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 our UK team considers developments on transitional arrangements and our EU team analyses whether Brussels may look to speed up negotiations following disappointing progress so far.

 

While the Prime Minister has been away on holiday this week, Cabinet Ministers have been busy attempting – although perhaps struggling – to clarify more details on how transitional arrangements might work. Although the Cabinet are now publicly united on the necessity for a transition period once the UK leaves the EU, it seems we are still a long way off to knowing how it will all work in practice.

In a different tone from the one she took at Conservative Party Conference nearly a year ago, Home Secretary Amber Rudd attempted to reassure businesses by saying there will be no “cliff edge” once we leave the bloc. She also announced there would be a transitional period to smooth new rules on migration and commissioned the Government’s Migration Advisory Committee to produce a detailed assessment of the costs and benefits of EU migration. However, Immigration Minister Brandon Lewis created some confusion when he then said that freedom of movement would still end by March 2019 and a new immigration system would be in place at that point. How the future migration policy will work is yet to be seen, but there has been a clear change in approach on migration since the election, with the Government effectively calling on business to make its case on the importance of EU workers.

The Chancellor, Philip Hammond, has continued to flex his muscles following new-found, post-general election freedom, saying he was hopeful transitional arrangements could begin to be discussed in September or October, once sufficient progress on the first stage of negotiations has been made. EU Brexit Negotiator Michel Barnier doesn’t seem to have quite the same optimism, warning that the next phase of Brexit negotiations could be delayed until December because of the UK’s refusal to engage with Brussels regarding the “divorce” settlement. The Chancellor however also added that any Brexit transitional deal would last three years “at the most” and envisaged that during the transition period the relationship would evolve towards the ‘new normal’ which would be in place by the end of the transition. Slowly but surely more details of the process of how a transition period will work are coming through, but until details of the agreement are known businesses are unlikely to be completely reassured.

Meanwhile, over in America, International Trade Secretary Liam Fox was challenged this week to eat chlorine washed chicken, as he and Northern Ireland Secretary James Brokenshire attempted to shore up progress on US-UK trade talks. The dispute in the Cabinet and in the wider public on whether the UK should de-regulate has given just a glimpse of how difficult the trade-offs and discussions on free-trade talks will be, with other such trade-offs inevitable not just on food standards but also economic sectors such as financial services and pharmaceuticals. Trade negotiators around the world are likely looking in on our chlorine washed chicken debacle and thinking that when it comes to free trade deals, the UK hasn’t made clear exactly what it wants to achieve.

Chris Hughes
Account Executive

 

Brussels is reflecting on the disappointing level of progress achieved in the Brexit negotiations since the UK invoked Article 50 almost four months ago. Given that both sides have only around 14 months left to find an agreement on the UK’s terms of withdrawal, the structure of a transition phase and the main tenets of their future relationship, it is worrying that they have only identified commonalities and differences on a single chapter so far.

There is concern on the continent that the UK still does not know what it aims to achieve from the negotiations. It has yet to publish position papers on core aspects of the first phase of negotiations, and due to the weakness of the government, there is a lingering doubt that whoever is in power in two years’ time may not back the positions set out this year. EU officials following the UK media are becoming increasingly frustrated with reports of frequent changes in the Government’s position concerning fundamental elements of the negotiations.

Even more, the Government is not preparing the public for the difficult compromises the country will need to accept as part of its decision to leave the EU. Comprehensive access to the Single Market will come with budget contributions and ECJ jurisdiction; leaving the customs union and striking comprehensive trade agreements will likely lead to a hard border in Ireland, and exiting the ECJ jurisdiction will mean that EU citizens in the UK will lose some rights. Given the weak position the Government finds itself in, Brussels may fear that cabinet members are unwilling to embrace an unpopular compromise just before the Conservative party conference in October.

There is now a growing realisation that the pace of negotiation will need to pick up, given that there is a real danger of missing the October deadline for the Council to approve negotiations to move on to discussing the future relationship. Michel Barnier reportedly told Member States that he believes this outcome to be “very unlikely”. The EU negotiation team is therefore mulling the possibility of shaking up the structure of the talks and cede to UK demands to meet more frequently than the four week cycle agreed in June. Ultimately, progress will be contingent on the UK’s ability to outline its negotiating positions and accept that any agreement will have its drawbacks. The “growing sense of realism” that is currently being detected in the Government will in itself not be sufficient in getting the talks back on schedule.

George Winkler
Senior Account Executive

 

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