The Article 50 negotiations

On 29 March Theresa May informed the European Council of the UK’s intention to leave the EU. Now the trigger has finally been pulled, what happens next? Article 50 doesn’t tell us very much about the timing and process of the negotiations. Some things have become clear, however. We know, for example, that while the the European Council, The Council of the EU– where ministers from member states meet to adopt laws and co-ordinate policies– and the European Commission will all have a role in determining the EU’s position, the negotiations will be led by Michel Barnier’s team at the Commission.

We also know that while the formal role of the European Parliament is technically confined to a final vote on the final agreement, its power to veto an agreement means it is likely to play a much more important role throughout the negotiations. We also know that, if all goes to plan, Michel Barnier and David Davis will be able to start negotiations in June.

Much less is known about the biggest question, namely, the degree to which the negotiations will, as Article 50 states, take ‘account of the framework for its future relationship with the Union’. Negotiating a trade agreement within two years is difficult enough. It would be even more so if those talks can only start after the completion of a withdrawal agreement. Attaching a transitional deal to the withdrawal agreement might help to avoid this situation but it is by no means certain.

Clarity about the extent to which the EU is prepared to start talking about the future relationship is critically important to determining how the next two years (and beyond) will play out. The following sets out at what we know and about the key actors and milestones involved in this process and when we might see key decisions (and disagreements) emerging that will tell us more about the shape and content of the negotiations, and what kind deal the UK might walk away with in two years’ time.

Ready, Steady, Go!

Before negotiations can begin, the European Council needs to issue the guidelines for the withdrawal negotiations. These have been drafted by the the European Council’s taskforce on Brexit, led by the Belgian mandarin Didier Seeuws, who has played a key role coordinating the input of the member states. In theory, these guidelines will be adopted by unanimous agreement at a special European Council meeting on the 29 April, in order for negotiations to begin by mid-June.

The guidelines are broad ambitions for the negotiations. They will not delve into the substance of the agreement or provide technical details. It will fall to the Commission, which has the expertise, manpower – and the autonomy from the competing demands of member states – to draft a more substantive mandate within the parameters laid out by the Council.

So what might the European Council guidelines include? Andrew Duff argues they will reiterate the principles first enumerated in the European Council’s statement of 29 June 2016. The UK will be welcomed as a prospective “close partner” of the EU; any agreement will be “based on a balance of rights and obligations”; “access to the single market requires the acceptance of all four freedoms” i.e. there will be no cherry-picking.

They are also likely to include confirmation of the procedural arrangements first agreed by the EU27 heads of state, Donald Tusk and Jean Claude Junker at a European Council meeting on the 15 December. These set out the next steps and, importantly, stipulated a number of working arrangements to ensure that the European Council, the Council and the European Parliament are not shut out of the negotiating process by the Commission’s negotiating team.

Substantively, this may not seem like much, but to avoid delay and open disagreement between member states, and to leave the Commission with room to manoeuvre, it is wise. Importantly, the Council also retains the right to review the guidelines once negotiations are underway. Nevertheless, the guidelines will still offer the first formal insight into the European stance where we might see some evolution and precision of objectives. It is possible, for example, that we might see a firmer commitment to beginning informal talks on the future relationship from the beginning of the process, to be succeeded by full negotiations once Article 50 talks have reached a point at which success seems assured.

The Commission takes the wheel

Next, as laid down in Article 218(3) TFEU, the European Council will hand over to the European Commission. The Commission’s task will be to recommend a series of negotiating directives and institutional arrangements to the Council of the EU, which will then take the formal decision to authorise the opening of the negotiations.

In practice, this means that the Commission, led by Barnier’s team, will draw on its sizeable legal, technical and policy expertise to fill in all the missing details from the European Council’s guidelines, including firm recommendations on each area under negotiation.

This mandate is also expected to offer technical guidance concerning the process through which the negotiations will be conducted, as well as fleshing out the working arrangements between the Council and the Commission. This process is also near completion and the Commission is expected to take only about a week to present its recommendations to the Council.

