Theresa May's tricky to-do list after triggering Article 50

Andrew Grice
It was striking that the Prime Minister failed to repeat her January mantra that “no deal is better than a bad deal”: AP

Theresa May called it the “no turning back” moment. But today was also the moment when her attention turned from reassuring Brexiteers she was on their side to the complex and messy task of reaching agreement with the EU 27.

The Prime Minister’s tone, both in her Commons statement and letter to Brussels formally triggering the two-year exit process, was more conciliatory towards the European Union than her speech in January setting out her 12 Brexit goals. She repeatedly stressed the UK and EU’s “shared values” and proposed a “deep and special partnership” in future. It was perhaps a tacit acceptance that the EU holds more cards than the UK now that the clock is ticking.

Although May hinted at some of the compromises that will inevitably lie ahead, she did not lower the great expectations of her own Eurosceptic MPs, as some pro-Europeans had hoped.

So as the negotiations start, what are the main points on her to-do list?

The security card

One big change since January was the Prime Minister’s decision to bracket future co-operation with the EU on security matters with economic ties. Security was mentioned no less than 11 times in May’s letter. It will be seen as a threat to withdraw such co-operation, even though Downing Street insisted it was a statement of fact that EU agreements on common arrest warrants, Europol and sharing DNA records would lapse if the UK left without a deal.

However, the perceived threat is not as strong as it sounds. Intelligence sharing is covered by agreements outside the EU, and Britain’s role as a leading member of Nato would continue. Highlighting co-operation on fighting crime is controversial and may anger some EU leaders. UK ministers do not believe the Government could threaten to abandon a joint fight against terrorism.

Follow the money

The EU will demand a divorce payment of about £50bn. If that sounds a lot, Britain has signed up to a seven-year EU budget running to the end of 2020 (21 months after it will leave).

UK ministers have ruled out paying such a huge sum. May has failed to prepare the ground among hard line Tory Brexiteers, who want to pay “not a penny”. But there was a hint in her letter that she may urge them to swallow a big one-off payment, plus limited annual contributions to EU programmes in which the UK will still take part. She called for “a fair settlement of the UK’s rights and obligations as a departing member state, in accordance with the law and in the spirit of the United Kingdom’s continuing partnership with the EU”.

Although there will be a legal battle over how much the UK owes, resolving it will require a political agreement between May and the 27 EU leaders.

Citizens’ rights

The UK and EU have a mutual interest in guaranteeing the rights of the 3m Britons who live in EU countries and the 1m EU citizens in the UK. May called for an “early agreement” on this and boosted the prospects of a deal by not making today the cut-off point for such rights for EU citizens. That would have ignored EU demands for Britain to stick to its obligations until it formally leaves the club.

On paper, it should be an early “win” for both sides to get the negotiations off to a positive start and end the uncertainty for those affected.

IRELAND

This will be high up the agenda because Michel Barnier, the EU’s chief negotiator, has made it one of his three immediate priorities (along with the divorce settlement and citizens’ rights). May said the UK does want a return to a hard 310-mile border between Northern Ireland and the Irish Republic. The EU agrees. The collapse of the devolved government in Belfast underlines the threat to the peace process. Passport checks for people crossing the border will likely be ruled out. Although no one has yet worked out a plan for customs controls, the solution might lie in a network of cameras and spot checks on goods crossing the border.

Trade

The “sequencing” of the negotiations could provoke an early row. May wants the future UK-EU relationship to be discussed in parallel with the three issues that form part of the divorce agreement. But to pile pressure on Britain to resolve “the money issue”, the EU wants to delay the debate on future relations, which could dash May’s hopes of striking a comprehensive free trade deal in the next two years. She admitted that was “a challenge” but insisted it could be done, even though some UK ministers doubt it.

Significantly, May declined to repeat the Brexit Secretary David Davis’s call for a free trade and customs agreement to deliver “the exact same benefits” as the UK enjoys now, which the EU sees as unrealistic given the UK’s refusal to accept the free movement of people.

She denied EU claims that she wanted to “cherry pick” the bloc’s benefits without accepting its obligations, conceding that the UK would not be able to set regulatory standards outside the single market.

A big battle lies ahead. The EU thinks Britain wants to “cherry pick” customs rules, saying it cannot be half in and half out of the customs union.

Transitional deal

May gave her strongest hint that the UK will need transitional arrangements to prevent a “cliff edge” when it leaves the EU at midnight on 29 March 2019. Such a deal would be welcomed by business. She argued that both sides would benefit from “implementation periods”. The use of the plural showed that these could last for different lengths of time in different fields. She will not call it a transitional deal as she wants to fight a 2020 general election as the leader who honoured the referendum instruction to leave.


Immigration

May’s response to last year’s EU referendum was to prioritise “control” of migration ahead of the economy. She offered no detail today on how that will be achieved. Ministers are moving towards a work permits system and a more flexible stance on EU migration than the Leave camp’s rhetoric implied during the referendum campaign.

The EU wants preferential access to the UK labour market for its workers, but this may be hard for May to “sell” to hard line Brexiteers. Trouble ahead.

European Court of Justice

May did not mention this in her letter, perhaps to avoid a dispute on day one. But to her different audience in the Commons, she reiterated her pledge to end the ECJ’s jurisdiction in the UK. Critics believe she may have underestimated how hard this will be because of its wide-ranging role. She acknowledged that other ways of resolving disputes would have to be found after Brexit. One likely sticking point is the ECJ’s remit during any transitional periods.

Deal or no deal

It was striking that the Prime Minister failed to repeat her January mantra that “no deal is better than a bad deal”, widely seen as a threat to walk out of the talks and, if necessary, crash out of the EU and into World Trade Organisation tariffs and rules. Nor did she repeat her threat to turn Britain into a low-tax version of Singapore in the EU’s backyard.

Such warnings played very badly in EU capitals and although Number 10 insisted that nothing has changed, their absence today is a sign that May intends to negotiate constructively in order to secure a deal.

Some Tories would actively prefer a “clean break” with the EU and a WTO regime, which most of business does not want.

The price of failure to reach an EU deal could be very high — not just for the country, but for May personally.

At the back of her mind will be the knowledge that “no deal” would make it harder to resist a second referendum on Scottish independence and more likely that the Scots would vote to break away from the UK. And that is definitely not on May’s to-do list.

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