Brexit Update 19th January 2018

By January 31, 2018 Brexit Updates

Top 3 developments  

  • EU Withdrawal Bill passes to the Lords
  • Scottish impact study published
  • EU steps up campaign for Brexit reversal

UK Update

Withdrawal Bill passes to the Lords

The European Union (Withdrawal) Bill is heading for the House of Lords following its successful passing through the Commons. The vote on the final stage of the Bill in the Commons passed by 29 votes, and is expected to be amended in the Lords before being passed back to the Commons in a process known as ping pong. Labour MPs were whipped to vote against the Bill following a series of unsuccessful attempts to amend it, with the Shadow Brexit Secretary Keir Starmer branding the final Bill as “not fit for purpose”. Parliament will however gain a ‘meaningful’ vote on the final deal negotiated with the European Commission, following the successful passing of Dominic Grieve’s amendment. Once passed the Bill will repeal the 1972 European Communities Act which took the UK into the EU, as well as transpose EU law into UK domestic law. Following the UK’s exit, and dependent on the final deal negotiated with the EU (if any), Parliament will have the ability to amend and withdraw the new domestic legislation. Something that is likely to fill the parliamentary calendar in the coming years.

Lords of all sides are expected to follow in the Commons wake and propose amendments to the Bill which may prove a greater challenge to the Government as no majority currently exists in the second chamber. However, the Government is likely to invoke the predominance of the Commons, enshrined in the Parliament Act, to try and pass the Bill long before the March 2019 deadline.

France Touquet £44m extra to police border

British border checkpoints are set to remain in France following negotiations this week over the future of the Le Touquet agreement at RMA Sandhurst. The UK has agreed to contribute an additional £44m to the policing of the border between France and the UK, centred largely around the Calais port. In addition, the UK has agreed to speed up the processing of migrants, notably children, from France. The additional payment has come under criticism however, with some pointing to France’s membership of the Schengen area of 26 European states which allows unhindered travel between their territories, leading to higher levels of travel to France’s northern ports. The future of the Le Touquet agreement however remains of critical importance to the UK, with Theresa May applauding the “more humane and efficient approach” to processing migrants in both UK and French territories, with additional importance placed on joint management of the border.

Defence was also on the agenda at Macron and May’s Sandhurst talks. As two of the five permanent members of the UN Security Council both hold a large amount of power in international defence operations, and the commitments made to strengthen joint operations and support showed how a post-Brexit relationship might look. The UK will be unable to negotiate bilateral trade agreements with EU members when it leaves the bloc, and will instead negotiate with the European Commission directly – leaving the UK to negotiate on areas where member states still hold competency such as defence. On Brexit, Macron simply reiterated the point made in Brussels, that the UK would need to choose one of the current agreements with third states as a model for its future relationship. He also reiterated his opposition to including financial services in a post-Brexit bespoke free trade deal between the UK and the EU, stating “I want to make sure that the single market is preserved because that is very much at the heart of the EU”. A position the UK hopes to change as negotiations continue.

Brexit set to bite in transition period

The European Commission has reopened the debate over the cut-off date for an indefinite right to remain in the UK for EU citizens. In December it was agreed that this date should be the 29th March 2019, ‘Brexit Day’. However, the EU has appeared to backtrack with draft negotiating guidelines for the transition period said to contain instructions to stop the UK from applying a new system of immigration for EU citizens throughout the 2-year period – opening the prospect of continued right-to-remain for people arriving between 2019 and 2021. Such a stance is likely to come under fire from leading Brexiteers who have placed a red-line on migration post-Brexit as part of their promise to take back control.

Whilst both the UK and EU have talked of transition talks being concluded early this year, uncertainty reigns as to whether this is achievable. The UK is keen to begin trade talks; the EU is less keen, with many seeing them as a post-Brexit, post-transition issue that would weaken the EU’s hand before Britain leaves. Commission negotiators are set to demand that the UK seeks permission to remain part of EU trade agreements throughout the transition period, and to negotiate post-transition trade agreements with third states only under the guidelines of the EU. This too is likely to come under contestation by the UK, who see the transition period as a two-year step to provide certainty for citizens and businesses whilst new agreements are forged by the International Trade department and others within Government.

Influential Brexit group recruits Rees-Mogg as new Chair

Jacob Rees Mogg was this week appointed as Chair of the influential European Reform Group. Two of the group’s previous Chairs have been recruited into the Department for Exiting the European Union (DExEU), leaving the possibility open that Rees-Mogg might be the next. The group, seen as the heart of the Conservative Eurosceptic movement, has more than 60 MPs. Rees-Mogg has been a vocal opponent of the European Union, and has taken a hard stance to negotiations, even telling PM Theresa May that her red lines ‘had gone a bit pink’ as she battled to reach agreement with the EU over reaching sufficient progress to move onto Phase 2 negotiations. The ERG is likely to be influential in pushing for the UK to remain firm in response to EU demands over the transition period, as well as their insistence that trade negotiations are concluded by the 29th March deadline.

