Wednesday

24th Jan 2018

Analysis

What are the key points of the Brexit deal?

  • Theresa May travelled to Brussels early Friday to close the divorce deal with Juncker (Photo: European Commission)

Negotiators have squared the circle, fudged where politically necessary and compromised where must.

After nine months of negotiations, UK and EU officials on Friday (8 December) produced a 15-page joint report of the result of those talks. Here is a summary of the main points of the agreement on the basis for the divorce.

On citizens' rights

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  • Barnier said 'real, genuine progress' was made in the first phase of Brexit talks (Photo: European Commission)

The EU's main aim was to provide EU citizens living in the UK, and UK citizens living in the EU, certainty that their rights enjoyed under EU law will be maintained.

The key obstacle for an agreement on this was the role of the EU's top court. Getting rid of oversight by the European Court of Justice (ECJ) in Luxembourg was a main focus for Brexiteers. However, the EU wanted the ECJ to stand as a bulwark for citizens' rights.

Here both sides compromised.

The EU will get indirect ECJ influence. The UK has agreed that its courts will take the ECJ's case law into account.

UK courts will also have an opportunity for eight years to turn to the Luxembourg-based court with regards to citizens' rights if it needs interpretation.

While it is not obligatory for the UK courts to do so, if they ask for the ECJ's help, they will have to then follow the EU court's ruling.

"We owe it to the citizens to give consistent interpretation of the law on both sides," EU negotiator Michel Barnier said.

The EU Commission and an independent national authority in the UK will monitor the implementation of citizens' rights.

EU citizens will have a "short, simple, user friendly" application form in the UK to register themselves, they will be given two years to do so at a low cost.

The deal also secured the right of family reunification (unification rules with non-EU relatives, however, will be the same as for UK citizens), and the exporting of some welfare benefits.

Those who are absent for more than five years from the UK (or an EU country if they are UK citizens) will lose their residency right.

The agreement however does not guarantee the right for UK citizens to automatically move from one EU country to another maintaining all the rights after Brexit.

Money

This was the main sticking point for months.

The UK first refused to pay anything beyond 'Brexit Day', then was only willing to pay a skeleton of what the EU has asked for, which was everything under the current seven-year EU budget, all the funds and liabilities, and then some.

In September, British PM Theresa May pledged to honour all the commitments the UK has entered into as a member, and that no remaining member state would receive less or need to pay more after the UK left the bloc.

By the end of the negotiations the UK made it clear that it would pay everything May has committed to.

The UK will pay its share in the current EU budget, which runs out in 2020.

But because of the way the EU budget works, some of the payments will need to be paid after 2020 - which the UK has also signed up for.

At the end of 2020, the EU will take a snapshot of what is still due and will calculate the UK's percentage based on the average of UK contributions between 2014-2020.

The UK will only pay as payments become due, so for instance paying for pensions could stretch out over decades.

The UK will be reimbursed for what it has paid to the European Investment Bank and the European Central Bank.

According to UK estimates, the budget contribution would amount to €17-18 billion, the sum of outstanding commitments would amount to €21-23 billion, and the liabilities (minus the reimbursements) would amount to €2-4 billion.

It adds up to €40-45 billion in total.

The only thing the UK is not going to pay for, despite the EU including it in the original bill, is the relocation of the two EU agencies that were based in London.

The EU is quiet on figures. "I have never quoted any figures and will not start today, because they can change," Barnier told reporters.

Irish border

This was the issue on which British prime minister Theresa May stumbled over on Monday (4 December).

The Republic of Ireland wanted guarantees that there will be no hard border after Brexit with Northern Ireland to avoid reigniting the sectarian conflict there.

They said the only way to achieve that was a pledge that the UK's, or at least Northern Ireland's regulations stay close to the EU's.

But May's Northern Irish allies, the Democratic Unionist party she relies on for a majority, protested against creating a new 'division' within the UK between itself and the mainland, and Scotland and Wales also said they wanted carve-outs from the bloc's single market, if Northern Ireland was allowed to do so.

Keeping a soft border while being outside of the single market and the customs union, and keeping the options open for regulatory divergence is an impossible trick to pull off.

So the negotiators pushed the issue into the benevolent blur of the future.

If there is no possibility of avoiding a hard border under a EU-UK deal, the UK will then propose "specific solutions to address the unique circumstances of the island of Ireland", the joint report said.

