This EU Won't Work

The European Council has produced its Draft guidelines following the United Kingdom’s notification under Article 50 TEU (Treaty of the European Union). They take the predicted hard line, as we examine below.

Although dated 31/03/2017 and leaked on 1^st April, there is little inside to amuse us. These are draft guidelines but we should not expect significant changes in the final version. It will be interesting to observe how the two sides move from their opening positions, as move they must if there is to be an agreement. They start very far apart, despite the trite pleasantries. 

The guidelines start with the usual banalities: “European integration has brought peace and prosperity to Europe…” and use these to justify what follows, “…the Union’s overall objective in these negotiations will be to preserve its interests, those of its Member States, its citizens and its businesses.”

A different group might see the opportunities that Brexit provides to undertake some fundamental reforms that would make the EU more attractive to its remaining members. However, this is not such a group and their fear is evident in the true objective, which is to “make everyone realise that it’s not worth leaving,” (see “All you need is love”)

That motive alone is sufficient to justify the UK’s decision to leave and will probably have the opposite effect from the one intended. Fighting to preserve the Union at any cost is the surest way to dismember it.

Given what follows, we can treat “In these negotiations the Union will act as one. It will be constructive throughout…” with the disrespect it deserves. They cannot be certain of unity, though “constructive” sounds agreeable. Sadly, there will be those who cling to such phrases because they desperately want to believe that all will be well. 

The ‘defence’ opens with: “Negotiations under Article 50 TEU 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. … there will be no separate negotiations between individual Member States and the United Kingdom”.

This makes nonsense of the claim that the negotiations will be open and transparent, at least on the EU side, as anything that is provisionally agreed and set aside could be changed before “everything is agreed”, so the negotiators won’t want to publish interim positions for fear of raising expectations that will not be met and criticisms that may be irrelevant.

Confirming the position outlined by Michel Barnier (see Barney or Blarney?) “the first phase of negotiations will aim to: – settle the disentanglement of the United Kingdom from the Union and from all the rights and obligations the United Kingdom derives from commitments undertaken as Member State”. 

In other words, Britain will have to agree to the terms of a divorce settlement before negotiations on trade and other arrangements will begin. However, the EU will be 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.” This may allow some room for manoeuvre without committing them to use it. The EU will define ‘sufficient progress’ and the UK can take it or leave it.

And “…the negotiations may also seek to determine transitional arrangements which are in the interest of the Union” but “this would require existing Union regulatory, budgetary, supervisory and enforcement instruments and structures to apply.”

So any transitional arrangement would require the UK to stay in the EU, in all but name, during any transitional period, keeping their budget intact. 

“The right for every EU citizen, and of his or her family members, to live, to work or to study in any EU Member State is a fundamental aspect of the European Union.” And this “will be a matter of priority for the negotiations.”

Freedom of movement must be guaranteed. But see Freedom of Movement for a lawyer’s perspective on this.

The divorce bill will have to be agreed in the first phase of the settlement:

“A single financial settlement should ensure that the Union and the United Kingdom both respect the obligations undertaken before the date of withdrawal.” This will cause some discussion.

Also to be included in the first phase, before trade and other negotiations can begin, will be: the border between the Republic of Ireland (which will remain in the EU) and Northern Ireland (which will leave with the rest of the UK); Sovereign Base Areas in Cyprus; a requirement to “honour its share of international commitments contracted in the context of its EU membership”; and the relocation of EU agencies currently based in the UK. 

The guidelines seek to retain as much as possible of the European Court of Justice’s regime, to which the UK is obliged to conform as a member state. The ECJ “should remain competent to adjudicate” in court procedures pending at the date of withdrawal. And “arrangements should be foreseen for the possibility of administrative or court proceedings to be initiated post-exit for facts that have occurred before the withdrawal date.”

Most of the above will be anathema to those who are preparing guidelines for the UK’s negotiators.

The next sections opens with more banalities, but nothing new:

“While a relationship between the Union and a non Member State cannot offer the same benefits as Union membership, strong and constructive ties will remain in both sides’ interest and should encompass more than just trade.”

As we have noted before, the Union is so pleased with itself that they must believe that any state that is not a member does not experience the same benefits as its members do. But of course that isn’t really what they mean, which is that a departing member should be seen to suffer as a result of departing, “pour encourager les autres”.

Paragraph 18 confirms that discussions on a free trade agreement will not be concluded before the UK is no longer a Member State. However the Guidelines already lay down some guiding principles:

“Any free trade agreement … 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.” 

This is intended to keep the UK in line with member states, which are expected to agree to financial and fiscal convergence towards completing economic and monetary union. (See the Five Presidents Report and Fixated on Union for our views on such convergence.) The giveaways here, indicating their fear of an independent UK, are “level playing field” and “safeguards”, which are intended to bind the UK legally into whatever convergent regime they manage to achieve.

“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.”

Leaving no stone unturned, whatever may crawl out from under it, the EU now wants to stick its nose into the private disagreement between Spain and the UK. Do they mean this to prevent any agreement or just to make it more difficult? We’ll see.

The Guidelines conclude with some rather ambiguous statements that appear to reveal acute nervousness on the part of the Council and the EU as a large member state withdraws: 

“The European Council recognises the … specificities of the United Kingdom as a withdrawing Member State, provided it remains loyal to the Union’s interests while still a Member. Similarly the Union expects the United Kingdom to recognise the need of the 27 Member States to meet and discuss matters related to the situation after the withdrawal of the United Kingdom.”

“While the United Kingdom is still a member, all ongoing EU business must continue to proceed as smoothly as possible at 28. The European Council remains committed to drive forward with ambition the priorities the Union has set itself. Negotiations with the United Kingdom will be kept separate from ongoing Union business, and shall not interfere with its progress.” 

To repeat: fear underlies these Guidelines, fear of an independent UK and fear that others may follow.

This is a quick response to the Draft Guidelines and we may not have brought out all the implications, for better or worse, that lie behind them. We will continue to monitor progress, as best we can, largely from statements coming directly from the EU, its institutions and its representatives.