The Cicero Brexit Insights team is producing regular updates, comment and insight on both the broad themes and the technical detail of Brexit. We aim to give readers a clear view of the issues and challenges as they are seen in Brussels, London and Member States. This week, the UK team considers the passage of the European Union (Notification of Withdrawal) Bill through the Lords and Thursday’s by-election results and the EU team considers the misconceptions of the EU’s top negotiating priorities.

This week has been another fairly calm one in the lifecycle of Brexit, with the European Union (Notification of Withdrawal) Bill cantering through the House of Lords Second Reading stage and into Committee Stage next week with little difficulty for the Government. The Prime Minister’s looming presence on the steps of the Royal Throne in the Lords Chamber on Monday and the Labour leader of the Lords Baroness Smith’s commitment that Labour Peers will not seek to overtly frustrate the Bill, seem to have secured its steady passage. However, with convention dictating that Peers rarely derail a Government Bill in Second Reading, the relative ease of the Bill’s passage this week does not necessary mean next week’s Committee Stage will be as hurdle-free for the Government. We can therefore expect Peers to be far more pressing, particularly on issues related to the rights of EU nationals next week.

Away from the Palace of Westminster, former Prime Minister, Tony Blair, has been getting increasingly exercised. His call for people to ‘rise up’ against Brexit may have left many believing we had turned back the clock 10 months to a time when the referendum campaign was still being fought. The former Labour leader’s comments also fly in the face of the views of many in traditional Labour heartlands.

In this week’s by-election results, the current Labour leader, Jeremy Corbyn is also feeling the effect of not adequately representing his supporters’ views on Brexit. The loss of the Copeland by-election to the Tories is a significant blow to the Party. The result is also the first by-election gain by a governing party since 1982. While in Stoke, Labour did hold their seat, fending off an arguably poor campaign from the UKIP leader Paul Nuttall, they did so with a decreased majority. Labour’s share of the vote has now dropped in every single by-election since the Brexit referendum in June. In the short-term these results could potentially destabilise Jeremy Corbyn while demonstrating that his strategy for the Labour Party does not chime with voters in its natural heartlands.

In contrast, the result can be seen as a vindicating one for Theresa May with many of her supporters now feeling quietly confident about the Government’s handling of Brexit.

Luke Seaman
Senior Account Manager

Just as in any divorce, there remains divergence between the two parties’ priorities as they enter negotiations. Faced with a host of existential challenges, including migrants, security, Greece and the very future of the entire Union, EU Chief Negotiator Michel Barnier is clear his priority is to disentangle Britain from the EU rather than jumping into trade discussions. The sooner the UK departs, the sooner the rest of the Union can begin to address these broader challenges.

The EU is supported in this view by the legal focus of the Article 50 process. Contrary to the increasingly common misconception, the topics and focus of the Article 50 divorce negotiated in the two-year window kick-started by Theresa May’s Article 50 notification explicitly excludes trade and market access negotiations. As the EU has made clear, the future relationship between the EU and UK, including trade, customs and market access, will be worked out in a separate, secondary negotiation initiated following the conclusion of the Article 50 agreement.

From the EU’s perspective, the controversial budgetary question, which includes settlement of pension liabilities and EU-funded infrastructure projects, will be an early priority within the Article 50 negotiations and comprise the majority of the negotiations’ focus in 2017. However, the divorce agreement also requires the negotiation of further crucial issues, including acquired rights of EU and UK citizens living in each other’s jurisdictions, the location of European agencies based in the UK, the status and pensions of British officials in the EU institutions and the withdrawal process of British MEPs from the European Parliament.

A direct consequence of this EU-imposed order of priorities is that UK-based businesses will not be provided any significant information on market access questions to inform critical decisions on their future strategies in 2017. The maximum clarity on future trading terms that businesses can expect over the next two-year period is a likely transitional arrangement bridging the gap between the end of Article 50 negotiations in 2019 and the ratification of a future trade agreement. And it is only until the latter is negotiated that interested stakeholders will finally have clarity on the implementation phase allowing businesses to adapt to the new EU-UK relationship.

Argi Sampedro
Account Executive – Brussels

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