitment and perseverance on both sides“, she said.

The international trade spokesman of Labour Party, Barry Gardiner, welcomed the move forward, but said it would be a “real problem” for business prosperity if the EU does not start the free trade deal negotiations in the next three months.

He also said that Labour Party do not stipulate a time limit on a post-Brexit transition phase, as the expected two-year period, (due to start from the so-called cut-off date of 29th March 2019, namely the date of the UK’s exit from the EU, and last until March 2021), would be “extremely tight“.

The document “calls on the UK to provide further clarity on its position on the framework for the future relationship“.

But in a passage added during the past week, it invites the EU’s Brexit negotiator Michel Barnier to “continue internal preparatory discussions” on future relations rather than having to wait until March 2018 to start proceeding with it.

What the Agreement of 16th December provides (in general)

A] For the EU Citizens

EU citizens in the UK and UK citizens in the rest of the EU will maintain the right to stay. Rights of their children and those of spouses/(unmarried) partners in existing “durable relationships”, (that means as partners to be able to prove through relevant evidence that they have been living together, as a couple akin to marriage, for at least two years), are also safeguarded. EU citizens who have not applied for the Permanent Residence, yet, although they meet the conditions prescribed by the Immigration (EEA) Regulations 2006, (for example, they have exercised EU Treaty Rights as workers, or students, or self-sufficient or self-employed persons in the UK, for at least five years), they will be allowed to apply for Permanent Residence, (the so-called Settled Status, as it will be called in the post-Brexit era), after the cut-off date, which is going to be the 29th March 2019.

UK courts will preside over enforcing rights over EU citizens in the UK but will still be able to refer controversial or challenged cases, (by way of an application for an appeal hearing), to the European Court of Justice; the European Court of Justice will still maintain jurisdiction over a number of UK legal cases, upon exhaustion of domestic legal remedies, for another 8 years after the 29th March 2019, namely the date of the UK’s withdrawal from the EU. Furthermore, a grace period of two years from 29th March 2019 to March 2021 is provided, under which the Europeans who will enter the UK will not be required to submit any application to regularise their status in the UK.

But still, there is a new legal regime, (accompanied by the relevant Application Forms), to be introduced and implemented through the UK Withdrawal/Repeal Bill, after the UK’s withdrawal from the EU, scrapping the current Immigration (EEA) Regulations 2006, providing for the rights of the EU citizens already living and exercising EU Treaty Rights in the UK, as well for their close and/or extended family members, (spouses/partners and children and nieces, nephews, cousins, uncles and aunties, repsectively), the latter being either EU/EEA citizens, ir non-EU/EEA citizens. Moreover, new legal rules, providing specifically for the rights of the EU citizens who are due to enter the UK after the cut-off date of 29th March 2019, (and in particular, after the end of the transitional period of grace).

B] Irish Border (Common Travel Area issue)

The agreement ensures that there will be no hard border, thus, upholding the Belfast, (Good Friday), Agreement. It makes clear that the whole of the UK, including Northern Ireland, will be leaving the Customs Union. However, it still remains unclear how an open border will be achieved but says in the absence of a later agreement, the UK will ensure “full alignment” with the rules of the Customs Union and Single Market that are contained in the Good Friday agreement. Moreover, there was secured a concession by the DUP, (the Northern Irish Party, being represented after the elections of 8th June 2017 in the House of Commons with 10 MPs, providing support to the Tory government of Theresa May), namely, that no new regulatory barriers will be allowed between Northern Ireland and the rest of the UK without the approval of Stormont, (the autonomous Parliament in Northern Ireland). As the DUP leader, Arlene Foster made it clear, Northern Ireland, should, by no means, be treated differently from the rest of the UK.

C] The “Divorce Bill” with the EU

There is no concrete figure on how much the UK is expected to pay, (it was rumoured that they agreed to a final sum of £42 bn), but the document sets out how the bill will be calculated; it is expected to be about £50bn and to be paid off gradually, for several years.

The UK agreed to continue to pay its scheduled contributions into the EU budget as normal in 2019 and 2020.

It also agrees to pay its liabilities such as pension contributions.

Tory Rebel MPs defeated the government on Wednesday, 13th December 2017 

In a debate in the House of Commons held on Wednesday, 13th December 2017, and with votes 309 to 305, it was decided that any amendment to the EU Withdrawal/Repeal Bill should be discussed and approved of, from Parliament, first before it can be implemented into the UK law and come in force. Therefore, in the light of the above developments, the government is highly likely to accept an amendment to the EU Withdrawal/Repeal Bill next week to see off another potential Commons defeat for Theresa May. Conservative rebel MPs have been concerned about plans to put the Brexit date and time – 11pm on 29 March 2019 – into law. Backbenchers, including former minister Oliver Letwin, have tabled an amendment, suggesting a change to the said Bill, in the direction of formally stipulating the date and time of the UK’s exodus from the EU.

