Tuesday, 24 October 2017

Brexit: getting to grips with Article 50 (7 months after invoking it)

In an ideal world, we would have a government that had conducted significant planning prior to embarking upon the process of EU withdrawal. Cummings, as I have written before many times, is correct when he links this overriding failure to the mess we are currently in. Not only did we find ourselves in a position whereby Article 50 had been invoked without managing to showcase sufficient understanding of its scope, we then decided to hold an entirely unnecessary and backfiring election after the withdrawal proceedings had begun. 

It amazes me, therefore, that I should have to write (and see others writing about) about the parameters of the Article 50 process shortly before Halloween, as opposed to early spring or just after the referendum. But we are where we are and I cannot do anything to change that. 



We should begin by establishing the facts on the ground. Article 50 is indeed the legal route out of the EU, but it was inserted into the amending Lisbon Treaty, to form part of the Consolidated European Treaty, in order to make the European Union appear democratic. This was the suggestion of one Altiero Spinelli, who during the constitutional conventions (around 14 years ago) made it clear that EU membership should not be a 'trap', insisting instead that the Union must be a 'voluntary association' of members. The treaty provision was drawn up mainly for the purpose of spin, with the working assumption of those writing it being that it would not ever realistically be used. 

A really good background into the use of Article 50 is provided here, on the Boiling Frog blog. Once again, readers should note just how far ahead of the game the blogosphere has been in comparison with the mainstream media and its crowded pool of commentators. It really is a shame that for much of the general population, blogs are not the go-to when folk attempt to interpret and scrutinise information they are provided with through other platforms, especially in an age where their use can potentially be so prevalent. 

But back to Article 50.



Theresa May yesterday revealed her ignorance on the subject when she told the Commons:


"Both sides recognise that the timetable was set out in the Lisbon treaty, which does indeed refer to the future relationship. The withdrawal agreement can only be considered and agreed taking account of the future relationship. It is important that we negotiate that future relationship, so we have both the withdrawal agreement and the future partnership, and the implementation period then is a practical implementation period."

The government thinks that the Article 50 period, which does allow for trade discussion and preparation, is in fact the window in which a trade deal is to be concluded. This is not true and these two things are not the same. Take a look again at the above graphic. Article 50 is for two things: tidying up (hence the current sticking points) and putting together a framework for a future partnership, which begins on Brexit day. When we say 'future partnership', we mean the nature of the relationship that exists between leaving the EU and the implementation of the trade deal 

As we now know, and as our referendum campaign spent months telling voters, EU member states do not have the ability to negotiate trade deals. This is because, in accordance with the framework of the Common Commercial Policy (and not the Customs Union, whose implications are somewhat different), the European Union negotiates deals as one bloc. For want of specifics, see below the phrases 'based on uniform principles' and 'the conclusion of tariff and trade agreements relating to trade in goods and services'. 



By Article 207, we are here referencing the Consolidated Treaty. It is often falsely claimed, such as in a recent Telegraph article by Liam Halligan and Gerard Lyons, that it is the Customs Union which prevents the ability of members to negotiate trade deals, but this is not the case. Any momentary inspection of the treaty material will confirm that no such argument can be made. No reference is made to trade deals within the context of the Customs Union, which has very different competencies and entirely separate technical features. 

But even if we leave trade policy competence aside, negotiating a trade deal within the two-year Article 50 period is not possible on logistical grounds, even if we do begin from a point of harmonised regulatory regimes. The European Union will not allow any compromise of the Single Market, or indeed of its internal market, and two years is not a reasonable amount of time in which to expect a trade deal to have been negotiated anyway. Negotiating an FTA with the EU is not made a simple matter by regulatory harmonisation, though it will of course be useful. Barnier himself has pointed out, on the issue of a future trade agreement:

“The two phases are difficult. The second will be very different and will last several years. It is truly unique because instead of promoting regulatory convergence, it will aim to frame a difference. It will involve risks, including about its political ratification, making all the more necessary transparency around these topics.”

Here he is referring to the negotiation of a trade agreement outside of the Article 50 period, but he reinforces the point I have made about undermining the integrity of established European institutions. 

So, where are we? Again, I refer readers to the colourful graphic above. Right now, the mission is to iron out the three phase one issues, which are placed in front of us for very specific reasons. They aren't impassable and nor are they unreasonable. The Northern Ireland situation, for instance, requires a solitary, island-specific settlement and cannot be included within the remit of an FTA because both sides want a soft border, and FTAs with third countries necessitate border inspections. The reason for this is a basic point about enforcement. The EU has legal jurisdiction in the internal affairs of member states, so checks and inspections take place at the point of production, rather than at the border. 

After the phase one issues are agreed upon, the specifics will need to be ironed out and then trade and add-ons (like participation in cross-European initiatives, such as Euratom, security agencies and aviation agreements) will be discussed. Trade will need to be discussed within this two-year window because we will need to trade with the European Union on and after Brexit day. It is important therefore to distinguish between 'trade talks' and the negotiation of a free trade deal, which as we have outlined comes after leaving. 

On March 29th, 2019 Britain, at least officially, leaves the European Union. It is at this point that we become a third country. We embark upon a relationship outlined as part of the withdrawal agreement, with no free trade deal in place. It is from here on out that we can negotiate one, and it will not be a simple or quick process. These things never are. 

2 comments:

  1. Yes, this all sounds entirely reasonable, logical and uncontroversial. I have read similar treatise on Pete North's blog and Jon Worth has a similar but slightly expanded version on his. I guess the obvious question remains, does our esteemed leader and her fellow travellers realise this because they are still selling the "dream" that we will be out of "the clutches" of the EU by March 2019.

    At some point, assuming we take her wish for a "deep and special" relationship with the EU at face value, then PM May must make a decision regarding the transition. It seems extremely likely that we will still be required to adhere to EU regulations and ECJ jurisdiction for however long this period lasts. It seems logical that we remain in the single market during this period to give business the certainty it needs for the short and medium term and minimize costly disruption. But she ruled out all these things in the run up to A50 notification and within the letter itself.

    I just cannot see how she can maintain these red lines if she truly wants this deep and special relationship, which to my mind can only be realised as a comprehensive trade agreement. Something's got to give, and I don’t think it will be the EU.

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  2. Brexit & Beyond1 November 2017 at 10:04

    My thoughts on Article 50.3

    '3. The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.'

    I see this as three scenario-

    a). Talks break down before 29th March 2019 - UK signs withdrawal agreement before this date

    b). Talks continue and are concluded by 29th March 2019 - UK signs withdrawal agreement on this date

    c). EU agrees to extend talks for a period of time. Talks continue beyond 29th March 2019 - UK signs withdrawal agreement sometime after this date.

    Have I read these scenario correctly?

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