The final mandate will be agreed by a Qualified Majority Vote of the Council of the EU that will not take place until a new French Minister of Europe is in place in June. It may take several meetings of the Council to reach agreement. This will not conclude the Council’s involvement.

The Council will also establish a special committee to monitor the progress of the Article 50 talks. Like the European Council, the Council will also retain its right to review the progress of the the negotiations at each of its meetings and issue new operational directives to the Commission from time to time.

The Commission’s negotiating directives are by far the most important aspect of this first phase of the Article 50 process. It is at this point that we will see EU set out its negotiating stance in detail. The biggest question here is whether the Commission’s mandate will offer any resolution on the vexed question of the timing and sequencing of the negotiations.

Thus far, while London has pushed for parallel negotiations that would see and immediate start to trade talks, Barnier has insisted that dealing with the UK’s rights and obligations as an EU member state must precede any discussion of the future relationship. These include the UK’s budget contributions; the fate of British staff in the EU institutions and EU agencies in the UK; the rights of EU citizens in the UK; and arrangements for border crossings, especially in Ireland.

This position would make it all but impossible to even begin talks about the future relationship in the limited time allowed under Article 50. The Commission mandate will give a firm indication about how much reality will match the rhetoric ­– it could formalise the intention to deal with the divorce first, or put in place procedures to begin preliminary or even full blooded talks about the future relationship either immediately or at some specified date.

Both courses of action would have important implications. A more flexible approach is likely to introduce alternate time scales that stretch beyond the two-year time period and, perhaps, an entirely new negotiating arena dealing with transitional arrangements pending the finalisation of a treaty on the new relationship.

The UK may or may not accept this. If, for example, a transitional deal is classed as a ‘mixed agreement’ under EU law, requiring ratification by all 27 national parliaments plus regional assemblies, the UK government may demur in spite of its desire to see a transitional arrangements put in place en route to a free trade deal. In contrast, a stubborn refusal to talk about the future relationship would pave the way to a histrionic start to the negotiations that would elevate the risk of an early crisis, or indeed a walk-out.

Finally, in the next two weeks the European Parliament will also debate and decide its position on the negotiations, including the ‘red lines’ that would see it reject a final agreement. These are expected to focus on the rights of EU citizens in the UK and vice versa and the UK’s budget contribution. In light of the openly heretical stance of the Parliament’s chief negotiator, Guy Verhofstadt, concerning the UK’s ability to retain some EU rights after Brexit, the formal announcement of the Parliament’s position will also help to clarify the extent to which Parliament will upset the delicate institutional balance underpinning the EU’s negotiating stance in the next two years.

Negotiations Begin

Once the mandate is agreed, the Commission will run the negotiations. All being well, Barnier and Davis will get to it in June with 17 months on the clock. At this point, until we know the outcome of the preceding stage, several scenarios are possible.

Scenario one: Talks begin in a sequential framework that offers little scope for beginning talks on the future relationship, at least until agreement has been reached on key areas of the withdrawal agreement. In this form, the negotiations themselves, if not the substance, would in a sense be much more straightforward­. As mentioned, however, while this could focus minds on the task at hand, it also carries a high political risk. Mired in disagreements over the budget, it is relatively easy to imagine a situation in which the UK might simply walk out of negotiations.

A second scenario would see talks regarding the future relationship beginning at a much earlier stage. These might be informal at first, before transitioning to full negotiations. Before the Commission’s crack down on officials talking to the press about possible negotiation formats in favour of a robotic adherence to the official line: divorce first, trade talks later (and no cherry picking)– the rumours late last year were that these might be headed by Didier Seeuws. Seeuws’ diplomatic experience and position as the Council’s man on Brexit would make him particularly well-suited to the delicate task of coordinating member state positions.

The third scenario would see an additional set of negotiations focused on a transitional agreement – or ‘implementation phase’ – pending the completion of a new agreement.