Downing Street No.10 sources are confident they can avoid a defeat, after it was announced there were no plans to take the date out of the bill.

Responding to the reports, Shadow Brexit Secretary, (Labour MP), Sir Keir Starmer wrote on Twitter: “After a car-crash defeat on Brexit vote, there are rumours that the Prime Minister will now U-turn on gimmick exit day amendment: she was forced to yield in to the pressure by one of her own Tory MPs to amend her own amendment before it is put to vote!

The European Commission’s President, Mr Jean-Claude Juncker said the EU’s initial priority was to “formalise the agreement” that had already been reached before moving forward, pointing out that, “the second phase will be significantly harder and the first was very difficult”. Mr Juncker also praised Mrs May as a “tough, smart and polite” negotiator; he finally said that he was “entirely convinced” that the final agreement reached would be approved by the UK and European Parliaments.

Giving his response, French President Emmanuel Macron said that in moving forward the EU had maintained its unity, protected the integrity of the single market and ensured “compliance with the EU rules“.

Mrs May is due to discuss her vision of the post-Brexit UK outside the EU at a cabinet meeting on Tuesday, 19th December 2017, having suffered her first Commons Brexit defeat last Wednesday. The Prime Minister has claimed her Government is “proving the doubters wrong” after securing a deal in the first phase of Brexit negotiations.

Theresa May said her Brexit plans will not be “derailed” as Senior Ministers are preparing plans as to the future shape of the UK’s relationship with the EU.

Boris Johnson called for Mrs May to broker a (free trade) deal with Brussels that will allow the UK to set aside EU laws, on the one hand, (in accordance with the people’s mandate on Brexit), but will not subjugate the UK, on the other to the EU norms and standards, thus, rendering it a “vassal state“.

Writing in the Sunday Telegraph, Mrs May said: “Amid all the noise, we are getting on with the job”.

The Cabinet will thrash out its stance on a post-Brexit trade deal over the coming days, with Mrs May under pressure from Brussels to provide clarity on the UK’s desired “end state” for the relationship it wants with the EU.

Implications-Conclusion

After the six months’ difficult negotiations, (they started on 19th June 2017), Theresa May may now be entitled to breathe a sigh of relief, as the European Council officially declared that the first phase of the UK’s long exodus process from the European Union is over. Both sides are now committed to reaching a free trade deal agreement, in due course.

The EU and the UK both now seem willing to strike a final deal, and while there have, inevitably, been conflicts and frictions on both sides over the past six months, they have, in the main, dealt with each other in good faith. But the fragility of the present government, (it is a Conservative Minority government getting support from 10 MPs of the Northern Irish DUP party), and the complexities of some of the issues, have meant that, on some occasions, it has felt like the Prime Minister might not fail to reach the primary agreement. Had she not been able to get this far, there genuinely could have been raised questions about her future. The conventional wisdom dictates that the next phase is expected to be more complicated, even unpredictable.

There are some optimists in government who believe it is not going to be that way – because the UK and the EU are already partners, as they say, reaching a deal is mainly a question of re-building a constructive existing relationship under a new shape, rather than creating one together, entirely from scratch.

But there are significant disagreements, contradictions, different and contrasting views and approaches to iron out, inside the Conservative Party as well as among the EU 27 Member States. Moreover, the terms of the first phase agreement are still vague and inconcrete, (in relation to the EU citizens’ rights, a new legal framework, that will scrap the current legal regime based on the Immigration EEA Regulations 2006, as well as in relation to the Divorce Bill, the amount of £42 bn has not been finalised, yet, nor has it been stipulated a precise time-schedule to be paid off- it may still well take many years for the payoff to be materialised- and finally, a new legal regime, safeguarding the free movement of individuals and goods across the border between Northern Ireland and Republic of Ireland, also in line with the Good Friday Agreement of 1998 has to be set up).

The experience of the past few months suggests, in fact, that the way ahead will be extremely fraught and the Prime Minister’s goal of a full functional agreement by March 2019 is still viewed as a rightful expectation, rather than something grounded on reality.

But, for the time being, Mrs May’s team can be satisfied that they have managed even to come this far.

∗Ioannis Karamarias LLB, LLM (Commercial Law), LLM (Financial/Criminal Fraud) is a Solicitor in England and Wales

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