Farm Ireland

Monday 20 November 2017

Irish team will need to bring their 'A' game to the Brexit transitional negotiations

British PM Theresa May
British PM Theresa May

Alan Matthews

The UK withdrawal from the European Union (Brexit) was triggered in a letter from the UK prime minister Theresa May to the President of the European Council Donald Tusk on March 29 last. It is a momentous decision, both for the UK and for the EU.

The process is likely to cause severe headaches for the Irish economy, and particularly for the agri-food sector, given the importance of the UK market for agri-food exports and the implications of UK withdrawal for the EU budget.

The next step is for the European Council to adopt guidelines for the Commission's handling of the negotiations which is expected to happen at its meeting on April 29 next.

Already, just two days after receiving the UK letter, Tusk circulated a draft of these negotiating guidelines.

These are currently being discussed by the Member States. The Tusk draft has received wide support and only minor changes are expected to be made when the guidelines are finally agreed at the end of this month.

Building on the political priorities set out in the European Council guidelines, the Commission will then recommend a more detailed legal mandate for its chief negotiator, Michel Barnier. This is expected to cover only the withdrawal issues and not the scope of the future relationship with the UK. Both the guidelines and the mandate will be updated throughout the Brexit process.

A couple of points from the Tusk draft guidelines are worth highlighting. First, they make clear that, so as not to undercut the position of the Union, there will be no separate negotiations between individual Member States and the UK on Brexit matters.

Thus, issues important to Ireland such as the Border with Northern Ireland and the future of the Common Travel Area have to be negotiated through the Commission negotiator and cannot be handled bilaterally between Ireland and the UK. Hence the importance of Irish ministers engaging with Barnier and the other Member States to make sure our desired outcome on these and other issues is well known.

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Second, the draft guidelines insist on a phased approach to the negotiations. Essentially, there are three issues to be discussed: the arrangements for an orderly withdrawal; the framework for a future relationship; and some form of transitional arrangement given that the actual future relationship cannot be put in place until sometime after Brexit has occurred.

The draft guidelines specify that the negotiations will begin by discussing the arrangements for an orderly withdrawal. Only when sufficient progress has been made in this first phase will the EU engage in a second phase of negotiations around the framework for the future relationship.

This stage is similar to the informal scoping exercises which the Commission conducts with a trade partner when a new free trade agreement (FTA) is proposed, in order to agree on the range and depth of topics that will be negotiated.

Both sides have made clear that they wish this future relationship to be based on a deep and comprehensive FTA. The negotiation of an UK-EU FTA would take place under the Treaty Article 218 which is an entirely separate process to the withdrawal negotiations under Article 50.

For one thing, the withdrawal agreement will be approved only by the European Union (by a qualified majority of Member States in the Council, and with the approval of a majority of the European Parliament).

A future FTA with the UK would likely be a mixed agreement, meaning that some of its provisions would touch on the competences of Member States under the Treaties.

This would require the unanimous agreement of all national (and, in some countries, regional) parliaments as well.

The EU procedures for negotiating an FTA are well established - and lengthy! First, the Commission holds a public consultation and conducts an assessment of the impact of any such deal on the EU and the other country. It then seeks a negotiating mandate from the Council which authorises the Commission to begin negotiations.

Trade negotiations can take many years. Once an agreement is reached, further time is required for ratification by the EU and by the Member States. Hence, Irish negotiators must focus on the nature of the 'transitional arrangements' which will cover the period between Brexit itself and the entry into force of this FTA and which could easily last four, five years or more.

The Tusk draft guidelines are clear that, if the benefits of the Union acquis including access to the single market are extended to the UK during this period, the existing Union regulatory, budgetary, supervisory, and enforcement instruments and structures must continue to apply.

One question is whether the UK would remain a member of the EU Customs Union during this transitional period. This would be desirable from an Irish standpoint. The UK market would continue to be shielded from low-cost competition by high agricultural tariffs and the UK would continue to be a high-price market for Irish exports.

The drawback from the UK side is that remaining part of the EU Customs Union would prevent it from participating in FTAs with third countries once Brexit has taken place. However, these agreements will also take some years to complete, so the UK might be willing to delay leaving the Customs Union for some years. The EU could argue that this would even strengthen its hand in its FTA negotiations with third countries.

Of course, if the UK wants ultimately to pursue a cheap food policy, this would only be a stay of execution. But it illustrates how much is at stake in the negotiations that will take place over the next 18 months.

Alan Matthews is Professor Emeritus of European Agricultural Policy at Trinity College Dublin

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