Deal or No Deal: The Triggering of Article 50

On Wednesday, Theresa May will officially trigger Article 50, starting the official Brexit negotiations - here's what happens next:

By Nick Clegg, Mar 28, 2017 2:03

On Wednesday, Theresa May will officially trigger Article 50, starting the off Brexit negotiations. Article 50 allows two years for the completion of these ‘divorce proceedings’, though an extension could be agreed between the UK and member states if there is the political will to do so.

A good deal is impossible in two years

The Government is entering the most complex negotiations in British political history. It insists it can negotiate and ratify both the terms of Britain’s exit from the EU and a comprehensive new ‘strategic partnership’, covering everything from trade to security, in the next two years. Our analysis shows that it is not possible for a such a deal, especially one that is in Britain’s interests, to be negotiated in such a short time.

In the meantime, the danger is that Whitehall will grind to a halt as it grapples with the Brexit negotiations and the renegotiation of dozens of trade agreements with other countries that currently hinge on our membership of the EU. Other vital issues – including the crisis in the NHS and social care - are likely to suffer.

This document sets out the 10 reasons why a fully negotiated and ratified deal with the EU won’t happen in two years.

Leaving without a deal would be a disaster

Theresa May has said she would be prepared to leave the EU with no new deal in place – but that would be a huge setback for British jobs and our economy. It would mean automatic tariffs on our exports to the continent, higher prices in the shops and thousands of jobs and businesses put at risk.

This document sets out the 10 reasons why leaving with no new deal in place would be a disaster for Britain.

Brexit Challenge papers

Over the last nine months, I have produced a series of ‘Brexit Challenge’ Papers, each analysing an area of the Brexit negotiations and posing questions to the Government about how they will deal with various unresolved challenges. Those papers can be found here:

Nick Clegg

Liberal Democrat European Union Spokesperson

10 Reasons Why a Full Deal Won’t Happen in Two Years

  1. Theresa May has chosen to trigger Article 50 in the middle of a number of national elections in EU member states, including two of the Union’s big hitters: France and Germany. This will delay their involvement in the talks, pushing back substantive negotiations until much later in the year.
  2. The EU-27 have said they won’t discuss a future trading relationship between the UK and EU until the terms of the ‘divorce’ are settled. Even if such strict sequencing of the talks is adjusted – as is likely – the time available for trade discussions will still be squeezed - from 2 years to as little as a year or even less.
  3. Trade deals between the EU and other countries have always taken longer than 2 years. For example, the CETA (Canada) negotiations were first launched in 2007, and the agreement still hasn’t come into force. While the UK starts negotiations from a position of parity with the EU, finding a common solution to the complex and competing interests of 28 countries inevitably takes time.
  4. Any new UK/EU Free Trade Agreement will require agreement by the British Parliament, the European Parliament, and then ratification by the national Parliaments of every single member state, and in some cases by regional Parliaments too. Any single Parliament could block the deal. In the past, this process has taken many years. In this case, it will have to be done in a few months.
  5. The government has threatened to walk away from a ‘bad deal’ and turn the UK into a low-tax, low-regulation haven to draw business away from the EU. This threat undermines the basis of trust that would be needed if the UK is to enjoy full continuing participation in the Single Market. It also guarantees that valuable negotiating time will be now be spent by the EU trying to write conditions into the agreement to prevent the UK from deliberately undercutting the rest of the EU. 
  6. Settling the UK’s outstanding financial commitments to the EU is an unavoidable part of any deal, but is likely to be extremely challenging to agree. Some estimates put the likely bill as high as £50 billion, while many Conservative backbenchers are saying the UK should pay no more than £3 billion. Failure to agree on the money will waste valuable time at best, and at worst could lead to the collapse of the talks.
  7. The government has made it clear that they will no longer accept the authority of the European Court of Justice (ECJ), and will instead seek to establish a bespoke alternative to oversee police the implementation of a UK/EU agreement and to resolve disputes as they arise. The EU-27 are highly likely to insist that the UK accepts the jurisdiction of the ECJ, at least during any transitional period. Unless the UK backs down, this issue is likely to make a deal very difficult to conclude.  
  8. The government plans to transpose all existing EU rules and regulations into UK law using a ‘Great Repeal Bill’ and up to 15 other Bills. This will also require thousands of pieces of secondary legislation to be scrutinised and approved by Parliament over the next two years. It is not clear how the government will find the Parliamentary time to achieve this before the UK automatically leaves the EU in the spring of 2019.
  9. Many of the affected areas, from agriculture to renewables, are the responsibility of devolved parliaments and not Westminster. Those Parliaments will have to be fully involved in this process, which could present problems in remain-voting Scotland and Northern Ireland.
  10. There are insufficient human and financial resources in Whitehall to deal with all of these challenges simultaneously. Every government department will be affected, but many are still facing severe budget cuts, and even DExEU is still short staffed.

10 Reasons Why ‘No Deal’ Would Be a Disaster  

  1. UK trade in goods with the EU would be immediately subject to tariffs. This would not be a matter of choice on the part of the EU, as some pro-Leave advocates have claimed.  Once we leave the Customs Union, we would become a ‘third country’ according to EU law. WTO rules mean that the EU couldn’t offer the UK ‘special rates’ unless and until it had signed a full Free Trade Agreement with the UK. Tariffs in some sectors such as food and agriculture would be crippling to UK businesses.
  2. Not only would UK businesses lose beneficial access to the Single Market, but the UK would also drop out of all the FTAs agreed by the EU with more than 50 countries around the world. These will need to be painstakingly renegotiated. In the meantime, valuable trade with booming economies with whom we have trade agreements via the EU, like South Korea, would be disrupted as tariffs are re-introduced.
  3. Immediate customs checks would be required at the EU border, including on the border of Northern Ireland and Ireland. This would cause huge disruption, especially to cross-border supply chains, for example in the car and food industries.
  4. The UK could no longer require EU police to carry out surveillance on terrorist suspects on the continent and would lose the ability to extradite criminals to the EU or bring fugitives back from the continent for trial. New arrangements would have to be negotiated from scratch.
  5. UK travellers to the EU would revert to ‘third country’ status under EU law, where entry would be allowed for 90 days out of every 180, with travel authorised in advance via the forthcoming online ESTA system, for which travellers will pay a fee. Tourists would lose their entitlement to free healthcare on the continent using the EHIC card.
  6. The status of UK citizens currently working or living in retirement on the continent, would be unknown. There would be no legal guarantees for their continued right to stay, or for their right to use local public services.
  7. Fishing rights, agricultural subsidies, the application of phytosanitary standards and all the other regulatory provisions governing the trade in foodstuffs would be thrown into chaos, crippling the British farming and fishing industries.
  8. British students would no longer enjoy free access to EU universities and would be eligible for differential tuition fees.
  9. The Financial Services industry, which accounts for 11% of UK GDP, would lose the ‘passporting' rights which currently allow UK-based firms to provide services across the EU. With no alternative deal in place, the sector is likely to shrink as customers look to EU-based competitors, and UK firms relocate to other EU cities.
  10. The UK would have to set up our own regulators for everything from medicines to aviation. Even then, it would not be clear whether the EU accepted the authority of those new regulators. The government currently has no answer about how much this will cost, or where the expertise will come from. The red-tape would be overwhelming.ld have to set up our own regulators for everything from medicines to aviation. Even then, it would not be clear whether the EU accepted the authority of those new regulators. The government currently has no answer about how much this will cost, or where the expertise will come from. The red-tape would be overwhelming.

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