BREXIT: 27 EU Member States have to agree with the UK
We’ve heard Prime Minister Theresa May outlining how the UK wants to leave the EU. What matters now is what the EU27 can accept and agree upon with the UK.
May stated that the UK wanted full control over the immigration of people, whether they came from other EU countries or from outside the EU, that only laws adopted in Westminster would be adhered to, and that the UK would withdraw from the jurisdiction of the European Courts of Justice. As a logical consequence, she recognized that the UK could not take part in the internal market, where freedom of movement for goods, services, capital and workers is the fundamental rule.
As a result, she will inform the EU27 government leaders by the end of March and the exit treaty talks can start. A whole range of practical issues needs to be resolved. Among them will be: the payments for pensions of EU personnel, the return of real estate owned by the EU in the UK, when exactly do payments in and out of EU programs and common policies, such as agriculture and fisheries, end, where the EU agencies based in the UK, such as the European Medicines Agency, will move to, and what transitional measures are required for a smooth dissolving of all UK ties with the EU.
These exit modalities will be negotiated by the Commission’s envoy, Michel Barnier, based on guidelines that the EU27 heads of government will issue upon receipt of the Article 50 letter and the mandate he will receive from the EU27 Council of Ministers of Foreign Affairs. Obviously, the Commission can only accept what is compatible with the Treaty on the Functioning of the EU (Lisbon Treaty), by which it is legally bound.
The resulting exit treaty requires approval by a qualified majority of the EU27 Member States and by the UK. The European Parliament and the Houses of Parliament in the UK will have to ratify it.
Leaving the EU is one thing, and difficult enough, but for the moment, the future relationship between the EU27 and the UK seems even more complicated and unclear. From a Brussels’ perspective, negotiations about a new relationship treaty with the UK can only start once the UK has actually left the EU, although some broad outlines of future ties may be considered during the exit talks.
The EU cannot negotiate a free trade agreement with an existing Member State, and the UK remains a full member until it has left the EU. Free trade agreements aim to bring down tariff and non-tariff barriers between countries and seek convergence or mutual recognition of regulatory provisions. Between EU Member States, there are no such barriers in place and there is full legal alignment. There are no hindrances to trade to get rid of.
To complicate matters further, these talks are completely novel. There is no handbook or precedent on how to conduct the process of an EU Member State leaving the club. Therefore, a negotiating protocol has to precede the real discussions. It should outline who calls for the meetings, where they take place – in Brussels, in London? – who sets the agenda, what the sequence of subjects will be, who drafts the minutes, who chairs, who attends, whether there will be one chronological negotiation or several parallel exercises. These practical elements are essential to achieve any results and can be cumbersome, since the EU27 will also need to ensure that the Member States and the European Parliament feel included and remain aligned, because, ultimately, they have to approve whatever the outcome is.
The question arises whether during the exit period, the UK ministers can debate and vote in the Council on EU laws that will no longer apply to the UK. The same problem arises for the MEPs: is it appropriate for UK MEPs to amend and vote on future EU laws that will not affect them? The situation promises political fireworks, e.g. when internal market legislation is being considered.
Companies and organizations affected by Brexit would do well to analyse clearly, what the impact of Brexit on their operations will be. They should articulate concerns now and pass the message not just to the UK government, but also to the 27 EU Member States and the Commission. The key will be to gain the support of the EU27. Since the better advice is likely to come from insiders rather than outsiders, it will pay off to closely monitor the negotiations that are about to commence in Brussels and in the Member States. That is where the decisions on Brexit will be made. It permits to seize every opportunity, to make remarks, and to mitigate possible negative developments. After all, the EU will remain the largest integrated single market, with 450 million consumers and totally free trade between 27 Member States, once the UK will have left.
Chairman, Hill+Knowlton Strategies Brussels
Co-head of Hill+Knowlton Strategies’ Global PA Practice