Barnier warns UK that time is running out for an orderly Brexit.

London

Having laid down firm conditions for any Brexit transition, the European Council will, before the end of March 2018, publish its framework for the future EU relationship with the UK.

At the time of writing, the UK and EU are far away from an agreement on the terms for allowing the UK time to implement the final solution.  Yet, in six weeks’ time negotiations open on what is considered to be the most important and complex deal in post-war history.

During his visit to London (5 February) the EU chief Brexit negotiator, Michel Barnier, reminded the UK that “the clock is ticking”.  Once the EU27 have set the negotiating guidelines for the future, there is no turning back.  And if there’s one thing we’ve learned about Barnier, he is a man who delivers on his brief.

Barnier has repeatedly made it clear that we must make a choice: either go for a free-trade agreement such as the one between the EU and Canada, or become a member of the European Economic Area (EEA).

According to Stephen Kinnock MP – and member of the Parliamentary Committee with oversight of Brexit: “The UK’s future relationship with the EU is on a burning platform, and we have six short weeks to put out the fire.  Trade, jobs, national security, employment rights, human rights, peace in Northern Ireland, and our place in the world - are hanging in the balance.”

Regarding the alternatives that the EU sees for the UK.

The Canada model does not cover financial services – crucial because 80 percent of the British economy is driven by the services sector.  And the Canada model would leave the UK outside the customs union - incompatible with the government’s stated desire to retain a frictionless border between Northern Ireland and the Republic.  Perhaps this is what David Davis means when he talks about ‘Canada plus-plus-plus’.

The EEA/EFTA model offers a high degree of access to the single market – whilst allowing for important differences that preserve Britain’s desire for ‘self-determination’.

EEA would end the principle of direct effect and the jurisdiction of the European Court of Justice (ECJ) on trade - it is overseen by the EFTA Court, which frequently takes a different line to the ECJ.  It would allow the U.K. to shape the rules for the shared aspects of the single market – as little as 10 percent of all EU rules apply to the EEA countries.  And there is a precedent for reforming the operation of free movement through the EEA.

EEA provides a solid base on which to negotiate a customs partnership between the UK and the EU - and would deliver the frictionless border between Northern Ireland and the Republic that all parties are, rightly, committed to preserving.  This matter is integral to the Phase 1 agreement – but a working solution has yet to be tabled and signed-off.

Timing of Brexit

We have highlighted elsewhere the gulf evident between the UK and the EU regarding terms of any Transition (Implementation) that would begin at the moment of Brexit (23:00 GMT on 29 March 2019).  And the EU has made it explicit and non-negotiable that the transition will be a carbon copy of the status quo, minus voting rights.  In other words, the UK will have to accept all the rules and obligations of the customs union and the single market (including the free movement of labour), along with the jurisdiction of the European Court of Justice, for the entire duration of the transition.”

Kinnock is convinced that: “The EU will not budge one inch on this.  Why should it when the UK government has put absolutely no constructive alternative on the table?”  He believes that this in its own right: “could therefore become the rock on which the entire Brexit process founders when parliament debates and votes on the EU (Withdrawal) Agreement in October.

Brexit Partners have been closely following the discussions for more than a year and developing models and scenarios that identify the impact on industry sectors for clients.  We, too, feel that ‘the clock is ticking’ for organisations and businesses to complete their own “Brexit Impact Analysis” – and use this as the base for planning and implementing an appropriate response.   We support the call that is now coming from Risk and Governance specialists to engage and ensure that the response is both considered and documented.

John ShuttleworthComment