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The Brexit negotiations cover the negotiations between the United Kingdom and the European Union leading up to Brexit, being the United Kingdom's exit from the European Union, following the United Kingdom European Union membership referendum in June 2016.
The Brexit negotiating period began on 29 March 2017 when the United Kingdom served the withdrawal notice under Article 50 of the Treaty on European Union. The period for negotiation stated in Article 50 is two years from notification, unless an extension is agreed.
Negotiations officially began on 19 June 2017 when British Secretary of State for Exiting the European Union, David Davis, arrived in Brussels to negotiate the Brexit terms with European Chief Negotiator for the United Kingdom Exiting the European Union, Michel Barnier.
According to the European parliament, "For the moment, it appears that the two sides have different views on the sequencing and scope of the negotiations, and notably the cross-over between the withdrawal agreement and the structure of future relations, and this divergence itself may be one of the first major challenges to overcome."
The Department for Exiting the European Union is responsible for overseeing the negotiations to leave the EU and for establishing the future relationship between the UK and EU.
The proposed principles were set out in the Article 50 notification:
The Prime Minister's formal letter of notification was delivered in Brussels on 29 March 2017. It included withdrawal from the European Atomic Energy Community. The letter recognized that consequences for the UK of leaving the EU included loss of influence over the rules that affect the European economy, and UK companies trading within the EU aligning with rules agreed by institutions of which the UK would no longer be part. It proposed agreeing to seven principles for the conduct of the withdrawal negotiation. These are for:
The constitutional lawyer and retired German Supreme Court judge Udo Di Fabio has stated that separate negotiations of the EU institutions with London, Scotland or Northern Ireland would constitute a violation of the Lisbon Treaty, according to which the integrity of a member country is explicitly put under protection.
The start of negotiations was delayed until after the United Kingdom general election, which took place on 8 June 2017. Antonio Tajani, speaking on 20 April said that the early election should bring stability to the UK, which would have been good for negotiations. In the event, the election led to a hung parliament which is expected to increase instability.
Following the United Kingdom's notification under Article 50, draft guidelines for the negotiations were sent to EU delegations of the 27 other member states (the EU27). The draft, prepared by the President of the European Council, states that the guidelines define the framework for negotiations under Article 50 and set out the overall positions and principles that the Union will pursue throughout the negotiation. It states that in the negotiations the Union's overall objective will be to preserve its interests, those of its Member States, its citizens and its businesses, and that, in the best interest of both sides, the Union will be constructive throughout and strive to find an agreement. The draft sets out two Core Principles:
According to the European Parliament, the withdrawal agreement and any possible transitional arrangement(s) should enter into force "well before the elections to the European Parliament of May 2019", and the negotiations should focus on:
On 18 April 2017, a spokesman for Donald Tusk said "We expect to have the Brexit guidelines adopted by the European Council on 29 April and, following that, the Brexit negotiating directives ready on 22 May". On 29 April the EU27 unanimously endorsed the draft guidelines with no debate.
In a speech to a plenary session of the European Committee of the Regions in Brussels on 22 March 2017, Barnier, as EU Chief Negotiator for the Preparation and Conduct of the Negotiations, said that the EU wanted to succeed by reaching a deal with the British, not against them.
On 22 May the European Commission Council, following the approval of negotiating directives which had been adopted by strong qualified majority (72% of the 27 Member States, i.e. 20 Member States representing 65% of the population of the EU27), authorised the opening of Article 50 discussions with the Commission appointed as the negotiator. It further confirmed that all agendas, EU position papers, Non-papers and EU text proposals will be released to the public and published on line.
EU27 guidelines include:
within the withdrawal phase.
The second phase, covering the post-Brexit relationship between the EU27 and the UK, will begin "as soon as the European Council decides that sufficient progress has been made in the first phase towards reaching a satisfactory agreement on the arrangements for an orderly withdrawal". The earliest opportunity for this decision is expected to be 19 October 2017, at a summit of EU leaders.
Some effects of the UK withdrawal could emerge before the UK and the EU27 conclude the Article 50 negotiation, as a result of policies existing when the negotiation begins, or some change of policy later. At the outset policy provisions binding on the EU include principles, aspirations and objectives set out in the TEU (Treaty on European Union) Preamble and Articles, of which
Policies mentioned in the Preamble include:
– Achieve the strengthening and convergence of Member States' economies and establish an economic and monetary union including a single and stable currency,
– Promote economic and social progress for their peoples, taking into account the principle of sustainable development and within the context of the accomplishment of the internal market and of reinforced cohesion and environmental protection, and implement policies ensuring that advances in economic integration are accompanied by parallel progress in other fields,
– Establish a citizenship common to nationals of their countries,
– Implement a common foreign and security policy including the progressive framing of a common defence policy, thereby reinforcing the European identity and its independence in order to promote peace, security and progress in Europe and in the world,
– Facilitate the free movement of persons, while ensuring the safety and security of their peoples, by establishing an area of freedom, security and justice.
