March 21, 2017

March 21, 2017

Subscribe to Latest Legal News and Analysis

March 20, 2017

Subscribe to Latest Legal News and Analysis

Six Months After the Brexit Referendum: Preparations in Brussels

On Thursday, December 15, at the end of the traditional end-of-year European Council, the 27 “remaining” heads of state or government of the EU had a short meeting, without Theresa May, to set out how the Brexit process would be handled by “the 27,” once the UK has notified its intent to leave the EU.

This was only their second meeting on this issue since the Brexit referendum. Even if Brexit dominates all conversations in the “Brussels bubble,” and is the topic of hundreds of policy papers and seminars, there has not been any discussion among the 27 remaining Member States since the European Council held a week after the June 23 referendum (see here). The leaders have indeed remained faithful to the rule they had set themselves in that meeting: “no negotiation without notification”.

They had also stressed, at the time, that any agreement would have to be based on a balance of rights and obligations, and that access to the Single Market required acceptance of all four freedoms, including the free movement of people. This essential principle was reconfirmed in the statement published after Thursday’s dinner.

The 27 do not in that statement address the substance of Brexit. It is for the UK to fire the first salvo, by triggering Article 50 of the Treaty on European Union, hopefully by the end of March next year. They only express their impatience to see the process start by the end of March 2017, enabling them to “begin to tackle the uncertainties arising from the prospect of the UK’s withdrawal”.

Procedural Arrangements for the Negotiation

The most substantive contribution of the statement is the seven-point annex, in which procedural arrangements for the Article 50 negotiation are set out:

  • Step One: guidelines Set by the European Council

According to Article 50, after having received the notification from the UK Prime Minister, the European Council must adopt “guidelines” for the negotiation. The statement gives an indication of what these guidelines should include: a “definition of the framework” and “the overall positions and principles that the EU will pursue throughout the negotiation”.

The text adds that these guidelines will be updated, if necessary, in the course of the negotiation. The European Council will remain “permanently seized” – but, as indicated below, the negotiation itself will be dealt with by the Council of Ministers, in this case the so called “General Affairs Council” in which Member States are represented by their Foreign or Europe Minister.

  • Step Two: Negotiating Directives Adopted by the Council of Ministers

After the guidelines are adopted, the Commission will present a “recommendation” on the basis of which the Council of Ministers will adopt negotiating directives. These will deal with the substance of the negotiation, and will confirm the arrangements described hereunder, setting up the respective roles of the Commission and the Council in the negotiation.

According to Article 50, these directives should “take account of the framework for [the UK’s] future relationship with the Union”. However, the statement does not say anything about this delicate question.  The ball, on this point, is squarely in the UK’s court: it is first for the UK government to decide which status it wants, before anything can be said about this in the mandate (which, as outlined above and in the statement, may be “amended and supplemented as necessary”).

  • Who Will Negotiate on Behalf of the Union?

As prescribed by the Treaty, the “withdrawal” negotiation itself will be conducted by the European Commission, under the procedure of Article 218 (3) of the Treaty on the Functioning of the EU, which applies to agreements between the EU and third countries. As confirmed by the statement, the chief negotiator for the EU will be the French ex-Commissioner Michel Barnier, who was responsible for financial services in the last Barroso Commission.  To this end, he has already constituted a team of experts.

As agreed since the start of the process, the text confirms that representatives of the President of the European Council will be present and participate, “in a supporting role”, in all negotiation sessions, alongside the European Commission’s representatives. Less than a week after the referendum, the Secretary General of the Council Jeppe Tranholm Mikkelsen appointed one of his deputies, Didier Seeuws, who was Chief of Staff to the former President of the European Council Herman Van Rompuy, to lead a Brexit Council taskforce. Through him, the members of the European Council will thus have direct access to the negotiation, which should reassure some of the 27 (and the British) that the process is not overly in the hands of the Commission.

