Commission recommends moving to phase 2 of Brexit negotiations Newsletter December 2017

11/12/2017

On 8 December the European Commission judged that “sufficient progress” had been made in the Brexit negotiations to enable talks to begin on Phase 2 – the future relationship and trade. The Leaders of the EU-27 will now need to sign off on the “sufficient progress” at the European Council Summit on 15 December.

The Commission’s assessment is based on a Joint Report agreed by the EU and UK negotiators. Three issues were key during Phase 1 – the so-called “divorce bill” that the UK would have to pay on leaving the EU, citizens’ rights, and avoiding a hard border on the island of Ireland.
Download the Joint Report

The President of the European Council Donald Tusk has already prepared guidelines in advance of the Summit which also need to be endorsed by the EU-27 Heads of State and Governments. These guidelines will cover the transition period, with the expectation that it will last for two years from March 2019 and will involve the UK remaining in both the Single Market and the Customs Union and therefore under the jurisdiction of the European Court of Justice.

However, during this transition period, the UK will not be a party to the EU-decision-making process.

The new guidelines do not cover the future relationship beyond transition, although Tusk mandates the EU lead negotiator, Michel Barnier, to “start exploratory talks” on the future relationship, assuming that after the transition period the UK will leave the Single Market and the Customs Union. Tusk added that the EU is “ready to start preparing a close EU-UK partnership in trade, but also on security, defence and foreign policy.” Guidelines for the future relationship will most likely be adopted towards the end of January 2018 at an Emergency European Council Summit.

The Grayling View

The European Commission has essentially agreed to move to what could be termed “Phase 1.5” of the Brexit negotiations, namely the Transition Period. The future relationship more broadly will have to wait until new guidelines are drawn up and agreed in 2018. Business can be happy that transition is front and centre as the immediate priority. However, there is still significant uncertainty over what the future EU-UK relationship will look like post-Brexit, as well as the exact length of the transition period.

It is expected that the EU-27 will agree that “sufficient progress” has been made – but how will this go down in the UK? A transition period of 2 years whilst having no seat at the decision-making table does not amount to “taking back control”. Theresa May’s premiership could now come under threat from Brexiteers in the Conservative Party, who want Brexit to begin from March 2019 at the latest.

If you have any questions or would like more information about any of the issues within Brexit, please contact the UEIL secretariat.