– Continue the process of creating an ever-closer union among the peoples of Europe, in which decisions are taken as closely as possible to the citizen in accordance with the principle of subsidiarity.
UK policy was stated in a white paper published in February 2017: The United Kingdom’s exit from and new partnership with the European Union. In the white paper, UK negotiating policy was set out as twelve guiding principles:
A meeting at 10 Downing Street took place on 6 April 2017 between Theresa May and Donald Tusk to discuss "the way ahead on Brexit". Another meeting took place in London on 20 April 2017, this time between Theresa May and Antonio Tajani to discuss the rights of EU citizens. After the 20 April meeting, Antonio Tajani said that the UK and EU27 timetables fitted well together, with a two-year exit deal negotiation followed by a three-year transition phase. A 10 Downing Street meeting between Theresa May, Michel Barnier and Jean-Claude Juncker took place on 26 April to discuss the withdrawal process. May reiterated the UK's aim for a "deep and special partnership" after Brexit.
At a meeting on 29 April 2017 the EU27 unanimously endorsed the draft guidelines with no debate. A meeting took place between Michel Barnier and both houses of the Irish parliament on 11 May, where Barnier assured members of Dáil Éireann and Seanad Éireann that Europe would "work with you to avoid a hard border". Barnier went on to say that "the Irish border issue would be one of his three priorities in the negotiations," and that "there is always an answer".
The UK retains its full EU rights until Brexit, and the EU is seeking to increase their budget, leading to the possibility that Britain may veto EU budget increases, which in the immediate term amount to 4 billion euros. A continued British veto would have far-reaching consequences and "will hurt us" according to German MEP Jens Geier.
On 19 June 2017, David Davis arrived in Brussels to start negotiations with Michel Barnier. Terms of reference were agreed, and dates were set for four-week cycles, to culminate in a fifth round of negotiations in the week commencing 9 October. Negotiating groups were established for three topics: citizens' rights, the financial settlement and "other separation issues", with a separate dialogue on Ireland / Northern Ireland to be led by Barnier and Davis.
Four days of talks, largely between officials, were held in Brussels on July 17–20. Progress was made in understanding each other's positions.
On citizens' rights, a joint paper compared the positions of the two parties in tabular form. On Irish border issues, both parties stated that they remained committed to the Good Friday Agreement. Michel Barnier called for clarification from the UK in the August round on the financial settlement, citizens’ rights and Ireland, including on how the UK intends to maintain the Common Travel Area.
Talks were held in Brussels on August 28–31. Agreement was reached on points including protecting the rights of frontier workers (those living in one country and working in another); recognition by the UK of social security contributions made both before and after exit; and continuation of healthcare reimbursement for UK citizens who are in the EU27 on exit day and vice versa. The joint paper comparing the two parties' positions was updated.
Speaking at the conclusion of the talks, Michel Barnier highlighted two areas of disagreement: the role of the European Court of Justice in enforcing citizens' rights, and the extent of the UK's financial obligations. He stated "Time is passing quickly ... At the current speed, we are far from being able to recommend to the European Council that there has been sufficient progress in order to start discussions on the future relationship".
Two different but incompatible legal approaches would be considered for the Brexit. The EU approach is top down while the British approach is bottom-up. this difference of approach raises a serious problem of confidence. From Michel Barnier point of view, what was decided by 28 member states, has to be paid by 28 member states till the end.
The issue of payments by the UK to the EU as part of the exit agreement is subject to much conjecture and has been divided into two broad questions. Firstly, whether a leaving state is legally obligated to contribute to the EU budget beyond its membership period or compensate for any financial losses that EU may suffer on account of withdrawal, given that Article 50 does not concern itself with financial ramifications of a withdrawal; and secondly – if the United Kingdom is legally obligated to pay – what should be the due amount.
The leaders of France and Germany have both stated that the UK would need to agree terms regarding the departure before discussing future relationships. This has been reinforced by EU27 guidelines issued to the remaining 27 countries. The UK has signalled that it may consider paying the EU to attain preferential access to the economic Single Market and may offer to pay liabilities, even if not legally obligated, on a moral and co-operative basis to secure a preferential working relationship with the EU.
