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Grayling's Brexit Bulletin - 19 January 2018

22nd January 2018

The BREXIT Bulletin: Agreeingtransition not so straightforward after all


Maybe the EU-27 need to be reminded of some words of wisdom from Michel Barnier. The clock continues to tick and the deadline for agreeing transition, the 22-23 March European Council Summit, is looming. 
The concern for business is that the latest discussions make the European Commission’s envisaged ‘status quo’ transition a much harder political sell in the UK.
Whilst the EU would almost certainly not authorise the conclusion of new FTAs, the language here still needs to be tightened. Further clarity would also be needed on who would be responsible for conducting such an assessment and the methodology.
Such vetting on the surface makes sense. However, the EU’s current wording is unclear as to whether it would be vetting for potential authorisation of ‘memoranda of understanding’ or new UK/3rd country FTAs. 
country agreement, on the premise of protecting the integrity of the Single Market and Customs Union.rdOf further concern is the wording in the current draft of the negotiating mandate that stipulates that the EU – most probably the European Commission – should be granted the power to authorise the results of any UK/3
countries will agree.rdIt is not clear whether the Government can ensure that they are in place before 29 March, and in any event it cannot be guaranteed that 3
countries. Talk of agreeing so called ‘memorandas of understanding’ to this effect have been persistent in the corridors of DEXEU, the Department for International Trade, and Downing Street.rdIndeed, it is the UK that is tasked with replicating the benefits that it currently enjoys in negotiations with 3
What is striking is that the answer to this particular Brexit conundrum is not one the EU-27 can help with. 
country agreement – for instance in granting preferential access to Mexican exports -  it cannot be assured of continuity in respect to the benefits - for example preferential access to the Mexican marketplace for UK exports.rdLegally, although the UK would be required to ensure continuity in respect to its obligations under an EU 3

country FTAs to the UK during transition.rdThe most important for business is the uncertainty around the continued application of the EU’s 3
Leaked drafts of the text suggest that whilst the European Commission and the business lobby’s favoured ‘status quo’ transition remains intact, some elements of transition are proving rather more difficult to negotiate.
Negotiations among representatives of the EU-27 have continued in earnest this week, as the Council looks to finalise the mandate that it will give to the European Commission to negotiate transition.

If you have any suggestions about the Brexit Bulletin or want to find out more about a specific aspect of Brexit, please do let us know. Please visit the Grayling Brussels website, follow us on Twitter @TheEULobby, and don't forget to check out our Brexit Papers and Timeline

This week's contents:


The view from the UK

The view from Brussels

The view from Poland

Grayling Brexit Unit Events 

TBC February 2018 - Seventh Installment of the Brexit Breakfast Club

Venue: Grayling’s Brussels Office, Floor 4, 46 Avenue des Arts, Brussels 1000

For more information contact Alexander Rowlatt -

The view from the UK 

Progress for the EU Withdrawal Bill?
On 17 January the European Union Withdrawal Bill completed its final stages in the House of Commons and headed to the House of Lords, where it faces tougher scrutiny. The Bill which repeals the European Communities act from 1972 and transfers all EU law into UK law so that it will still apply after Brexit, passed by 324 votes to 295, a majority of 29, at the third and final reading.
Critics argue this bill risks passing unprecedented ‘Henry VIII-style’ powers to the Government, as they will be able to rewrite the British legal and regulatory framework without proper scrutiny. Whilst there was no rebellion from the Conservative party on the final vote, dozens of Labour MPs, including former Labour Cabinet ministers, rebelled against party leader Jeremy Corbyn by opposing the Bill’s third reading.
The Grayling View
The passing of the Bill was seen as a success for Theresa May, as she faced no rebellion from her government. Nevertheless, it was not an easy fight, and the battle is far from over.
The bill was subject to many amendments, most notably one, not welcomed by Theresa May, which ensures Parliament will have a “meaningful vote” over the shape of a final Brexit deal. Theresa May’s chief whips had to work hard to make sure MPs voted in favour of the bill, highlighting the weak position of her government.   
Whilst MPs voted against an amendment to the EU Withdrawal Bill to retain EU human rights measures in UK law, on 16 January 30 cross party MEPs signed a letter to David Davis urging him to keep the charter of fundamental rights. This suggests further challenges to come.
The bill is set to have a much harder time in the House of Lords, as the Government does not hold a majority here. Amendments to the bill requiring MPs to vote on it again have already been suggested by peers, many of whom are leading lawyers. This could give more time for Labour and Tory backbenchers to coordinate plans to challenge the Government.
The Withdrawal Bill is only the first of at least nine Brexit bills which must be passed by the Government. This was only the first hurdle, in a series of much more difficult challenges to face the British Government.


