UK officials have been trying to reach an outline agreement with European leaders on the sequence of Brexit talks, including a discussion about whether the terms of Britain leaving the EU can be negotiated at the same time as talks about the future trade relationship.
Theresa May and her Brexit departments in Whitehall do not want to concede any ground on triggering article 50, the clause that starts the two-year negotiating process, until this can be clarified. The sequence question is an essential in the opening phase in the tactical battle, with the UK being in a weaker position if the negotiations are rigidly organised.
There is a danger that the UK would leave the EU only to find itself in a legal limbo in which the status of critical trade, security and environmental laws have not been clarified. That applies not just to access to the EU single market, but a variety of other critical functions, ranging from the European arrest warrant to data sharing and climate change laws.
Under the article 50 procedure, member states must first negotiate the terms of their departure before negotiating a future deal with the EU.
“Technically, the terms of a future relationship agreement between the EU and the UK as a third country can only be negotiated once the UK has become that third country, and left the EU,” said Michel Petite, a former director general of legal services at the European commission.
Because trade is an exclusive EU competence, the UK could not formally negotiate bilateral trade deals until it has left the EU, he said.
Mark Sedwill, permanent secretary to the Home Office and a former senior diplomat, expressed the British hope that the EU would not demand such rigid sequencing.
Addressing the Institute for Government this week, he argued there were many informal ways for the different phases of the talks to take place: “Talks about talks, agreements in principle, things that are initialled before they are signed; all this kind of thing is the meat and drink of of international negotiations. With some ingenuity and some good will, it should be possible to do all of these thing in parallel in a way that remains clearly lawful, but meets the political objective.”
But the scale of the potential uncertainty has been posed by Sir Andrew Cahn, a former British diplomat in Europe who spent five years in charge of the government department UK Trade & Investment. “There is a huge complication about sequencing events so there is not a legal vacuum. Such a legal hiatus would be unbearable from a business point of view. It is going to be enormously difficult,” Cahn said.
Sedwill acknowledged that article 50 puts the UK at a negotiating disadvantage, likening it to a prenuptial agreement designed to discourage any member state from leaving the EU.
Sedwill, who is likely to be one of the critical figures in the Brexit talks, admitted that all sides would to some extent be making up the negotiating procedure as they went along. But he added that the detailed wording of article 50 gives the UK some scope so long as there was political will to reach an agreement.
But he said there would be consequences for the UK if it left the EU and found itself in a legal limbo. He warned there would be an enormous amount of disruption unless there was legal continuity from the moment of UK exit.
For example, there could be complications for outstanding EU arrests warrants if a legal framework is not in place. “It is quite clear if you talk to judges there has to be complete legal continuity whatever arrangements were in place,” he said. “Otherwise, and this is true of a whole range of other activities, you create legal uncertainty and there could just be an enormous amount of disruption. In practice, we are going to have to be have a pretty clear view of where we are going to move to immediately afterwards.”
He said that if the UK did not have a detailed legal framework of “the day after” leaving, the British authorities would not know the legal basis on which to act on a range of issues from borders to environmental regulation.
In probably the most significant remarks to come out of May’s visits to Berlin and Paris this week, Angela Merkel seemed to endorse the idea of parallel talks on the terms of divorce and the future relationship.
“I think it is in all our interests if Great Britain applies for this exit with a very well-defined negotiating position and with the clear possibility to say, how do we envision our future relationship to the EU,” the German chancellor said. “These must be parallel processes because you cannot cut ties first and then figure out in another long negotiation process which relationship one enters.”
This is also the advice the US has been giving the UK.
Article 50 could give Merkel some legal basis to support talks on exit and trade happening simultaneously as it says the exit terms should be negotiated with “the framework” of the future relationship being kept in mind.
The need to agree simultaneously the terms of the new relationship, as well as the terms of the exit, could prolong the talks well beyond the stipulated two-year timetable, or require the UK to find an interim staging post relationship such as the one that Norway has with the EU.
Cahn pointed out that the UK could not just leave the EU and become a member of the World Trade Organisation the next day. The terms of UK re-entry into WTO would have to be negotiated, possibly taking years.
He posed the question: what would happen if article 50 were invoked, no agreement was reached after two years and the UK was forced to leave the EU? “What laws are in place? What duties to customs officers apply? It is really so confusing that it is unthinkable that it would happen, but then over the last few weeks a number of unthinkable things have happened,” he said.
Sequencing is not the only issue to be agreed in the preliminary talks.
There will also have to be discussion on how the EU will be represented in the UK – whether by the more hardline European commission or by the heads of state – and on the UK remaining subject to EU law– including the payment of fees during the negotiating process. An early understanding of how any deal will be ratified by the EU is also needed, and that in turn may be determined by the legal nature of the deal, including how much it extends beyond the issue of trade.
With ministers still discussing internally what kind of Brexit they want, Sedwill said the essential issue to be resolved remained the balance between the conflicting objectives of access to the single market and restrictions on the free movement of people.
But Sedwill stressed that the referendum outcome was crystal clear. “There will have to be significant changes to free movement in whatever arrangement we reach, so the question then becomes how much access to the single market our European partners are going to give,” he said.
It is going to be a tortuous business, and many of the best cards lie in the hands of the EU.
British officials are optimistic that it would not be in the interests of big European economies and for counties that care about issues such as climate change, security, governance of the sea or international law to end up with “some kind of fractious divorce between the UK and the EU”. But in these opening moves of what is a multidimensional chess game, it is clear Britain is placing great faith in locating a well of goodwill in Europe.
This article was written by Patrick Wintour Diplomatic editor, for theguardian.com on Friday 22nd July 2016 18.20 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010