The highest reported claim by the EU is around €60 billion (£50 billion[when?]). In March 2017 the Bruegel think tank estimated that the UK would need to pay at least €25.4 billion, but the method of calculation is debatable and their calculations using seven different methods produced estimates between €30 and €45 billion. However this £50 billion bill includes the United Kingdom's annual EU contribution (approximately £13 billion annually) for the two years from 2020 and 2021 as agreed in the Multiannual Financial Framework (MFF). The United Kingdom, in accordance with Article 50 and unless otherwise extended, will cease to be a member of the EU from 29 March 2019 and the MFF does have a provision for "unforeseen circumstances".
EU27 is expected to ask the UK to pay its liabilities in euros, including the relocation costs associated with the two EU bodies currently based in London.
Speaking on 20 April, Antonio Tajani said that it was too early to quantify the amount the UK would need to pay and that it was not a bill to leave the EU, it was money needed for farmers and small businesses.
A March 2017 House of Lords report acknowledges that the EU may claim for (1) part of the current budget (which runs from 2014 to 2020) post March 2019, because it was approved by the UK (2) part of the EU future commitments which amount to €200 billion and (3) a contribution if the UK is to continue with access to some EU programmes. The report concluded that the UK had no legal obligation to make "exit" payments to the EU if there was no post Brexit deal.
Discussing financial and legal complexities involved in negotiating withdrawal, including settlement of outstanding financial liabilities and division of assets, the report mentions (paragraph 15) that the EU budget is funded by revenue drawn from various sources, governed by the EU’s Own Resources Decision (ORD), which was made part of UK law by the European Union (Finance) Act 2015. The revenue includes contributions from import duties and VAT collected by member states. The report also mentions the EU Multiannual Financial Framework for controlling the annual expenditure.
The EU has considerable assets including buildings, equipment and financial instruments, and there is a potential claim by the UK for a portion of these assets. Boris Johnson, the UK's Foreign Secretary, commenting on the Brexit "divorce bill" in May 2017 stated that the valuable EU assets the UK has paid for over the years should be properly valued, and that there were good arguments for including them in the negotiations.
The Bank of England (BoE) has invested in the European Central Bank (ECB) amounting to 13.6743%, representing paid up capital of €55.5million. The BoE does not participate in any profits (or losses) of the ECB. The BoE has also made loans to the ECB. The ECB set up the European Financial Stability Facility in 2010, which has a borrowing facility of €440bn and in addition used a guarantee from the European Commission and the Budget of the European Union as collateral to borrow a further €60bn. The UK withdrawal will affect the ECB.
The EU has a pension liability of €64 billion.
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Some EU institution drafted a 10-page position document regarding the single bill. This position does not define the final cost of the divorce, but provide some elements such as the name of first identified EU bodies which might be concerned by the single bill. Those bodies includes around 40 agencies, eight joint projects on new technologies and a panoply of funds agreed by all countries, including aid for refugees in Turkey to supporting peace in Colombia. As an EU member, Britain is also involved in the funding of teachers for the elite European schools that educate EU civil servants’ children. this document should be discussed on Tuesday and Thursday by the side wher (Great-)Britain is not. The EU has promised to publish key Brexit documents, a decision that is both transparency pledge and negotiating tactic.
Concerns have been raised by UK citizens who live in other EU countries, and by citizens from those countries who live in the UK. In May 2017, Michel Barnier stated: "Currently around 3.2 million EU citizens work and live in the UK, and 1.2 million British citizens work and live in the EU."
Issues include rights of movement, citizenship, abode, education, social support and medical treatment, and the payment of pensions; and the extent to which these rights apply to family members. Considerations for UK citizens domiciled in an EU27 country include their rights to work or live in a different EU27 country. Beyond the 27 EU countries, workers have certain freedom of movement rights to/from Norway, Iceland, Liechtenstein and Switzerland.
"Associate citizenship", suggested by EU27 negotiator Guy Verhofstadt, would allow UK nationals to volunteer individually for EU citizenship, enabling them to continue to work and live on the continent. Jean-Claude Juncker, president of the European Commission, is not opposed to the idea.
Antonio Tajani spoke after a meeting with Theresa May on 20 April, saying "the issue of reciprocal EU citizen rights should be negotiated 'immediately' with a view to getting an agreement by the end of the year." The European Commission published a position paper on "Essential Principles on Citizens' Rights" on 12 June, proposing that current and future family members of European nationals in the UK would keep their rights to settle in their residence country at any time after Britain's withdrawal. Speaking in advance of publication of the paper, David Davis described the demands as "ridiculously high". The UK government published their policy paper "Safeguarding the position of EU citizens in the UK and UK nationals in the EU" on 26 June. The policy paper proposed that EU citizens living in Britain will be required to apply for inclusion on a “settled status” register if they wish to remain in the country after Brexit.
