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Brexit: What Still Needs To Be Done

 7 min read / 

What Happened So Far In The Brexit Tale?

On the 23rd of June 2016, the British people decided to leave the European Union. 51.9% of those voting opted to leave. It could have been clearer, but it was unambiguous that there was a majority opinion in British society for leaving the EU. On the 29th of March 2017 the UK withdrawal letter was given to the President of the European Council, and within two years the UK will officially be out of the Union.

By March 2019 there has to be an agreement on the withdrawal terms, a transition deal for the implementation phase until 2021 and guidelines for a future relationship agreement, which will be specified during the implementation phase. The withdraw deal has to be voted
by a qualified majority in the European Council and by consent from the European Parliament. The final agreement will also be subject to a vote in the British parliament; due to a diminishing majority behind Theresa May’s government, it will be a Herculean task for her to get a majority for the deal.

Reaching a First UK-EU Settlement

On December 15th, 2017 a provisional settlement between the divorcing partners was reached on the subjects of citizens’ rights, financial obligations and the Irish border. One can find the underlying law respectively in part two “Citizens’ Rights“, part five “Financial Provisions“ and in the “Protocol on Ireland and Northern Ireland“ of the draft agreement, which was released by the European Commission and by the British Government.

The first crucial matter is about EU citizen rights. They will be reserved for incoming EU citizens during the transition period, and the jurisdiction of the European Court of Justice will cover them. This can be found in part two of the joint withdrawal agreement between the UK and the EU. The UK government has agreed that EU citizens and their families arriving during the implementation period will be able to stay on the same terms as EU citizens living in the UK currently. Still, they will have to apply for a so-called settled status, which is a formal application procedure, available only after they have been resident in the UK for five years. Settled status cannot be denied for arbitrary reasons, so there one can confidently say that EU citizens arriving before the deadline in 2021 will obtain the status. However, an important thing to notice is that for EU citizens arriving after the transition period has ended, EU law will no longer apply, and the migration and status of EU nationals will be subject to UK law and the UK immigration regime

The second crucial matter is financial. Both sides have agreed on a withdrawal cost of around £37bn for the UK to pay. Britain will pay £37.1bn to the EU over the next 45 years. Chancellor Philip Hammond laid out that the UK would pay almost half of its outstanding commitments to Brussels by the end of 2020. Namely, £16.4 billion will be paid by 2020, when the EU’s seven-year budget runs out. In the coming EU budget, the UK will not have any further financial commitments. Nevertheless, between 2021 and the end of 2028 the UK will pay a further £18.2bn towards projects that have been signed off by the UK but have not yet been paid for. On top of this, the UK has to pay a further £2.5bn over the next 45 years to cover on-going expenses such as the pensions of British EU officials and British MEPs. These figures are estimated by the British Office of Budget Responsibility and agreed on by the UK government.

The third matter is the Irish border, which might be the hardest thing to agree on. Both sides are committed to having a frictionless Irish border after Brexit. Both parties agreed that they are strongly committed to the Belfast Agreement of 1998, more widely known as the Good Friday Agreement. On the issue of a common regulatory area on the island of Ireland, they have not found common ground. Both parties agree on the outcome, however; a frictionless Irish border for people and goods, but they disagree on the means to achieve it, with the EU reserving the option to keep Northern Ireland in the EU customs union as a last resort.

Phase 2 Of The Negotiations

Currently, phase 2 of the Brexit negotiations is on-going, with talks on the framework of a future trade deal and other future relationship issues. The UK negotiating team would be keen to focus on the future trade deal, but EU officials reiterated that concrete talks about a future trade deal would only commence during the transition period. Several officials have made it clear that a final deal on the withdrawal agreement and the transition period should be ready by October so that the European Parliament and the European Council have time to vote on it. Whether this ambitious schedule will be feasible is another question.

The goal for the UK must be to find solutions in all kind of areas to all kinds of regulatory voids they will be facing, thereby ensuring a smooth operation of business in the UK. The UK needs to negotiate with the EU, and in the same time, they need to find substitutes to all regulatory agreements in which they are currently covered by an EU regime. They have to fulfil a two-sided negotiation role. It means a lot of hard work for the British negotiators.

It is important to point out that leaving the EU on the 29th of March 2019 without a future trade deal would be disastrous since this would mean a fall back on WTO terms in trade relations, which is in the interest of neither party. The British government reiterated that they want to leave the single market and the customs union, and only a deal like the CETA free trade agreement, which the EU negotiated successfully with Canada is feasible.

A Political Outlook on the Future

Leadership changes in the two most important economies in Europe, Germany and France, will play an important part in negotiations.

On the one hand, President Macron is unlikely to give any favourable deal to Britain since he wants to strengthen and reform the EU and is a politician with clear federalist ideas; for him, it would be unfavourable to give Britain a too good a deal since this may encourage other Euroskeptic nations to leave the Union.

On the other hand, Germany’s political change, or call it non-change, might be nevertheless more favorable for Britain. The new finance minister, Olaf Scholz, a strong voice in the government as vice-chancellor, could play a crucial role. There is a good chance that he will advocate for a more lenient Brexit, with strong economic ties to the UK in the future. He has a good relationship with Philip Hammond, his British counterpart, and is the former major of Hamburg, a city that is sometimes dubbed as the most British German city. The trade dependency of Hamburg is important, with a great bulk of container cargo coming from British ports into its harbour. It is unlikely that he wants to actively harm the region where he comes from by advocating for a punitive Brexit.

Finally, it is important to note that after the chemical attack in Salisbury there was a clear, united response by the United Kingdom, Germany and France. It is interesting to note that while trade talk might be tense, there is still European support for Britain, especially in crucial issues like defense.

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