March 15, 2019

An Ambitious EU-UK Partnership, Based on an Orderly Withdrawal

French policemen redirect trucks towards Lille instead of Calais on a highway near Dunkirk, northern France on 6 March 2019, as a work-to-rule strike by customs agents caused traffic disruption. French customs agents began their protest on 4 March 2019 to press their demands for higher pay and demonstrate what will happen if additional controls are put in place when Britain leaves the EU, leading to queues of several kilometres involving more than 3,000 trucks.
French policemen redirect trucks towards Lille instead of Calais on a highway near Dunkirk, northern France on 6 March 2019, as a work-to-rule strike by customs agents caused traffic disruption. French customs agents began their protest on 4 March 2019 to press their demands for higher pay and demonstrate what will happen if additional controls are put in place when Britain leaves the EU, leading to queues of several kilometres involving more than 3,000 trucks.

The European Union is interested in a future partnership with the United Kingdom, European Commission’s Chief Negotiator Michel Barnier writes in the current issue of our magazine Diplomaatia.

29 March 2019 will mark the end of the two-year period triggered by the UK’s notification of its intention to leave the European Union.

During this period, the EU and British negotiating teams had two main objectives.

First, we needed to organise the UK’s withdrawal.

In November last year, the 27 heads of state or government agreed with Prime Minister Theresa May on a detailed Withdrawal Agreement, which provides guarantees, answers and legal certainty in the face of all the uncertainty created by Brexit.

This 585-page international treaty is the result of intensive negotiations. On our side, it is also the outcome of weekly discussions with the 27 member states and the European Parliament, in close liaison with national parliaments, social partners and civil society.

Such an inclusive approach, based on unprecedented transparency, allowed us to agree at the negotiating table on five main points to enable an orderly UK withdrawal.

1 – Citizens’ rights

Four and a half million European citizens living in the UK and British citizens living in the EU were uncertain about their rights following Brexit. These citizens have been our priority, and that of the European Parliament, since the beginning of the negotiations.

In the Withdrawal Agreement, we agreed that any citizens who settled in their country of residence before the end of 2020—or before the end of an extended transition period—would be able to continue to live, work, study and bring their families there, for the rest of their lives.

2 – The financial settlement

Since the UK referendum in June 2016, the budgetary issue has been a significant concern for all member states, but also for the many farmers, regions, businesses and universities who are carrying out projects financed by the EU budget for the period 2014–2020—be it in the EU or in the UK.

In the Withdrawal Agreement, we have agreed that all commitments taken by the 28 during the current budgetary period will be honoured by all 28.

3 – Other separation issues

Brexit also means uncertainty in a number of other fields: How do we safely transfer the legal ownership of the nuclear material owned by Euratom, which the UK will also leave? Will the 3,000 geographical indications and the one million trademarks currently protected under EU law still be protected after Brexit? What will happen to data exchanged between the EU and the UK before the latter’s withdrawal?

All these questions, and many more, are resolved in the Withdrawal Agreement, which commits the EU and the UK to protect geographical indications and to continue to apply EU privacy protection rules to data exchanged before the withdrawal.

4 – Ireland and Northern Ireland

On the island of Ireland, the problem created by Brexit is not limited to trade and customs. It touches upon peace and stability, which was established by the 1998 Good Friday Agreement and supported by EU membership. Since Ireland’s border is the border of our 27 countries, the integrity of the Single Market is also at stake. Any goods arriving from Northern Ireland will be entering not just Ireland but also Estonia, Italy or Slovakia.

From the beginning of this negotiation, therefore, the European Council has committed to preserve all aspects of the Good Friday Agreement and to avoid reintroducing a hard border, whilst maintaining the integrity of the internal market. The European Parliament has consistently taken the same line. In December 2017, prime minister May herself made a commitment to avoid under all circumstances the return of a hard border, regardless of the future relationship between her country and the EU.

