EU draft guidelines for Brexit annotated – what they say and what they mean

Dan Roberts

... we must proceed according to a phased approach giving priority to an orderly withdrawal. In these negotiations the union will act as one ... but it will prepare itself to be able to handle the situation also if the negotiations were to fail.

Stern bureaucratic language underscoring EU determination to face down Britain’s hopes of dictating the terms of the negotiation. There will be no talks on trade until the exit agreement is dealt with. There will be no side deals with friendly governments. We can flounce off in a huff too.

Preserving the integrity of the single market excludes participation based on a sector-by-sector approach ... A non-member of the union, that does not live up to the same obligations as a member, cannot have the same rights and enjoy the same benefits as a member.

Once again, a key British demand is firmly smacked down. In her Lancaster House speech, Theresa May called for “elements of current single market arrangements in certain areas” such as cars and banking. Non, nein, nee!

Negotiations under article 50 will be conducted as a single package. In accordance with the principle that nothing is agreed until everything is agreed, individual items cannot be settled separately.

Superficially, this sounds promising. Downing Street wants everything on the table at once, so it can use trade and security as leverage. But the EU is actually only making the point that this principle applies to article 50 talks, ie the terms of exit, not what follows after.

An overall understanding on the framework for the future relationship could be identified during a second phase of the negotiations under article 50. The union and its member states stand ready to engage in preliminary and preparatory discussions ... as soon as sufficient progress has been made in the first phase towards reaching a satisfactory agreement on the arrangements for an orderly withdrawal.

There is more of a chink of light here. Instead of arguing nothing else can happen until exit is fully agreed, the EU is suggesting some signs of progress might be enough. Whether this just means a commitment in principle to pay the divorce settlement or a deal on a concrete number remains to be seen. The phrase “stand ready to engage” makes clear the EU will decide.

A single financial settlement should ensure that the union and the United Kingdom both respect the obligations undertaken before the date of withdrawal. The settlement should cover all legal and budgetary commitments as well as liabilities, including contingent liabilities.

What is clear is that payment demand will be high, probably the rumoured €60bn (currently £51bn). The inclusion of ongoing obligations and contingent liabilities (such as financial guarantees that might one day need paying) is exactly what the British government is keen to avoid.

The withdrawal agreement should include appropriate dispute settlement mechanisms regarding the application and interpretation of the withdrawal agreement. This should be done bearing in mind the union’s interest to effectively protect its autonomy and its legal order, including the role of the court of justice of the European Union.

Some more tiny chinks of light here for the UK government, which wants to be rid of the European court of justice from day one. Brussels is saying it does not mind what you call it, so long as there is a fair way of settling disputes. This was a British suggestion that appears to have been accepted.

Any free-trade agreement should be balanced, ambitious and wide-ranging. It cannot, however, amount to participation in the single market or parts thereof, as this would undermine its integrity and proper functioning. It must ensure a level playing field in terms of competition and state aid, and must encompass safeguards against unfair competitive advantages through inter alia, fiscal, social and environmental dumping.

Another reminder that Boris Johnson cannot have his cake and eat it, but also a reminder of how this negotiation will play out. There will be relief in London that its call for an ambitious deal has been acknowledged. Everything else is still to play for.

After the United Kingdom leaves the union, no agreement between the EU and the United Kingdom may apply to the territory of Gibraltar without the agreement between the Kingdom of Spain and the United Kingdom.

The best (or worst) is left until last. Almost in passing, EU negotiators seem to be saying “oh, and by the way, one other thing before you go”. In the wake of British threats to lump security into the talks, the EU is reminding London that two can play that game – including a veiled threat to put the Spanish in charge of deciding how to treat Gibraltar.

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