Brexit Briefing: Updated EU views on Brexit - as Government concludes its attempt to find a deal that is acceptable to opposition and Parliament
This week sees the conclusion of the Prime Minister’s attempt to agree an approach on Brexit with the Labour party. This would then go back to the House of Commons for a vote.
If these talks do not succeed, the Prime Minister - in consultation with opposition - will put a ‘small number’ of ‘options for the future relationship with the EU’ to the House of Commons.
There is no scheduled Brexit business in the Commons. Progress continues, however, across Parliamentary Committees.
The Brexit Committee will hear from three experts on:
the UK’s role during the transition period;
how European Parliament elections might change political dynamics in the EU; and
prospects for the future relationship.
The International Trade Committee will hold a two-panel session on the UK’s trade in services.
There are six more ‘EU Exit’ Statutory Instruments to be considered by the Delegated Legislation Committees.
Meanwhile, the other 27 EU Member States have maintained a largely united front in the Brexit negotiations and in maintaining that the negotiated Withdrawal Agreement should not be re-opened. A report published last week examines the views of each of the EU27 on Brexit - and their contingency planning for a possible no-deal Brexit. It also provides background on their internal politics and trade and economic statistics. We report in full, below.
Timetable for the week
Tuesday 7 May: no scheduled Brexit business in the Commons Chamber.
Debates on four Brexit-related Statutory Instruments: an update to existing SIs concerning the Common Agriculture Policy; and three SIs ‘update’ Railways legislation to ensure it is legally operable after Brexit.
Wednesday 8 May: the Brexit Committee continues its inquiry into ‘The progress of the UK’s negotiations with the EU’ taking expert evidence.
The International Trade Committee has two expert panels for its inquiry into ‘UK trade in services’. The first panel will discuss services liberalisation; and the second is all about digital trade.
The service industries include the retail sector, the financial sector, the public sector, business administration, leisure and cultural activities.
In 2017, these industries accounted for 79% of total UK economic output (Gross Value Added).
Services also accounted for 83% of workforce jobs in September 2018.
Thursday 9 May: two Brexit-related Statutory Instruments will be debated in Delegated Legislation Committees:
amendments to the Architects Act 1997 in preparation for Brexit; and
amendments to the UK’s VAT regime for travel services, to make sure it is legally operable after Brexit.
Unity of the EU27 and Single Market integrity
The EU27 Member States have maintained a largely united front in the Brexit negotiations. They adopted joint negotiating guidelines in April 2017 following the UK Government’s Article 50 notification - mandating Michel Barnier to lead negotiations on their behalf.
Examining the positions on Brexit taken by the EU27, a number of common themes emerge, notably insistence on the integrity of the EU Single Market and an unwillingness to divide the four market freedoms (relating to goods, services, capital and people) when it comes to negotiating the future UK-EU trading relationship. This has also come alongside concerns that the new trading relationship should not enable the UK to gain a competitive advantage by retaining participation in some elements of the Single Market while no longer being required to comply with all the requirements of membership, including regulations relating to competition, the environment and labour market.
The governments of the EU’s two leading Member States - France and Germany - have been influential in promoting these lines. However, other EU governments have also stressed the importance of the Single Market and the need to balance trading access with certain obligations arising out of membership, including free movement of people.
Some EU governments - notably those of Poland, Hungary and Italy – have, for varying reasons, been in dispute with the European Commission or other Member States. Both the Polish and Hungarian Governments face questions regarding their compliance with the EU’s rule of law framework and, along with Slovakia, face European Commission ‘infringement’ proceedings regarding non-compliance with the EU’s refugee relocation plan.
The new Italian Government has clashed with other EU governments over its calls for greater burden sharing in relation to migrant and refugee arrivals and its unwillingness to comply with Eurozone budget strictures. However, occasional criticisms of the EU’s approach to negotiations from government figures in these countries have not translated into any major divergences from the principal EU lines in the negotiations. This partly relates to a preoccupation among these governments with their own national priorities and a lack of coincidence with those of the UK when it comes to the Brexit negotiations.
Maintaining trade and security co-operation
EU27 governments have expressed a wish to retain a close trading relationship with the UK and a desire to avoid a 'no deal' Brexit which would be harmful to EU economies as well the UK. Retaining strong trading links with the UK is a particular consideration for those Member States with a high proportion of trade with the UK, although this is secondary to preserving the Single Market. Trade with the UK is equivalent to between 13% and 15% of GDP for Belgium, Cyprus, Luxembourg and the Netherlands, and more than 20% for Malta and Ireland. However, for the other 21 Member States trade with the UK is equivalent to less than 6% of GDP.
While agreement on the future economic and trading relationship has proved difficult, there has been a greater level of convergence between the UK and the EU27 over continuing security co-operation. Former Soviet bloc states, including Bulgaria, Romania, Poland and the Baltic countries, have been particularly concerned to ensure that Brexit does not undermine the UK contribution to European security.
The first phase of negotiations
There has also been unity on the question of sequencing of the Brexit negotiations, and the need for agreement on the status and rights of EU citizens in the UK after Brexit, the UK’s financial settlement with the EU, and the Ireland-Northern Ireland border, all of which were addressed by the Joint Report on progress in the first phase of Brexit negotiations in December 2017. The status of Member State nationals in the UK was a priority for several states with large numbers of their citizens living in the UK, notably Poland, Romania and other recent accession countries as well as Italy. Reaching agreement on the UK’s financial settlement upon withdrawal from the EU was also critical, with net recipients from the EU budget concerned about a potential loss of funds and net contributors concerned about having to make up any shortfall.
