This Debate Pack has been produced ahead of the general debates on 'European Affairs', to be held in the Commons Chamber on Wednesday 14 and Thursday 15 March 2018.
Where to find information on Brexit
All Library and Select Committee reports on Brexit issues can be found on Parliament’s Brexit: research and analysis website.
The Library’s briefing paper Brexit timeline: events leading to the UK’s exit from the European Union provides a timeline of the major events thus far and looks ahead to expected events as the UK and EU continue to negotiate Britain’s exit.
The Article 50 process
Article 50 of the Treaty on European Union (TEU) sets out how a Member State can leave the EU if it wants to. It envisages an orderly withdrawal from the EU with a negotiated withdrawal agreement, but does not rule out leaving the EU without an agreement. Article 50 is the bare bones of the exit process. It specifies a timeframe (two years from formal notice) and formal procedures for agreeing guidelines and a withdrawal agreement. But the details of how a Member State would leave the EU are for the negotiators – David Davis and Michel Barnier – to decide and for the other 27 Member States and the European Parliament (EP) to approve. As an EP Research Service briefing noted: “For the first time in history, the EU will negotiate the loosening of ties with a country, from a situation of full convergence”.
Preparing to leave the EU
Since the EU referendum in June 2016, the EU and the UK negotiators have spent some 21 months trying to work out how the UK will leave the EU: the conditions and terms of withdrawal and transition in some key areas – EU and UK citizens’ rights, the financial settlement and the border between Ireland and Northern Ireland – and in a range of other ‘separation issues’. Phase I of the negotiations concluded in December 2017. For Phase two of the negotiations, which will be on a possible transition period and a framework for a future partnership, the Council set out new negotiating directives in January 2018 and in February the Commission published a draft transition agreement.
The negotiators aim to move on shortly to discuss a framework for future EU-UK relations, although the kind of future relationship each side envisages has already been the subject of much debate and some disagreement. On 7 March the European Council President Donald Tusk sent new draft guidelines to EU-27 leaders, setting out the proposed framework. The aim is to conclude the withdrawal agreement by October 2018, allowing time for further action under the Article 50 process, such as EP approval, revision if necessary, and UK ratification.
A transition/implementation period
If the proposed timetable is met, the UK will no longer be an EU Member State on 30 March 2019. The UK will transition from being a non-Member State, but continuing to fulfil EU obligations and to pay into the EU budget, but without influence or institutional representation, to eventual full separation via an extended process of departure. This will last for around two years (in practice it could take much longer), during which time the UK and the EU will implement legal, structural and policy changes, and wean themselves off each other. The EU’s position on a transition agreement specifies that it will:
- be time-limited and end by 31 December 2020;
- require the entire EU acquis to continue to apply to the UK, including in areas relating to free movement of people, the EU customs and trade laws and policies, including new EU laws that enter into force during the transition period;
- require the UK to remain within the CJEU’s jurisdiction;
- preclude the UK from concluding its own trade agreements, unless the EU authorises this;
- preclude the UK from representation in EU institutions and agencies.
The EU’s position on transition has implications for the UK Government’s ability to achieve a number of its Brexit priorities, at least during transition. Divergence from EU law will not be possible in the proposed framework. The UK will have to remain in the customs union and adhere to EU trade policies and it cannot be bound by new trade agreements or implement a new immigration policy for EU nationals. The CJEU would continue to be a binding source of authority in the UK, making unachievable the UK’s ‘red line’ of ending CJEU jurisdiction.
The UK and EU currently diverge on transition, as seen in the DExEU response on 21 February to the Commission’s draft transition agreement. There appears to be room for clarification on many aspects of their positions, but substantial differences remain – such as the extent of coverage of EU law in the UK and the UK’s ability to express opinions on new legislative initiatives.
Leaving the EU with a withdrawal agreement
If agreement is reached between the UK and the other EU Member States on all withdrawal matters and there is EP support, the UK will leave the EU on 29 March 2019, on the basis of the withdrawal agreement – including provisions on transition – and a ‘political declaration’ on future relations. The detailed terms of the future relationship will be set out in a separate agreement between the EU and the UK. The Government has set out its ‘ideal’ future relationship in various speeches and papers since the EU referendum. This includes:
- leaving the EU Single Market and customs union but having the most frictionless possible trade in goods and services by means of a “new strategic partnership with the EU, including an ambitious Free Trade Agreement and a new customs arrangement” not based on an existing EU model for relations with third countries (e.g. EFTA, EEA, FTAs);
- avoiding any physical infrastructure at the Irish border;
- ending the free movement of people, the direct jurisdiction of the Court of Justice of the EU (CJEU) and contributions to the EU budget;
- pursuing an independent trade policy.
