To pull or not to pull

Introduction

There should be speculation about when to trigger the Brexit process under Article 50 of the Lisbon Treaty. Brexiteers have always disliked Article 50-

1. It sets a two-year deadline that can be extended only unanimously
2. Its voting rules exclude the exiting country
3. It is meant to cover mainly administrative issues such as sorting out pensions, relocating EU agencies based in Britain and safeguarding multi-year projects (the Treasury has promised recipients of EU money that it will guarantee their funds, including paying farm subsidies until 2020).

But Article 50 also promises to take account of future relations with the EU. That means, above all, trade arrangements.

Could the Brexit process be delayed to allow several years of trade talks?

• Mrs May has said only that she will not trigger Article 50 this year. Putting off Article 50 further might mean its two-year expiry clashes with the European elections and a new EU budget round, both due in 2019. And delays could irritate Britain’s EU partners, who might refuse to negotiate seriously until the government shows that it really means to leave.
• One alternative proposed by some in London is to seek prior political agreement to extend the Article 50 process beyond two years. But since the treaty requires unanimous approval at the end of the two years, it may not be possible to secure a guarantee that binds future EU leaders.
• Another possibility is an interim arrangement to take effect during the hiatus after Article 50 expires, but before the final shape of future trade deals is clear.

This would probably be an off-the-shelf model, such as temporary membership of the European Economic Area that includes Norway. This would preserve full access to the EU’s single market. But it would have two drawbacks.

1. In trade, the temporary often becomes near-permanent

Against Brexiteers’ fervent wishes, it would imply continuing to accept free migration from the EU, make payments into the EU budget and abide by all single-market rules.

Brexit? What Brexit? EU on cruise control

• EU officials and governments are keen for Britain be out by early 2019, partly to curb economic uncertainty, partly to avoid a mess if the country is still a reluctant member when the Union chooses a new parliament and executive in mid-2019 and negotiates a seven-year budget to take effect for 2021.
• For London, an ideal outcome could be to retain free access to EU markets while stopping so many Poles and other EU citizens coming to work in Britain – one of the main demands of the leave side during the referendum campaign.
• Against this, Brussels is repeating two things: no freedom of access for British goods, services and finance without free movement for EU workers into Britain; and no talks before Article 50 is invoked.
• There are already some differences. Some countries, notably among Britain’s northern, free-trading allies, reckon London has to be given some idea of a “landing zone” – what kind of deal it might get – before it hurls itself off the cliff of Article 50.
• Others are anxious that Britain would exploit such talks to go on negotiating as much as it could without weakening its hand by starting the two-year clock ticking. They insist on radio silence and hope that demands in Britain itself for faster progress on Brexit will pressure May into action.

What is Article 50?

Article 50 of the Treaty on European Union allows a member state to notify the EU of its withdrawal and obliges the EU to try to negotiate a ‘withdrawal agreement’ with that state – it involves five points laid out below.

1. “Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements.
2. A Member State which decides to withdraw shall notify the European Council of its intention. In the light of the guidelines provided by the European Council, the Union shall negotiate and conclude an agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union. That agreement shall be negotiated in accordance with Article 218(3) of the Treaty on the Functioning of the European Union. It shall be concluded on behalf of the Union by the Council, acting by a qualified majority, after obtaining the consent of the European Parliament.
3. The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.
4. For the purposes of paragraphs 2 and 3, the member of the European Council or of the Council representing the withdrawing Member State shall not participate in the discussions of the European Council or Council or in decisions concerning it. A qualified majority shall be defined in accordance with Article 238(3)(b) of the Treaty on the Functioning of the European Union.
5. If a State which has withdrawn from the Union asks to rejoin, its request shall be subject to the procedure referred to in Article 49.”

• The form of any withdrawal agreement would depend on the negotiations and there is therefore no guarantee the UK would find the terms acceptable. The EU Treaties would cease to apply to the UK on the entry into force of a withdrawal agreement or, if no new agreement is concluded, after two years, unless there is unanimous agreement to extend the negotiating period.
• During the two-year negotiation period, EU laws would still apply to the UK. The UK would continue to participate in other EU business as normal, but it would not participate in internal EU discussions or decisions on its own withdrawal.
• On the EU side, the agreement would be negotiated by the European Commission following a mandate from EU ministers and concluded by EU governments “acting by a qualified majority, after obtaining the consent of the European Parliament.” This means that the European Parliament would be an additional unpredictable factor in striking a deal.
• However, if the final agreement cuts across policy areas within the preserve of the member states, such as certain elements of services, transport and investment protection – as many recent EU FTAs have done (for example with Peru and with Columbia) – it will be classed as a ‘mixed agreement’ and require additional ratification by every national parliament in the EU.
• The EU Treaties would also need to be amended to reflect the UK’s departure. In effect, this means that the final deal at the end of a negotiated UK exit from the EU would need to be ratified by EU leaders via a qualified majority vote, a majority in the European Parliament and by the remaining 27 national parliaments across the EU.

Are there withdrawal options other than Article 50?

• Theoretically, there is nothing to stop a British Government unilaterally withdrawing from the EU by simply repealing the 1972 European Communities Act.
• Article 50 compels only the EU to seek a negotiation, not the withdrawing member state. However, while this may be the case in principle, such an approach would likely damage the UK’s chances of striking a preferential trade agreement with the EU after exit – since its first act as an ‘independent’ nation would have been to have reneged on its EU treaty commitments. It would also mean there is no transition period, so EU legislation along with the UK’s free trade agreements via the EU lapse immediately. Since some EU law applies in the UK directly, the UK would need to legislate to replace it.

When would Article 50 be triggered?

• The Prime Minister’s spokeswoman said today “a vote to leave is a vote to leave” and suggested that Article 50 would be triggered immediately if the referendum vote were for Leave. This was confirmed by David Cameron in the House of Commons, adding that Article 50 is the only way to leave. When it is triggered is ultimately up to the UK government but it is hard to imagine that it could be significantly delayed after a leave vote. Some have suggested that, since the EU cannot throw the UK out, one way would be for the UK government to use a No vote in the referendum as a de facto negotiating mandate. But this would depend on the EU’s willingness to negotiate an exit before Article 50 was triggered.
• Similarly, any alternative mechanism for exit would need to be devised and agreed by the rest of the EU – a significant gesture of goodwill. Nevertheless, any potential agreement the UK struck with the EU at any point after withdrawal would come up against the same dynamics as Article 50, most notably requiring approval by EU leaders, MEPs and national parliaments. Therefore, unless the UK is truly prepared to ‘go it alone’, any ‘unilateral withdrawal’ option is tricky.