The general rule for losing EU citizenship is that European citizenship is lost if member state nationality is lost, but the automatic loss of EU citizenship as a result of a member state withdrawing from the EU is the subject of debate. The situation of a person acquiring EU citizenship when the UK joined the EU in 1973 compared to a person born in the UK after 1973 and was therefore born into EU citizenship may differ. It may be necessary for the European Court of Justice to rule on these issues.
A 2017 decision of the European Court of Human Rights has ruled that where a child is born in the EU, the parent/s, even if they are both non EU citizens, are entitled to rights of residence. This could have consequential effects for UK residents who have young children and wish to live in the EU27 territory post Brexit.
Until the UK effectively withdraws from the EU in 2019 or at another agreed date, the current system of free movement of labour between the EU27 and the UK remains in place.
The report of the House of Commons Exiting the European Union Committee on The Government's negotiating objectives, published in April 2017, proposed (paragraphs 20 and 123) that the future system for EU migration should meet the needs of different sectors of the UK economy, including those employing scientists, bankers, vets, care workers, health service professionals and seasonal agriculture workers.
Theresa May, answering press questions on 5 April 2017, commented that the free movement of labour would not end in March 2019; an implementation period of possibly five years would give business and government time to adjust.
The UK currently charges an annual levy of up to £1,000 for each non-EU citizen employed within the UK. Proposals are under consideration to increase this 'immigration skills charge' to £2,000 p.a. and to implement a similar levy on EU citizens employed in the UK.
According to an unconfirmed newspaper report, a leaked Home Office paper has a proposal that the UK will end the free movement of labour of low-skilled workers immediately after Brexit, focusing on highly skilled EU workers instead. The proposal would limit lower-skilled EU migrants' residency permits to a maximum of two years, and the implementation of a new immigration system ending the right to settle in Britain for most European migrants while placing tough restrictions on their rights to bring over family members. Those in “high-skilled occupations” could be given permission to work in the UK for a period of three to five years.
The concept of European Court of Justice competence creates complications. Some pro-Brexiteers believe the Court of Justice might be completely removed from the UK landscape. Various other opinions consider that the Court of Justice or some equivalent should be able to rule on remaining issues after Brexit (for instance between a European and a British stakeholder), at least in respect of the TEU (Treaty on European Union), European Union citizens, or access to the European Single Market.
Brexit might have impact in various sectors.
Without a trade agreement in place, the World Trade Organization rules would apply to trade between the UK and the EU. This would lead to common tariffs being imposed by the EU27 upon the UK's access to the European Single Market, because the Market is also a customs union. However, the UK would then have an opportunity to control immigration as well as develop its own trade regulations.
The UK is not permitted to hold trade talks until after Brexit is concluded, however the UK can do preparatory work with other countries regarding the UK's future trading relationships; this is not to the liking of some EU27 countries.
Only the EU can act in areas where it has exclusive competence, such as the customs union and common commercial policy. In those areas Member States may not act independently. The UK can still negotiate its own bilateral investment protection treaties subject to Commission authorization.
Strategic controls on military goods are primarily a Member State competence. As a result, Member States themselves negotiate multilateral or bilateral agreements on the strategic aspects of trade in defense goods.
The EU27 wish to exclude the UK from sitting in on trade negotiations held by the EU during the period ending March 2019, seeing the UK as a competitor. Theresa May rejected this idea, saying "While we're members of the European Union we would expect our obligations but also our rights to be honored in full."
The Geographical indications and traditional specialties in the European Union, known as protected designation of origin (PDO) is applied internationally via bilateral agreements. Without an agreement with the EU27, UK producers of products such as the Cornish pasty, Scotch whisky and Jersey Royal potatoes are at risk of being copied.
The EU27 have stated that UK fish supplies could lose tariff-free access to the continent unless EU countries have continued access to UK waters after Brexit.
Investment banks may want to have new or expanded offices up and running inside the EU27 bloc before the UK's departure in March 2019, with Frankfurt and Dublin the possible favourites. Ireland's investment arm, IDA Ireland, witnessed an increase in inquiries from London-based financial groups considering to open up on an office in Dublin by the end of 2016, mostly coming from North American companies. In May 2017, JP Morgan became the first major bank to officially choose Dublin to transfer some of its personnel and operations from its London office. 
