May has got her Brexit breakthrough, now for the hard part
The U.K. and the European Union struck a deal to unlock divorce negotiations, opening the way for talks on what businesses are keenest to nail down – the nature of the post-Brexit future.
The deal, made before dawn on Friday after rushed talks through the night, clears the path for discussions to start next year on the new terms of trade between the U.K. and its biggest commercial partner. The EU was quick to put down a marker of where it thinks those talks are headed and it’s far short of what May has said she wants.
The agreements outlined on Friday, including a 45 billion-euro ($53 billion) divorce bill and vague promises on the sensitive issue of the Irish border, will come back onto the table if trade talks turn sour. While the EU made some concessions, the U.K. did most of the running.
Businesses have won some time, as the EU said it was prepared to move quickly to discuss the terms of a transition period that Britain wants to put in place for two years after the divorce. In reality, commission officials expect it to be longer – the transition could be twice as long as May says – and a final accord signed and ratified by 2025, according to a person familiar with the EU’s thinking.
Negotiations about the transition deal can start in January although trade talks won’t start until February or March, according an EU official. That’s not necessarily a bad thing for the U.K. government, which is still to work out its common position on what it’s after.
After eight months of haggling, which at times has been bitter, EU officials warned that the hardest part of the Brexit process lies ahead. Trade deals don’t usually cover the service industries that make up about 80 percent of the U.K. economy. May has agreed to pay the bill and make other concessions in order to secure a good trade deal, but the country wants that accord to include its crucial financial services.
The risk is that if trade talks run into trouble, political support at home for those concessions might drain away. May has already faced down one attempted coup and there’s a sense she’s one crisis away from losing her job.
Once the euroskeptics realize what kind of trade deal is on offer, their hesitant support of May’s concessions may disappear, says Eurasia’s Mij Rahman.
“The rubber will hit in the road in phase two,” he said.
The agreement May came to Brussels to sign covered the rights of EU citizens, the financial settlement, and a solution to keep the border between Northern Ireland and the Republic as open as it is now after Brexit.
The last turned out to be the thorniest, requiring delicate four-way talks as the Northern Irish party that holds the balance of power in London wielded a powerful veto until the last minute. The issue is far from resolved and threatens to dog the next stage of negotiations.
Arlene Foster, who heads the Northern Irish party that holds the balance of power in London, said her Democratic Unionist lawmakers could still vote down a final exit deal if they’re not happy.
Britons will also be watching to see if talks live up to what was promised: they were told that Brexit would mean free trade deals with Europe and the rest of the world, controls on European immigration and the repatriation of regulation.
“So much time has been devoted to the easier part of the task and now to negotiate a transition arrangement and the framework for our future relationship we have, de facto, less than a year," European Council President Donald Tusk said. “We all know that breaking up is hard but breaking up and building a new relation is much harder.”
Brexit Breakthrough Deal Shows Give and Take: Some Key Points
European Commission President Jean-Claude Juncker described it as a negotiation where both sides – the European Union and the U.K. – “had to listen to each other, adjust their position and show a willingness to compromise.” Here is a breakdown of the key points.
The U.K will contribute to EU budgets for the years 2019 and 2020 as if it had remained in the Union
The U.K will contribute its share of financing of EU budgetary commitments outstanding at 31 December 2020
The U.K. will contribute its share of the financing of the EU’s liabilities incurred before 31 December 2020
The citizens’ rights part of the final Withdrawal Agreement is to be interpreted in line with the case law of the Court of Justice of the European Union
In the context of the application or interpretation of those rights, U.K. courts shall have due regard to relevant decisions of the ECJ
There will be a mechanism enabling U.K. courts to ask the ECJ questions of interpretation and it will last eight years.
The U.K. will either propose a solution for keeping the Irish border open that will be acceptable to the EU, or continue to by EU’s single market and customs union rules “which, now or in the future, support North-South cooperation, the all-island economy and the protection of the 1998 Agreement”
- Joint report on progress during phase 1 of negotiations under Article 50 TEU on the UK’s orderly withdrawal from the EU | December 2017
- State of progress of the negotiations with the United Kingdom under Article 50 of the Treaty on European Union: Communication from the European Commission | December 2017