In the negotiations on our future relationship, we intend to foresee ambitious customs cooperation, and have a trade relationship with zero tariffs and quotas between us. But this does not erase friction at the border between the EU and the UK, as the UK decided to leave the Single Market and Customs Union. In any case, since the details of this future relationship will not be known on Brexit day, we have agreed on an all-weather insurance mechanism in the Withdrawal Agreement. The “backstop” arrangement provides that:

  • the UK and the EU would form a single customs territory. We have aligned ourselves with this UK idea, which was not in our blueprint for the backstop;
  • the necessary EU rules for smooth cooperation between Northern Ireland and the Republic of Ireland and for the integrity of our Single Market would continue to apply in Northern Ireland.

As with any insurance policy, our preference is not to use the “backstop”. The agreement that is on the table commits us to use our best endeavours to conclude by the end of December 2020 a subsequent agreement which will replace the backstop. In any case, such a backstop would only be used for a temporary period, until and unless a better solution is jointly found.

5- The transition period

Finally, the Withdrawal Agreement makes provision, at the request of the UK government, for a transition period until 31 December 2020, which could be extended once by mutual agreement for a maximum of 24 months. This option offered to the UK would give us even more time to avoid using the backstop.

During this transition period, the UK will retain all the rights and obligations of a member state, although —in accordance with the choice it has made—it will no longer participate in the decision-making processes of the Union.

This will provide businesses and public administrations with the stability they need to adapt, once only, to the future relationship. It will also enable us to continue negotiating the details of our future relationship.

Our second objective by 29 March was precisely to agree on the framework of this future relationship.

This will give rise to another negotiation, due to begin as soon as possible after the UK’s withdrawal, as presidents Tusk and Juncker clearly reaffirmed in a letter to prime minister May on 14 January.

The political declaration agreed by the European Council and the UK government in November 2018 fulfils this objective, making provision for an ambitious partnership on security and the economy.

This partnership will of course have to respect the EU’s core principles, as well as the red lines set out by the UK government: no free movement of people, no substantial contribution to the EU budget, regulatory autonomy and independence of trade policy.

Given these red lines, and the British decision to leave the EU Single Market and Customs Union, the political declaration currently envisages a free trade agreement with ambitious customs cooperation.

This free trade agreement will exclude tariffs and quotas. It will cover a wide range of topics, from intellectual property to public procurement. It will be accompanied by a range of socio-economic cooperation in some sectors of common interest, such as aviation.

This broad economic partnership will naturally have to be governed by specific obligations guaranteeing a level playing field on social, environmental, fiscal and state aid matters—all these “rules of the game” to enable the proper operation of our competitive social market economy.

Finally, if the UK’s red lines were to change in the days or weeks to come, the Union would immediately be prepared to look at other—more ambitious—models for our economic relationship, each of these being based on a balance between rights and obligations. For instance, should the UK agree to align with our trade policy for goods, we would immediately consider the option of setting up a customs union.

Alongside this economic partnership, we agreed on a strong partnership for our internal and external security.

Let us look at the world as it stands today. The United States has chosen unilateralism as never before. China has drawn a political and economic model that competes with the one we have today. Our relationship with Russia remains complex and unstable. Too often in the concert of nations, power overrides law. The authority of the UN, the WTO, the World Bank, NATO and the International Criminal Court has been questioned, sometimes contested.

In this world, the EU must continue to honour its responsibilities. It is a global player and it will remain so after Brexit. Once the UK has left the EU, we will take decisions based on the interests of the EU27—and we will respect the UK’s sovereignty.

However, in the face of global threats such as terrorism, cyber-attacks or hybrid threats, the EU and the UK have a mutual interest in joining forces. We also need to continue working together to secure the nuclear deal in Iran, find political solutions to crises in the Middle East and support growth initiatives and address the root causes of migration in Africa.

In the field of foreign, security and defence policy, what unites us here is much stronger than what divides us.

Obviously, post-Brexit, our solidarity will be organised on a different basis. The UK has decided to leave the Union and become a third country. The UK will therefore not have the same rights as EU member states. It will no longer participate in EU decision-making. It will no longer have the ability to shape and lead the EU’s collective actions. British entities will no longer have the same rights as EU entities. These are the legal, mechanical, consequences of Brexit.

However, the EU does not act in isolation. It has always favoured multilateral and international cooperation. This applies in particular to the Common Foreign and Security Policy and the Common Security and Defence Policy, which have developed over time in a flexible manner. Today, the EU cooperates with many partners: for instance, more than 25 third countries have so far participated in EU-led operations.