In her Mansion House speech on 2 March, the Prime Minister said a withdrawal agreement must endure, protect people’s jobs and security, allow the UK to be “a modern, open, outward-looking, tolerant, European democracy”. But there is no guarantee that this vision of the future will be achieved in the withdrawal negotiations.
Technical preparations for leaving the EU have been set in motion by the introduction of the European Union (Withdrawal) Bill (currently in the Lords), which will convert or keep the EU acquis as ‘retained EU law’ where practicable, so as to avoid large gaps in the UK’s statute book on Brexit day.
The Government intends that an EU withdrawal and implementation bill will incorporate the withdrawal agreement, including transition provisions, into UK law. Changes in various policy areas have been proposed in bills on trade, customs, international sanctions and money-laundering, nuclear safeguards and data protection. Other bills will follow on immigration, agriculture and fisheries.
Options if no agreement is in sight
It is not certain whether or when agreement will be reached on the terms and modalities of UK withdrawal. Under Article 50 the UK can leave the EU after two years with or without a withdrawal agreement, but both the UK Government and the EU want a smooth and orderly Brexit. Leaving without an agreement would not be smooth or orderly.
If there is no timely withdrawal agreement and no extension of negotiations, the EU Treaties will cease to apply to the UK after 29 March 2019. Although both sides want to avoid this, it is still a possibility. ‘No deal’ could result in UK-EU trade being subject to general WTO rules, meaning increased barriers to trade in goods, without preferential tariff agreement and possibly preventing some trade in services. There would be no transition period and possibly no other agreements with the EU on matters such as data sharing, aviation or customs co-operation. It would also mean significant uncertainty about all the other issues in the negotiations, such as citizens’ rights.
Leaving with no agreement would not necessarily prevent the two sides from reaching future bilateral agreements, but on Brexit day the UK and the EU would not have concluded such agreements. Both sides could try and make the best of the lack of agreement and salvage from the areas they did reach agreement on something that would prevent the most damaging aspects (for both the UK and the EU) of the UK ‘crashing out’ of the EU. This might involve, for example, many elements of citizens’ rights being implemented and compromise solutions in aviation, customs and possibly WTO terms in trade.
Continuing to negotiate
Time permitting, the UK could ask the EU-27 for more time to negotiate an acceptable Brexit agreement – this option has been rejected by the Government and might not be granted by the EU-27 if good will has been lost.
Looking for ‘softer’ Brexits
Depending on timing, the UK could seek various forms of a ’softer’ Brexit or membership of the European Free Trade Area (EFTA). These are summarised in Debate Pack, Alternatives to a no-deal outcome in negotiations with the EU, 19 February 2018, and other Library briefings.
Other political developments in Europe
On 4 March Germany’s Social Democrat Party approved the coalition deal drawn up by the SPD and Angela Merkel’s CDU/CSU. The new government is scheduled to take office on 14 March, when the Parliament is expected to re-elect Angela Merkel as Chancellor for a fourth term.
The Italian General Election in March resulted in a hung parliament. The populist Five Star Movement gained 32% of the vote, making it the largest single party in the Parliament. The Lega Nord became the largest party on the right. The centre-right alliance has the most seats. It is not clear who President Mattarella will ask to form a government when the new parliament meets on 23 March. If no stable government can be formed he may have to call fresh elections.
In Poland a controversial law which makes it illegal to accuse the Polish nation or state of complicity in the Nazi Holocaust has come into force. It has been denounced by Israel and the US. This comes as the European Commission is considering whether to advance Article 7 (rule of law) proceedings against Poland, which were initiated after the Polish government passed reforms which the European Commission and Parliament argue curb the independence of the judiciary.
Hungary will hold parliamentary elections on 8 April and Sweden’s general election is scheduled for early September.
- The Trade Bill, CBP-8073, 7 March 2018
- European defence: where is it heading?, CBP-8216, 30 January 2018
- Brexit: ‘sufficient progress’ to move to phase 2, CBP-8183, 19 December 2017
- EU Defence: the realisation of Permanent Structured Cooperation (PESCO), CBP-8149, 12 December 2017
- European Union (Withdrawal) Bill, CBP-8079, 1 September 2017