The Withdrawal Agreement and the Northern Ireland Backstop
The critical sticking point as the negotiations on the Withdrawal Agreement (WA) drew to a close was the question of the Northern Ireland-Ireland border and the measures required to prevent a hard border re-emerging. Again, the EU27 remained united on this front and supportive of Ireland’s position in the negotiations. Smaller states expressed their affinity with a fellow small state in the negotiations, while the German Government expressed itself as a guarantor of the interests of smaller states.
The EU initially proposed a Northern Ireland specific backstop which kept Northern Ireland - but not the rest of the UK - in a customs union with the EU and parts of the EU Single Market in order to avoid the need for border checks with Ireland. The UK Government rejected this and proposed the eventually agreed backstop which would keep the whole of the UK in a single customs territory with the EU until a new arrangement avoiding a hard border could be implemented. The level playing field provisions accompanying the backstop, covering state aid, competition and environmental and labour standards, reflected concerns from Member States that this could give the UK a back door to the EU Single Market without the obligations of membership.
The UK’s ‘Chequers proposal’ in July 2018, involving a ‘common rulebook’ with the EU in relation to EU rules enabling frictionless trade in goods and a ‘facilitated customs arrangement’ whereby the UK would collect tariffs on behalf of the EU while maintaining a separate tariff, was rejected by the EU. However, there were reports that some countries including Poland, Hungary, Sweden, Denmark, the Netherlands and Belgium had pushed for greater engagement with these proposals.
Since the WA was approved by EU leaders at the European Council in November 2018, the EU27 has remained united behind the agreement and the position adopted by the December 2018 European Council that the WA was “not open for renegotiation”. This has also meant defending the principles underpinning the backstop in order to maintain an open border on the island of Ireland and protect both the Good Friday Agreement and the integrity of the Single Market. Some Member States have indicated a willingness to engage in further discussions with the UK in order to find solutions that allay concerns in the UK and enable the WA to win Parliamentary approval as long as these underlying principles are maintained. A suggestion in January 2019 from the Polish Foreign Minister that the backstop could be limited to a five-year period however did not win backing from other Member States.
Extending Article 50 and avoiding no-deal
As a UK request to extend the Article 50 period in order to delay Brexit became likely following the House of Commons votes against the WA in January and March 2019, EU27 Government representatives expressed an openness towards extension while also stressing the need for such an extension to have a clear objective.
The French government appeared to take the toughest stance in this regard, while the German Chancellor and other EU leaders appeared more determined to do what they could to avoid a no deal Brexit.
Prior to the first decision to extend Article 50 taken on 21 March, the Irish Prime Minister, mindful of the potentially damaging impact on Ireland of a no deal Brexit, called on fellow EU27 leaders to “cut the British government some slack”.
At the European Council meeting on 10 April to discuss the UK’s second request for an Article 50 extension, the EU27 appeared more openly divided. The majority agreed on the need for a long extension with an option for the UK to leave earlier if it ratified the WA while France, with support from a smaller number of Member States including Austria and Belgium, argued for a short extension. A number of Member States - including France, Belgium and Spain - expressed concern about the potential disruption to the EU’s future business arising out of the continued membership of a withdrawing Member State. This was assuaged to an extent by language in the European Council Conclusions referring to the UK’s continued commitment to “sincere co-operation” and to refrain from measures which could jeopardise attainment of the EU’s objectives.
No Deal Preparations
While preferring to avoid a no deal scenario Member States are implementing the EU’s no-deal preparedness legislation and have also made their own plans to mitigate a no-deal impact on the economy, trade, transport and other sectors. This also includes border and customs adaptations.
Those with major ports (e.g. Belgium) and significant trade with UK (e.g. the Netherlands) have provided extra border infrastructure and new technology systems, and recruited extra customs or veterinary staff (e.g. France, Ireland, Poland, Netherlands, Spain).
EU27 Member States have also agreed to continue existing residence, employment and travel rights at least for a temporary period. Some Member States, including Austria, Bulgaria, Croatia, Denmark, Cyprus, Italy, Malta, Romania and Slovakia, have offered permanent national ‘regularisation’ for UK citizens already living in the country.
The EU27 governments have been mindful of public opinion and have been boosted in this regard by increasing support for the EU in surveys. Support for EU membership has increased since the UK referendum in 2016 in countries with long-standing histories of Euro-scepticism such as Sweden and Denmark as well as more recently Euro-sceptic countries like Italy.
A special Eurobarometer survey for the European Parliament published in April 2019 (based on a survey conducted in February-March 2019 of a representative sample of people aged 15+) showed net support for EU membership in all EU Member States, although support was below 50% in the UK, Czech Republic and Italy (with large numbers of don’t knows).
Delegated Legislation Committees are a ‘mini-version’ of the House of Commons Chamber for debating statutory instruments. They usually have 17 MPs, with a majority from the Government, and an impartial Chair. The Committee will include at least one minister and at least one spokesperson from the Official Opposition. Sometimes a spokesperson from the third largest party is a member as well.