Brexit set to dominate political agenda in 2018

Brexit looks set to dominate in 2018. Despite the referendum taking place some 18 months ago there is still a lack of clarity about what exactly Brexit will look like in terms of the final deal including trade deals and what, if any, transition period post March 2019 will entail. There are however some knowns in the list of many unknowns.

  • The transition talks must be effectively concluded by March, for the sake of business certainty and so the Council can trigger trade negotiations at its next summit. Formal negotiations on this are due to start at the end of January.

  • May is rumoured to be giving a big speech on Europe, (likely late January/early February) articulating more clearly the Cabinets vision of the type of Brexit they want. More than anything the Cabinet now needs to demonstrate unity

  • A joint EU-UK report on "sufficient progress" needs to be turned into a legal text that will form the basis of a formal withdrawal agreement. This is expected no later than the end of October to allow for ratificatio (it will need the approval of a qualified majority of the remaining 27 EU member states, as well as simple majorities in the UK and European parliaments).

  • The UK and EU negotiating teams meet face-to-face for one week each month, with a few extra sessions also thrown in ahead of EU summits. They are now discussing a "transition" period and future relations between the UK and the EU. The EU 27 are scheduled to adopt guidelines on the trade deal at the March European Council.

Overshadowing all of these issues is the question of time. The government still reckon that a full, bespoke trade deal can be negotiated by October this year, which will then be applied over two years. However spending too long arguing over the shape and form of a transition period will eat into time to negotiate the hundreds of deals with the rest of the world.

The logic of a transitional deal is to give both economies certainty and support as the UK and EU negotiate a new relationship. But the transition debate will be tricky. Michel Barnier has said that the EU’s 750 international agreements—from the blockbuster trade deals to obscure fishing accords—will automatically exclude the UK after March 2019. The EU's position is that the transition has to take place under all existing rules and regulations (including budget payments, the jurisdiction of the European Court of Justice and the free movement of people), and that it should come to an end on 31 December 2020.

It is also unclear what the UK’s post March 2019  status will be with the myriad of  agencies such as the Community Plant Variety Office or the European Medicines Agency. Can these be resolved by this spring to clear the decks for the hard bargaining and negotiations of the trade talks?

And the issues around the Northern Ireland border have not gone away. It is still hard, if not impossible, to reconcile the government’s desired policy of leaving the customs union and single market and yet guaranteeing an open Irish border and “full regulatory alignment” on matters pertaining to the Good Friday Agreement and island-of-Ireland economy. Former Taoiseach John bruton said in the Irish Times recently “ taking back control and no hard border are hard to reconcile, to put it mildly”.

As we go into 2018 some are now dubious that we will be in a position to leave by this October. Jonathan Lis, Deputy Director of the Think Tank British Influence reckons that even if we execute a status-quo transition we will run out of time, claiming in a recent article we must extend Article 50.

Captains of industry say the end of March is the deadline for a deal on the terms of transition to exit the EU. If that deadline is missed, they would be forced to make decisions that could have negative consequences for jobs and investment. And yet financial armageddon has not happened and manufacturing is reaping the benefits of a cheap pound. Reports in the  news on today’s debate on the Taxation (Cross- border Trade) Bill demonstrate the nervousness in the business community.  

In the meantime the EU (Withdrawal) Bill will have Report Stage and its Third Reading next week in the Commons before it reaches the Lords. This will bring once again the issue of how rights are protected post Brexit as Labour have said they will force a vote on the EU Charter of Fundamental Rights (for more details see here )

Whatever happens the next nine months will be defining for Brexit.

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Malene Bratlie