It further said that in the absence of a deal, that the UK will maintain "full alignment" with the rules of the single market and the customs union, which support the North-South cooperation and the Good Friday agreement.

These fallback options are now enough for Belfast, Dublin and London to get to the second phase of talks.

But was EU negotiator Michel Barnier said: "No one should underestimate the difficulties that we will face on this issue". He said negotiations on Ireland would continue.

"We want to be clear whatever happens, this is a unique problem that will need unique solutions that will not constitute a precedent," he said.

Irish prime minister Leo Varadkar said Friday it was a "politically bullet proof" agreement to avoid a hard border.

What's next?

As the politics wind down, the legal procedure kicks in.

The commission has recommended to EU leaders to agree that "sufficient progress" was achieved on this first phase of Brexit talks, and that negotiators could move to discuss the next phase.

EU diplomats have gathered on Friday to discuss the draft guidelines for those talks, aimed to be adopted on 15 December by EU leaders at a pre-Christmas summit in Brussels. These guidelines will provide the basis for the talks on transition and the framework for future relations.

The guidelines underline that there should be no backsliding on what has been achieved during the first phase of talks.

It also points out that during the limited transition period – proposed by May in September – the UK would put itself in a similar position to non-EU Norway now. It would be involved in all the aspects of the EU's life except for institutions.

"The world continues as it is today, except that UK has no judge in the court, no seat in the council, no MEPs," a senior EU official pointed out.

"All existing Union regulatory, budgetary, supervisory, judiciary and enforcement instruments and structures will also apply," the guidelines set out, making sure that a level playing field remains between the UK and the EU.

Based on that if the transition period goes beyond two years ("about two years" was the time limit suggested by May) the UK could end up continuing to pay into the EU budget. But that is one of those grey areas which both sides will try to avoid.

To be able to talk in substance about how the new relationship between the UK and the EU will look like, European officials said they would like to hear more from the UK on what London wants.

Then the EU could adopt a new set of negotiating guidelines in February or March to form the basis for the talks on the future relationship.

Little wonder EU Council president Donald Tusk said on Friday: "Let us remember that the most difficult challenge is still ahead."

When will trade talks finally begin?

Officially, trade talks between the UK and the EU can only begin once the UK is a 'third country', meaning April 2019.

EU leaders will have to adopt a new set of guidelines, and Barnier will have to get a separate mandate.

The final trade deal is expected to be a mixed agreement, and therefore would have to go through the national and regional parliaments for ratification.

Regarding trade with third countries: once the UK is out it will fall out of the existing trade deals the EU signed with third countries. EU trade commissioner Cecilia Malmstroem recently said that London cannot expect that these deals would be rolled over for the UK.

So the UK would have to start negotiating its own free trade deals.

On Friday an EU official said that technically no agreement with third countries can come into force with the UK during the transition period, but it is something member states will have to discuss among themselves.

What could complicate trade talks is that third countries which the EU has signed free trade deals with will scrutinise the negotiations very carefully.

Some of the EU's agreements have special clauses saying, in effect: 'if you give more to others, you have to come back to us and give the same'.

Some countries have already approached the EU, the EU official said, making it clear it would be a major problem for them if the UK gets better terms.

At the same time the UK cannot expect to pick and choose rights and obligations. The EU official warned the UK: "Having the cake and eat it, and cherry-picking, will not work."

May travels to Brussels without Ireland deal

As the British prime minister arrives to present her proposals to meet the "absolute deadline" in Brexit talks, she has yet to secure an agreement with Ireland.

'We are not there yet', Barnier tells UK

The EU's chief Brexit negotiator dismissed reports on a 'deal' on the divorce bill with the UK, as the Irish border issue remains a key hurdle to move negotiations into the second phase after the December summit.

EU sets Brexit 'deadline of deadlines'

The EU will not have enough time to prepare for launching the second phase of Brexit talks at the summit next week, if the UK government does not come to an agreement on the divorce soon.

MEPs positive on Brexit deal, but with provisos

'A lot of the requests that the parliament has put forward, been achieved in the negotiations,' said Guy Verhofstadt, the European Parliament's 'point man' on Brexit.

EU leaders welcome Brexit divorce deal

British prime minister May's fellow leaders in Europe welcomed Friday's hard-won Brexit agreement on divorce, but Berlin in particular warned that the more 'highly complex' part of negotiations is to come.

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