The situation may be different when it comes to the fund management industry, as British asset owners, notably UK pension funds, often constitute an incommensurate share of total turnover for German, French, Dutch and other Continental European asset managers.
This imbalance could potentially give Britain some negotiating leverage e.g. power of retorsion in case the EU attempts to impose an abrupt cancellation of the mutually-binding obligations and advantages pertaining to the Markets in Financial Instruments Directive 2004 ("fund passporting"). Research conducted by the World Pensions Council (WPC) shows that
“Assets owned by UK pension funds are more than 11 times bigger than those of all German and French pension funds put together […] If need be, at the first hint of threat to the City of London, Her Majesty’s Government should be in a position to respond very forcefully.”
The London Stock Exchange issued a warning over a proposal by the EU to only allow euro-denominated transactions to be cleared within the EU eurozone claiming it would increase business costs by €100bn over 5 years and isolate the euro capital market.
The letter of 29 March 2017 giving the UK's notice of intention to withdraw from the EU stated "In security terms a failure to reach agreement would mean our cooperation in the fight against crime and terrorism would be weakened." This was seen by some as a threat. On 31 March, Boris Johnson, the UK Foreign Secretary, confirmed that the "UK commitment to EU security is unconditional".
The call by the United States to other members of NATO to increase their defence expenditure to the 2% of GDP level coincides in timing with Brexit. The UK is the second largest contributor to NATO defence, one of only five to meet the 2% level and one of only two EU members who have nuclear weapons. The possibility of a new Franco-German partnership to fill the vacuum left by Britain has been raised as a possibility and post Brexit an EU military headquarters, previously vetoed by the UK, may be created. The UK is fully committed to NATO.
The UK government's negotiating policy when the negotiating period started on 29 March 2017 included remaining at the vanguard of science and innovation, and seeking continued close collaboration with the UK's European partners.
In the Great Repeal Bill white paper published on 30 March 2017, the UK government stated "The Government is committed to engaging with the Crown Dependencies, Gibraltar and the other Overseas Territories as we leave the EU.":ch.5
Robin Walker MP, a junior minister at the Department for Exiting the European Union, is responsible for managing the relationship between the overseas territories and Parliament in their discussion with the EU27.
Brexit raised issues around sovereignty for Gibraltar, the only British Overseas Territory in the EU. Gibraltarians voted to stay in the European Union by 96%. Spain claims sovereignty over Gibraltar; however, in 2002 Gibraltarians voted 99% to keep British sovereignty.
The EU27 draft guidelines allow Spain a veto over any effect that the Brexit agreement has as regards Gibraltar. The guidelines state: "After the United Kingdom leaves the Union, no agreement between the EU and the United Kingdom may apply to the territory of Gibraltar without the agreement between the Kingdom of Spain and the United Kingdom."
The Crown dependencies are neither part of the EU nor of the UK. They have a unique constitutional relationship both with the UK and, as encapsulated in Protocol 3 to the UK’s Treaty of Accession, with the EU. They have no voting rights in EU or UK referenda or elections and no international voice, the UK government having the responsibility to act for the dependencies on foreign matters. Oliver Heald QC MP is responsible for managing the relationship between the Islands and Parliament in their discussion with the EU27.
If no withdrawal agreement is in place by the end of the two year period under Article 50, the EU Treaties will cease to apply to the UK. This has been described as "falling over the cliff-edge".
A Parliamentary inquiry has concluded that "the possibility of 'no deal' is real enough to justify planning for it. The Government has produced no evidence, either to this inquiry or in its White Paper, to indicate that it is giving the possibility of 'no deal' the level of consideration that it deserves, or is contemplating any serious contingency planning. This is all the more urgent if the Government is serious in its assertion that it will walk away from a 'bad' deal."
The UK government has consistently said that it will aim for the "best possible deal" but that "no deal is better than a bad deal". This position was restated in the Conservative Party manifesto for the 2017 general election. In July, Michel Barnier said that "a fair deal is better than no deal", because "In the case of Brexit, 'no deal' is a return to a distant past".
Aviation would be particularly affected if the EU–US Open Skies Agreement no longer applied to the UK after a "no-deal" Brexit, since World Trade Organisation rules do not cover that sector, implying that the following day a British plane could not land at an EU airport.
In September 2017 the BBC reported that there was little evidence of UK government preparations for a "No Deal" scenario: "our government is not behaving like it is really preparing for No Deal – and the EU27 can surely see it."
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