A variety of more or less complex hybrids of these scenarios can also be imagined. Regardless, in light of the complexity of the divorce agreement alone and the tight timescale of the negotiations, no scenario offers a fool proof route to success. In each case, it could quickly seem like the withdrawal agreement, let alone an agreement setting up a new relationship, is simply not going to get done in time, raising the possibility of an extension or exit after 2 years without an agreement.

The critical issue, most observers accept, will be money – establishing the extent of the UK’s financial liabilities. Politically and institutionally, other problems could also contribute to an impasse. Changes in the European political landscape, leading to pressure on and from the European Council to alter the EU’s negotiating stance, and push back from the Commission, are another way that talks could break down.

Conclusions

Absent a crisis, most experts agree that near-final legal texts of the withdrawal agreement will need to be ready by the end of October 2018 in order for approval by the European Parliament, the Council and the UK Parliament to occur within the two-year deadline. If it isn’t, it would be necessary at this point to begin discussions concerning an extension. This would require unanimous agreement by the European Council.

Assuming a withdrawal agreement is reached by October 2018, the Commission will propose to the Council that an agreement can be concluded (Article 218(5)). The Council will ask the European Parliament for its consent. Parliamentary consent will be given through a simple majority and the approval of Guy Verhofstadt. Note that the Parliament also has the right to dispatch the final agreement to the European Court of Justice (ECJ) in order to verify its compatibility with the EU treaties (Article 218(11)).

The Parliament’s consent will authorise the Council to conclude the agreement with the withdrawing state by Super-qualified majority. Having been approved by the Council and the Parliament, the agreement can be formally adopted and negotiations will officially be concluded. The final agreement must then be approved and ratified by the UK Parliament and signed by the UK Government. There is currently some confusion as to whether Parliament’s vote to approve the agreement may in fact take place sooner, before negotiations are concluded. While this remains to be clarified, a later vote, before the agreement ‘comes into force’, remains more likely. Finally, the 27 remaining member states of the European Union will also have to ratify Treaty changes.

Leaving aside the legislative processes that will then begin – the Great Repeal Bill in the UK and secondary legislation in the EU adjusting budgets and policies– all this assumes we will be dealing with a withdrawal agreement alone. If a transitional agreement is also on the table or, however unlikely, a treaty establishing a new relationship that includes a free trade deal, the conclusion of agreements will be much more complicated, requiring the approval of 38 national and regional European parliaments. This will not be easy.

The success or failure of these additional agreements, particularly the achievement of a transitional agreement, also means that the UK could find itself in a paradoxical situation come March 2019. Agreement may have been reached over money, borders and citizens’ rights in the context of a successful divorce agreement under Article 50 – a significant achievement– but the UK could still face a ‘cliff edge’, or find itself partially beholden to the EU, including the ECJ, under the terms of a transitional agreement, for some time to come.

Article 50 – Treaty on European Union (TEU)

  1. Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements.
  2.  A Member State which decides to withdraw shall notify the European Council of its intention. In the light of the guidelines provided by the European Council, the Union shall negotiate and conclude an agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union. That agreement shall be negotiated in accordance with Article 218(3) of the Treaty on the Functioning of the European Union. It shall be concluded on behalf of the Union by theCouncil, acting by a qualified majority, after obtaining the consent of the European Parliament.
  3. The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.
  4. For the purposes of paragraphs 2 and 3, the member of the European Council or of the Council representing the withdrawing Member State shall not participate in the discussions of the European Council or Council or in decisions concerning it. A qualified majority shall be defined in accordance with Article 238(3)(b) of the Treaty on the Functioning of the European Union.
  5. If a State which has withdrawn from the Union asks to rejoin, its request shall be subject to the procedure referred to in Article 49.

By Dr Camilla Macdonald, researcher at The UK in a Changing Europe

Disclaimer:
The views expressed in this explainer are those of the authors and not necessarily those of the UK in a Changing Europe initiative.

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