The statement adds that, “to ensure transparency and build trust”, a representative of the rotating presidency could be “integrated” into the Commission’s team. This was added at the strong request of the Maltese Presidency, which lobbied hard to play a role in the Brexit process. However, the rotating presidency will not preside the working party in which representatives of the Member States will ensure the monitoring of the negotiation; this group will rather have a permanent chair. However, it will function under the Committee of Permanent Representatives, which is presided by the rotating presidency – and which will play its usual role of preparing the meetings of the Council and the European Council.

  • When Will There Be Meetings at 27? 10 Downing Street now seems to have accepted this. In presenting the agenda of the December European Council, Theresa May’s spokeswoman noted that the meetings at 27 “were not a cause of concern” for the UK: “those remaining in the EU also need to have discussions about how they are going to handle the departure process. That is reasonable. We would expect that.

  • The British Prime Minister expressed some annoyance, during the October meeting of the European Council, that her 27 colleagues had already started meeting without her. The statement makes clear that this will happen often in the future: in the European Council, the Council and its preparatory bodies, those members who represent the UK “will not participate in the discussions or in the decisions concerning it”. A mechanism, probably managed by Coreper, will be put in place to decide what should from now on be discussed at 27.

  • The Role of the European Parliament

The European Parliament will not participate in the talks. Under the EU Treaties, it is only supposed to give its consent after the negotiation has been concluded, as is the case for third country agreements concluded by the EU under Article 218 of the Treaty on the Functioning of the EU, to which Article 50 refers.  Nevertheless, the President of the European parliament, Martin Schulz, has personally appointed the President of the liberal group (“ALDE”), Guy Verhofstadt, as the Parliament’s “negotiator”.  Verhofstadt and Schulz were not pleased at being excluded from the meeting of the 27 on December 15, and conducted a major offensive – through the media – to be given a place at the table.  They even threatened to conduct separate negotiations with the UK!

The leaders, who had made major efforts to present a united front in the preparatory process, agreed at the last minute to modify their text to include representatives of the Parliament in the meetings of the working group and of Coreper dealing with Brexit. For the rest, the Parliament will be informed regularly of progress in the talks by the negotiator and the rotating presidency, as is usual.  The statement even recalls that the President of the Parliament will be invited to be heard at the beginning of the European Council meetings, which is a long-established rule for all such meetings.

 The Timing of the Talks

The negotiator for the EU, Michel Barnier, raised some eyebrows in London when he said during a press conference at the beginning of December that the talks would last only 18 months – and not the two years mentioned in Article 50 of the Treaty. This assessment is based on the following calculation:

  • The preparation of the guidelines and the negotiating directives is expected to take at least two and a half months. The earliest time for the beginning of the negotiation itself, if Article 50 is triggered at the end of March, is therefore the end of June 2017. Unless Theresa May’s letter includes requests which are too ambitious for the 27 to swallow, major substantive problems are not anticipated at this stage of the procedure. The fact that the French presidential elections will take place during this period (April 23 to May 7) should not be a real obstacle – unless of course Marine Le Pen is elected, and already seeks to disturb the process at this early stage.

  • The negotiation itself will start before the German elections, but will continue for more than a year thereafter. Everyone counts on a reelection of Angela Merkel, who would then help the UK swallow the pill of the Brexit deal. It will indeed be a very tough awakening for those who thought that Brexit would bring financial bonuses for the UK: on top of the technical issues related to the withdrawal from EU policies, there will be difficult discussions about the likely continuation of budget contributions after the UK’s exit.

Unless a major breakthrough happens in a parallel negotiation on the UK’s new status (see below), the risk during this period is that political pressure in the UK from the “Leavers” becomes too strong and either paralyzes the talks, or forces a unilateral withdrawal of the UK from the Union.

  • If this scenario can be avoided, the negotiation for the withdrawal treaty needs to be concluded early enough to allow Westminster and the European Parliament to give their consent. It is reasonable to leave a margin of 3 months for this at the end of the process. In order to avoid an automatic withdrawal at the end of the 2 years, the negotiation itself needs to be concluded by the end of 2017 – so after 18 months.

