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New guidelines for phase three

On 7 March new draft guidelines were published for the next phase of the negotiations on the framework for future relations between the EU and the UK, and in mid-March there were reports of an amended text. On 23 March 2018 the European Council adopted the new guidelines. The two earlier sets of guidelines will continue to apply. There are no new supplementary negotiating directives.

A solution to the problem of how to avoid a hard border between Ireland and Northern Ireland remains an outstanding issue for this phase of the negotiations.

The European Council will assess progress in ongoing issues and the framework for future relations at the June 2018 summit.

The EU’s proposed framework for future relations

The new guidelines provide the following framework for future EU-UK relations:

  • “as close as possible a partnership with the UK”;
  • The EU “will preserve its autonomy in decision-making”, so UK will be excluded from participation in EU Institutions and decision-making of EU bodies, offices and agencies;
  • The role of the Court of Justice of the European Union (CJEU) will be “fully respected”;
  • A future free trade agreement will be “balanced, ambitious and wide-ranging” and finalised once the UK has left the EU;
  • Trade in goods should cover all sectors, maintain zero tariffs and rules of origin;
  • Reciprocal access to fishing waters and resources;
  • Customs cooperation, preserving regulatory and jurisdictional autonomy of parties and integrity of Customs Union;
  • Disciplines on technical barriers to trade, and sanitary and phytosanitary measures;
  • A framework for voluntary regulatory cooperation;
  • Market access to provide services under host state rules;
  • Provisions on access to public procurement markets, investments and protection of intellectual property rights;
  • “Close cooperation” on global challenges, e.g. climate change, sustainable development and cross-border pollution;
  • “Ambitious” free movement provisions:       reciprocity and non-discrimination, coordination of social security, recognition of professional qualifications and adherence to human rights;
  • Connectivity in transport services via agreements on air transport, aviation safety, security and other modes of transport;
  • UK participation in e.g. research and innovation, education and culture programmes, subject to conditions for third county participation;
  • “Robust guarantees which ensure a level playing field” by alignment of UK rules with EU and international standards;
  • Law enforcement and judicial cooperation in criminal matters;
  • Exchanges of information, operational cooperation between law enforcement authorities, judicial cooperation in criminal matters;
  • “Strong cooperation” in foreign, security and defence policy;
  • Dialogue, consultation, coordination, exchange of information, and cooperation mechanisms, including a Security of Information Agreement;
  • Adherence to EU rules on data protection;
  • Overall management and supervision, dispute settlement and enforcement mechanisms, taking into account need for legal certainty and the autonomy of the EU legal order.

The Prime Minister’s Mansion House speech

The Prime Minister acknowledged in her Mansion House speech on 2 March 2018 that neither side “can have exactly what we want”, but she envisaged the following for the future EU-UK relationship:

  • “the same regulatory outcomes over time” for when UK banks lose ‘passporting’ rights to trade across EU;
  • Associate membership of European Medicines Agency, European Chemicals Agency and European Aviation Safety Agency, accepting their rules and making financial contribution;
  • Participation in EU science, education and cultural programmes;
  • A “close association with Euratom”;
  • Possibly UK participation in EU internal energy market;
  • Independent arbitration mechanism for trade disputes to replace jurisdiction of the Court of Justice of the EU;
  • Fairer terms for UK fishermen based on reciprocal access to waters and shared stocks management;
  • Mutual recognition of broadcasting rules allowing UK channels to continue transmitting in the EU;
  • Rail, maritime, aviation and hauliers’ access to EU markets;
  • UK regulatory standards will be “as high as the EU’s”, though “not identical”, to allow continued trade.

Areas of agreement and disagreement

The Prime Minister’s Mansion House speech and the European Council guidelines show that there are several broad areas of agreed pursuit, which suggest the parties will seek to agree to a future partnership that is as close as possible while recognising the autonomy of the EU legal order, and to create a ‘level playing field’ which at least covers state aid and competition law. This would cover in substantive terms: trade in goods (with a specific commitment to no tariff barriers); customs cooperation; so-called Modes 3 and 4 of services provision (establishment abroad under ‘host state’ rules, and temporary provision of services abroad under ‘host state’ rules); inclusion of rules on the movement of people that may surpass standard trade agreement rules; recognition of respective qualifications; civil judicial cooperation in matters of family law; all forms of transport; research and innovation (suggesting Horizon2020 and other research links); education and cultural programmes (suggesting Erasmus); and law enforcement, security and judicial cooperation in criminal matters (suggesting a replacement of the European Arrest Warrant.

This leaves several matters proposed by one of the parties that the other has either not addressed in the Mansion House or the European Council guidelines, or has explicitly ruled out. The areas where there are clear disagreements on both approach and form are: 

  • Mutual recognition as a viable mechanism by which to govern future UK-EU trade and cooperation in both goods and services (specifically, financial services), recognition of UK workers’ rights; environmental protection, and social standards as guaranteeing a ‘level playing field’.
  • Data protection: the EU wants unilateral ‘adequacy’ rulings, while the UK wants a ‘firmer’ solution.
  • Agency participation: the UK is willing to sign up to all EU rules and institutional enforcement in order to remain a party to certain EU agencies. The EU so far appears to be ruling out agency participation for non-Member States. But some EU agencies explicitly allow for third party status.
  • Dispute settlement: UK wants an arbitration system; EU says a dispute settlement system must respect the depth of the partnership and the autonomy of the CJEU.

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