With the UK in particular, our future cooperation could include five dimensions, as outlined in the Political Declaration framing the future relationship between the EU and the UK we have negotiated together.

1 – Consultations

First, we agreed on close and regular consultations with the UK on foreign policy. The High Representative will conduct a political dialogue with the UK on global issues. The 140 EU delegations across the world will cooperate locally with UK missions, for example on security issues and development projects.

A shared assessment of geopolitical challenges will facilitate the convergence and consistency of our external action. This will notably be the case for sanctions. Dialogue and information-sharing regarding EU restrictive measures will facilitate the UK’s convergence with the EU.

2 – Contribution to EU actions worldwide

Second, when projecting the EU’s support worldwide, we will be open to the UK’s contribution.

In development aid, the EU and its member states are the world’s leading donors. We are open to contributions from third countries and to local joint programming. We hope that the UK will make use of these possibilities.

The EU is running six military operations and ten civilian missions to secure its neighbourhood. We would of course welcome the UK’s participation in EU-led operations in the future, given that the UK has strategic military assets.

3 – Participation in European defence projects

Third, in defence matters, the UK should have the possibility—where it will add value—of taking active part in a number of the European Defence Agency’s research and technology projects. British companies will also have the possibility to cooperate with EU firms in cooperative defence projects under the European Defence Fund, in line with the provisions foreseen in EU law.

However, we should keep in mind that industrial cooperation, also in the field of defence, is intertwined with EU rules underpinning the Single Market. This will in particular apply to the European Defence Fund.

4 – Intelligence exchange

Fourth, incidents on both sides should give rise to a reciprocal exchange of sensitive information and intelligence. This will make us collectively more effective in fighting global threats such as terrorism and cyber-attacks, which is a concern for all our member states and Estonia in particular. Our future relationship should be underpinned by a Security of Information Agreement that will provide for the exchange and protection of classified information

5 – Cyber

Last, the EU and the UK should cooperate on emerging threats such as cyber-incidents and disinformation campaigns which are spread on social media. We should for example exchange on cyber-incidents, on key trends and on ways to address cyber-attacks.

In these five dimensions, the level of ambition of our future partnership will very much depend on the UK’s readiness to commit. The more the UK converges with EU foreign and security policy and substantially engages alongside the EU, the closer the cooperation is likely to be.

Besides, we should not lose sight of one essential point: in order to start negotiating on the future, a prerequisite is to settle the past and ratify the Withdrawal Agreement.

Without ratification there will be no Withdrawal Agreement and no transition agreement; nor will there be the mutual trust we need in order to build our future relationship.

These are not ordinary trade negotiations, where failure just means the parties going back to square one. In the case of Brexit, a “no deal” scenario would take us back to a distant past when customs duties were part of the daily life of our businesses.

At the time of writing [5 March], this “no deal” scenario cannot be ruled out. Economic and social stakeholders and civil society too must all therefore prepare for this eventuality, just as we are doing at European level.

On 19 December the Commission set out 14 measures that the Union could introduce unilaterally in areas where a “no deal” scenario would cause major disruption to the public and businesses in the EU 27, such as aviation, customs and financial services.

All these measures would be temporary, limited in scope and adopted unilaterally by the EU. Their aim is to protect European interests, not to negotiate “mini-deals” with the UK. It will not be possible for the UK to maintain the advantages of EU membership.

This last point is perhaps a rare silver lining in this negative, lose-lose negotiation: by showing what a member state will lose, mechanically, upon leaving the EU, it also emphasises what the 27 member states will retain:

  • a Single Market of 445 million consumers and 22 million businesses, where people, goods, services and capital can move freely;
  • a Customs Union which, combined with the four freedoms, ensures frictionless trade between us;
  • the economic power required to negotiate fair and ambitious trade deals with major world economies, as we did recently with Japan, and to set standards that are often adopted by other jurisdictions.

Based on these assets—and many others—the EU will remain a global player. It will use the unity that we created and maintained in the Brexit negotiations to develop positive projects. And it will be a strong partner with the UK, which will remain our neighbour, our ally and our friend.