Brexit and business | A timeline of what to expect in 2018

This morning (15 December 2017), the European Council decided that ‘sufficient progress’ has been made on Phase 1 of the Brexit negotiations.

So the Brexit talks will now move on to discussing the transition arrangements that are likely to apply after the UK leaves the European Union on 29 March 2019 (probably!).  And at some point, they’ll start to talk about the future trading relationship between the EU27 and the UK.

A possible timeline from here

Looking at the guidelines that the European Council has set out today, this is how the next few months could pan out:

January to March 2018

Settling the terms of withdrawal: The ‘Joint Report’ on progress during Phase 1 of the negotiations needs to be fleshed out and turned into a binding agreement; the ‘Withdrawal Agreement’. In the words of today’s Council guidelines, these Phase 1 commitments must be ‘respected in full and translated faithfully into legal terms as quickly as possible’. Issues here include:

• The tricky statements about the treatment of the UK’s only land border with the EU (between Northern Ireland and the Republic) at paragraphs 49 and 50 of the Joint Report need to be turned into legal reality.
• Some matters around citizens’ rights that are still be resolved.

Discussions begin on the terms of the transition: That is, the period between the UK leaving the EU on 29 March 2019 (probably!) and the final trading relationship between the UK and the EU27 being settled. Issues here include:

• The Prime Minister would like the transition to last ‘around two years’, with the UK accessing the Single Market and Customs Union ‘on current terms’.  That’s presumably not quite the same as being a member of the Single Market and Customs Union.
• But the terms of the European Council guidelines today are rather more specific:  The UK will become a ‘third country’ and so ‘will no longer participate in or nominate or elect members of the EU institutions, nor participate in the decision-making of the Union bodies, offices and agencies’.  The guidelines continue that:

‘In order to ensure a level playing field based on the same rules applying throughout the Single Market, changes to the acquis adopted by EU institutions, bodies, offices and agencies will have to apply both in the United Kingdom and the EU. All existing Union regulatory, budgetary, supervisory, judiciary and enforcement instruments and structures will also apply, including the competence of the Court of Justice of the European Union. As the United Kingdom will continue to participate in the Customs Union and the Single Market (with all four freedoms) during the transition, it will have to continue to comply with EU trade policy, to apply EU customs tariff and collect EU customs duties, and to ensure all EU checks are being performed on the border vis-à-vis other third countries’

• Particular questions will be: Can the UK negotiate trade deals with non-EU states during the transition period? Will the UK be required to adopt new EU laws? Will the UK be able to proceed with its scheme for registering new EU migrants after March 2019?
• And, will a two year transition be long enough? The two sides have to negotiate a comprehensive trade deal in that time. It’s pretty much a consensus view that trade deals take a bit longer than that, though these are unique circumstances.

March 2018 to end 2018

Trade talks: Assuming the terms of the Withdrawal Agreement are settled, outline talks on the framework for the UK’s future relationship with the EU may start.  But the EU is clear that detailed negotiations on that trade agreement won’t start until after the UK leaves (and as a matter of EU law nothing can be signed until the UK is a ‘third country’).  So today’s guidelines say that:

‘…the Union will be ready to engage in preliminary and preparatory discussions with the aim of identifying an overall understanding of the framework for the future relationship, once additional guidelines have been adopted to this effect. Such an understanding should be elaborated in a political declaration accompanying and referred to in the Withdrawal Agreement.’

So we have to wait for those ‘additional guidelines’ before those ‘preliminary and preparatory’ discussions about future trade can start.  All that the EU is offering by Brexit day (29 March 2019, probably!) on the terms of future trade is a ‘political declaration’.

The big issue here is: what does the UK actually want the future trading relationship to look like?  The guidelines call ‘on the United Kingdom to provide further clarity on its position on the framework for the future relationship’. The Cabinet is scheduled to have its first (!) discussion on this central question next week.  In a way, the reluctance of the EU side to move on to discussing trade is useful for Mrs May, as it gives her some months to try to resolve the question now at the heart of Brexit.

Will it be Norway minus? Canada plus plus plus? The Swiss model? No one knows!  Here’s a primer from the Institute of Government on the options (M. Barnier has been spotted using this).

Legislative approvals: The Withdrawal Agreement needs to be approved by the European Parliament and – it now seems – by the UK Parliament.  That’s why the EU side wants the Withdrawal Agreement in a final form by October; to give time for these legislative approvals.

Early 2019

The Withdrawal Agreement – which will be a legally binding international treaty – will be signed.  Or not! If it isn’t, because the two sides have not been able to agree the Irish border question, for example, then the UK is headed for the hardest of hard Brexits.

29 March 2019 (probably!)

The UK leaves the European Union.  The terms of the transition kick in.  Detailed negotiations on the future trade relationship start.