Scottish Government Report Published

The Scottish Government have published a report this week detailing how the Scottish economy would be £12.7bn worse off in the case of a hard Brexit. Whilst the UK Government insists it is seeking a Brexit deal that works for the whole of the UK, the Scottish government insisted that retaining single market membership would be the least damaging and urged No.10 to change its position on the issue. The £12.7bn figure is drawn from a scenario in which the UK leaves the EU without a trade deal and operates under WTO rules totalling an 8.5% GDP hit on the Scottish economy. First Minister Nicola Sturgeon further urged Labour to join several other opposition parties in pushing for Single Market membership – a position it is unlikely to take, at least until further clarity is given over what is achievable in the second phase of negotiations with the EU.

The report follows an earlier commissioned impact study by the Mayor of London which outlined a potential impact to London’s economy of a no-deal scenario. The study calculated that up to 87,000 jobs may be lost in the capital, adding to the concerns of many up and down the country. The UK continues to press for a comprehensive agreement, but it is becoming increasingly clearer to see the potential cost if this fails. The studies are likely to be reviewed by the Department for Exiting the European Union as they draw up their negotiating position ready for phase 2 talks.

Airline Industry given hope as EU eyes contingencies

EU airlines were given some hope over the future of flights between the EU and post-Brexit Britain this week as the European Commission asked diplomats from EU27 states to consider skeleton agreements with the UK to keep airlines moving. The agreements would cover traffic rights and safety standard recognition, amongst other areas, in the event of a no-deal scenario. The Commission also outlined the agreements are likely to mimic those agreed with the US and Canada. Less certainty exists over the future of UK inclusion in the EU-US Open Skies agreement which permits airlines based in the US to fly to any point in the EU and vice versa. In the event of non-inclusion, the UK is likely to establish its own agreements with the US. The UK government is expected to seek an association agreement or a higher level of inclusion with EASA, the European regulatory body overseeing air travel and safety standards. Less certainty exits over the future of domestic flights by national carriers not based within the territory of operation. Ryanair, a carrier based in Ireland, was the first to publicly announce they had applied to the UK for a licence to operate between UK airports domestically, with others expected to follow suit where internal routes have already been established.

Zimbabwe seeks deeper ties with post-Brexit Britain

Zimbabwean President Mnangagwa reached out this week, hailing Britain’s departure from the EU as an opportunity for Zimbabwe to forge stronger links with its former Commonwealth partner. The President has been keen to reverse many of the policies of deposed leader Robert Mugabe, and is set to apply to re-join the Commonwealth if agreed domestically.

The Commonwealth does not have the formal institutions associated with the European Union, but that hasn’t stopped some in the UK pointing to it as a future source of increased trade, and a staging post for Britain’s post-Brexit relationships. Many states have been tentative to the UK’s overtures of building relations before it leaves, given their own ongoing trade discussions with the EU. The transition period is likely to be the earliest opportunity therefore to begin more comprehensive trade talks. Whether the Commonwealth will offer an effective alternative to the benefits of the Single Market is uncertain, certainly in the long term. In the short term however, the UK will need to continue to press for access to its established market in Europe. Even if that is on WTO terms.

European Update

EU seeks Brexit reversal

A campaign appears to have begun in Brussels and across EU27 capitals this week to encourage the UK to reverse its decision to leave the bloc. European Council President Donald Tusk was the first to speak out saying the EU’s ‘heart [is] still open’ to the UK, followed by Commission President Juncker who suggested the UK should re-join after leaving, and French President Macron who stated France would look ‘with kindness’ on a UK decision to halt Brexit. Former Education Secretary Justine Greening also spoke of a future generation of MP’s ‘improving or undoing’ Brexit if it does not work for young people. The UK Government by contrast has reiterated its intention to “respect the decision by the British public to leave the EU”, a position also shared by the Labour Party.

The EU is likely to remain open to a Brexit reversal throughout the second phase of negotiations, with many believing that the terms set by the EU for the transition period and the stance of the EU on UK access to the Single Market possibly swaying the UK away from leaving. The Government has no plan to reverse its decision to leave, and remains committed to leave both the single market and customs union. Public opinion is also deemed to have largely stayed the same on the issue, weakening the hopes of many that a second referendum might be held overturning the original result. The Government also has no plans to re-enter negotiations over reforms and opt-outs it wants, as suggested by Jean-Claude Juncker, with many thinking this would go against the spirit of the commitments the Government has made to leave.

UK Nationals seek protection of EU citizenship in Dutch court

British nationals living in the Netherlands are fighting to keep their EU citizenship after the UK leaves the EU. Under current plans agreed in phase one of the negotiations, British nationals living in EU27 states will revert to holding sole UK citizenship with some protected rights to remain in the EU countries they currently reside in. If the bid is successful it could reach the European Court of Justice which may in turn guarantee those rights, and the rights of all UK nationals living in the EU27, under EU citizenship. A ruling by the ECJ on the issue is likely to be complex, given the difficulties associated with interpreting EU law, whilst at the same time considering citizens as nationals of a state leaving the EU and therefore the jurisdiction of the ECJ. It is also likely to open similar cases of UK citizens seeking a retention of EU citizenship, something the UK Government has previously ruled out. 

Timeline

  • 29th January – EU27 ministers meet to sign off start date of second phase of negotiations
  • 23rd February – Informal meeting of EU27 Heads of State/Government
  • 22nd – 23rd March – European Council Summit

 

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