The view from Brussels

The European Commission again shows its penchant for modelling
Avid Brexit-watchers will remember that the EU’s consolation to the UK in denying “sufficient progress” back at the October European Council Summit was to allow there to be internal preparatory discussions on the future relationship. This week Michel Barnier’s Taskforce published three presentation decks that it has used to brief the EU-27’s representatives in Brussels on some of its initial thoughts. To date the Taskforce has published decks coveringgovernance mechanisms for the future relationship, aviation, and fisheries.

The Grayling View
The presentations given by the Taskforce to the EU-27 are similar to what a university professor would use to instruct his students on how particular international agreements function. 
Take the presentation on governance. Representatives were first run through the standard governance components of international agreements, “ongoing management/supervision”, “dispute settlement” and “enforcement after dispute settlement”. The presentation then took the EU-27’s Brexit counsellors through three available models for governance in international agreements; CETA, the Ukraine Association Agreement, and the European Economic Area Agreement (EEA).
The Taskforce concludes that the “classical internal law arbitration” arrangements in CETA do not sufficiently incorporate EU law concepts and as such is unsuitable for application to the Withdrawal Agreement, but could be considered for the future relationship. Since the EEA model relies on the jurisdiction of the Court of Justice of the EU (CJEU) and enforcement by the European Commission, it is ruled out as clearly incompatible with the UK’s red lines. 
This leaves the ‘Ukraine model’ which the Taskforce considers as exhibiting a sufficient reliance on EU law, particularly concerning the capacity for preliminary references to the CJEU, to be sufficient for both the Withdrawal Agreement and the future relationship. 
Whilst it looks like the European Commission is open to a Ukraine solution, in this case it is of course less clear what the UK is looking to obtain on this issue, and as such it is difficult to draw conclusions as to whether this will indeed be ‘the solution’
What is glaringly obvious is that whilst the UK has constantly called for a ‘bespoke’ relationship, it is clear that existing models are being used by the European Commission to structure their initial discussions. While the UK might not like models, you have to start a discussion on the basis of what is already possible.  

The highlights from the Member States

Ireland demands that the UK keeps it promises 
On 17 January during a speech addressing the European Parliament in Strasbourg, Irish Prime Minister Leo Varadkar told the UK it could not back out of its commitments made on the Irish border.
He argued that the agreement made in December, which promised that a hard border between Ireland and Northern Ireland would be avoided regardless of the UK’s future relationship with the EU, must be delivered in practice. At a press conference after the speech, he said he would ensure the agreement on Ireland is turned into “legally binding language”. On the same day, Rory Montgomery, one of Ireland’s lead Brexit negotiators, argued that it would be extremely difficult to put Britain’s commitments into practice.
The Grayling View
Heralded at the time as a breakthrough, the UK made several commitments on the Irish border in order to progress to the next stages of the Brexit negotiations. This included maintaining the Common Travel Area across the UK and Ireland and keeping Northern Ireland aligned with the rules of the EU Single Market and Customs Union, whilst alsopromising that no new regulatory barriers would develop between Northern Ireland and the rest of the UK. As pointed out by Rory Montgomery, these commitments will be very challenging to effect in practice, particularly given that Theresa May’s government is officially committed to leaving both the Single Market and the Customs Union. 
The fact that there is little evidence suggesting how these commitments would work in practice presents a problem given Varadkar’s demand for legally binding language. This shows that the Irish question was not answered in December, and it will continue to haunt the Brexit negotiations.
This is amplified by talks to be launched next week between the Irish and British governments to reestablish the Government in Northern Ireland. These talks aim to avoid a return to direct rule of the region from London for the first time in a decade, highlighting the deep-rooted nature of this Irish question. 

Dates for your diary

23 January 2018 - Ad Hoc Working Party on Art. 50 
25 January 2018 - Ad Hoc Working Party on Art. 50 
29 January 2018  - General Affairs Council (Art. 50) - Adoption of transition mandate
27 February 2018  - General Affairs Council (Art. 50)
4 March 2018 - Italian General Election
20 March 2018  - General Affairs Council (Art. 50)
22-23 March 2018 - European Council Summit
1 July 2018 - Austrian Presidency of the Council
End of October 2018 - Negotiations expected to end
1 January 2019 - Romanian Presidency of the Council
29 March 2019 - UK expected to leave EU



Grayling Brexit Unit

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The Grayling Brexit Unit is here to support, guide and inform the success of your business and identify how the political dynamics will change as a result of Brexit in both London and Brussels. We are your Brexit experts.

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