  • What if this timing is not respected? This would then be to the disadvantage of the UK only. Indeed, Article 50 deliberately makes it difficult for the outgoing country: to prolong the negotiation beyond two years, unanimous agreement of the other EU members is required – which means that the UK would then either be out without a proper treaty, or obliged to accept the potential of being “blackmailed” by a single member state.

What About the Negotiation Over the Future UK-EU Relationship?

There is nothing in the statement about the future status of the UK, or even about the way this will be negotiated. The issue however has been much discussed behind the scenes, as has the need – or not – for a transition period after the withdrawal takes place.  The issue is very sensitive indeed, and difficult to address before the UK has itself decided what kind of status it wants.

Nothing in Article 50 prevents the negotiation on the future relationship between the UK and the EU to proceed in parallel with the withdrawal negotiation. As mentioned above, Article 50 even states that the withdrawal negotiation should be conducted “taking account of the framework” for the future relationship.

Even if the two negotiations are conducted to a certain extent in parallel, it will be impossible to conclude an agreement on the UK’s future status before the end of the 2 years. The withdrawal agreement (if decided in time) only requires a qualified majority in the Council, but the decision on the new status will require unanimity, and probably ratification by the national parliaments.

Several reliable British sources, including the UK Permanent Representative to the EU, have mentioned much longer periods. The UK Permanent Representative, Sir Ivor Rogers, in a leaked report to Whitehall, even suggested a period of 10 years – and, though this looks a little provocative, it gives an indication of the current mood in Brussels on this matter.

This is why most analysts, increasingly also in the UK, accept that, to avoid the UK “falling off a cliff edge” at the end of the two years, a transition period will be needed to bridge the gap.

The implications of this concept are difficult to assess – we are here in totally unchartered waters – but have been discussed at length in the corridors of the European Council and in Whitehall.

What can be said at this stage is that the transition period will not constitute a new status or a new relationship. During the transition, the UK will be out of the EU, but committed to its obligations as a member of the internal market, including the free movement of people and a contribution to the budget.  A progressive withdrawal, as some envisage, will not be easy to put in place, and its precise timing will be difficult to fix.

But no position on this can be expected from the 27 before they know what the UK really wants – on which, at the moment, they are in the dark.

The next act will indeed be played out in London. After the UK Supreme Court delivers its judgment on the Article 50 case (R (Miller) v Secretary of State for Exiting the EU – see the UK Supreme Court’s case details here, and its dedicated website here), the government will need to prepare its starting position and – unless the court agrees to let the government trigger article 50 with no passage through Parliament, which is unlikely – present it to Parliament.

This should happen in February, so that the UK Prime Minister’s deadline of end March can be respected – which is the hope of most actors on both sides of the Channel.

© 2017 Covington & Burling LLP

TRENDING LEGAL ANALYSIS


About this Author

Jean De Ryut, Senior Policy Advisor, Covington Law Firm
Senior European Policy Advisor

Ambassador Jean De Ruyt is a senior public policy advisor in Covington’s EU Government Affairs team.  Ambassador De Ruyt, a non-lawyer, is among the most experienced diplomats in Europe.  Most recently, he served as the Permanent Representative of Belgium to the European Union and was chair of the Committee of Permanent Representatives during the 2010 Belgian Presidency of the Council. 

32.2.549.5289
Sebastian F.A. Vos, Public Policy/Government Affair Attorney, Covington Law Firm
Partner

Sebastian Vos heads the European division of the firm’s global public policy and government affairs practice.  Mr Vos has extensive experience in the European Union and advises clients as they navigate and manage today’s global regulatory and policy challenges. 

Mr. Vos provides clients with strategic public policy, regulatory, and communications advice on a range of competition, trade, transactional and sectoral issues.  Mr Vos has particular expertise in advising companies in the technology, financial services, energy and transport sectors. 

32-2-549-5267