European Policy Centre: The next phase of Brexit negotiations

29 April 2020

It will be more challenging for the EU27 to remain united and reach a deal on the future EU-UK relationship than on the divorce. Continuing the transparent and collaborative negotiation style of the European Commission’s Task Force will be crucial.

As the COVID-19 pandemic de facto delays the negotiations on the future trade deal between the EU and UK, the Union should use this time to draw the right lessons from the first phase of Brexit. The most obvious question to ask is whether the outcome of the withdrawal negotiations was a success. Critics of the EU point to the fact that the withdrawal agreement means a much harder Brexit than the Union had initially hoped for, with the UK (though not Northern Ireland) leaving both the Single Market and Customs Union.

However, judging the negotiations by merely comparing the outcome to the EU’s initial expectations overlooks the UK’s political realities. Since Theresa May’s party conference speech in October 2016, the UK was heading towards a hard Brexit.

While a close partnership is in the EU’s long-term interest, it cannot come at the expense of EU integrity. From that perspective, the withdrawal agreement with the Johnson government is a success. It protects the integrity of the Single Market, safeguards EU citizens’ rights in the UK, avoids a hard border in Ireland and settles UK financial liabilities. Finally, and perhaps politically most importantly, it avoids setting a precedent for easy and uncostly exiting of the EU that other Eurosceptic forces could follow. [1]

Three reasons for the successful divorce negotiations

There are at least three reasons why the EU achieved a deal largely on its terms. First, it was obvious from the start that the Union would be in a stronger bargaining position. As the UK exports much more to the EU in relative terms than vice versa, it desperately needed a deal. Moreover, the withdrawal process, as per Article 50, disadvantages the departing state by putting immense time pressure on the negotiations.

Second, the UK exacerbated its unfavourable situation through negotiation errors. Propelled by Brexit fervour in the Conservative Party and large parts of the press, the May government was unprepared when it triggered Article 50, and boxed itself in further by proclaiming several red lines early on. However, despite her pursuit of a hard Brexit, May never managed to quell her contenders, like Boris Johnson, and unite the Conservative Party, not to mention the House of Commons, behind her position.

The third crucial reason, however, is often overlooked: the EU’s novel, collaborative negotiation approach developed for the Brexit withdrawal process, including the role played by the European Commission’s Task Force 50 (TF50).

In normal trade negotiations, the Commission runs a technocratic process, which it tends to shield from both the Council and the European Parliament. Brexit was different. The then Commission President Jean-Claude Juncker and his team were aware of the political significance of the negotiations and decided to appoint a politician rather than a technocrat to lead the negotiations: Michel Barnier, a former French cabinet minister and Commissioner.

Given the political sensitivity, it was imperative to actively involve member states. The national leaders in the European Council drafted the negotiation mandate, decided on sufficient progress of the first phase and granted extensions to Brexit deadlines. The Council also set up a Brexit working party under Didier Seeuws to facilitate regular exchanges between the TF50 and the capitals.

Collaboration and transparency

Early in the process, Juncker and Barnier decided on a collaborative and transparent negotiation conduct strategically. The Commission’s reflex would have been to keep negotiations secret and attempt to exceed the mandate. However, this would have alienated member states and the European Parliament and thus marginalised the Commission’s influence.

Instead, the TF50 employed maximum transparency and forged close relations with other actors. It sounded out the concerns of member states through extensive coordination and consultation efforts, hosting more than 150 meetings with national delegations and regular pre- and debriefs before and after negotiation rounds. Senior TF50 members attended the Council’s Working Party meetings up to three times a week. Barnier also regularly partook in the Parliament’s Brexit Steering Group meetings to coordinate positions, which allowed the TF50 to leverage the Parliament’s red lines during its negotiations with the UK. 

This transparency generated trust among member states – even those sceptical of the Commission’s leadership (e.g. Poland), or those with massive stakes (e.g. Ireland). At no point did a member state succumb to the temptation of dealing with the UK bilaterally behind the TF50’s back. The combination of its status as a trusted broker and Barnier’s appointment also allowed the Commission to play much more than just a faciliatory role.

Throughout the negotiations, the Commission shaped key political decisions. For instance, it came up with the critical proposal to sequence the negotiations into two distinct phases which address withdrawal matters and future relations, respectively. Only once sufficient progress on the UK’s financial liabilities, EU citizens’ rights and the border issue in Ireland had been reached would the negotiations proceed to the next phase, depriving the UK of much of its leverage.

The TF50 also convinced reluctant member states to include the backstop solution to the Irish border issue in the first phase of the negotiations. Furthermore, the Commission was critical in reaching a final deal with the May government. It conceded an all-UK rather than Northern Ireland-only backstop to get the UK government on its side. It also managed to assure sceptical member states that the EU would maintain its leverage in future trade negotiations and that the level playing field provisions included in the deal were watertight.

The Commission’s collaborative and transparent approach thus proved critical in maintaining unity among the EU27 and allowed the Union to exploit its stronger bargaining position effectively. It therefore comes as no surprise that the EU intends to continue the set-up and modus operandi of the TF50 in the negotiations on future relations.

Michel Barnier remains the chair of the Commission’s Task Force, now called the Task Force for Relations with the UK. Some of his key staff, like Sabine Weyand, have moved to other posts in the Commission and been replaced by officials with ample Brexit experience. Both the Council’s Working Party and the Parliament’s Steering Group are also set to continue in slightly modified form.

Challenging negotiations ahead

The negotiations on the future relations, however, differ structurally from those on the divorce. Negotiations in the first phase contained only a limited number of dossiers and interests among member states were relatively aligned. Now, the trade negotiations include 11, in part highly politicised, baskets which include trade in goods and services, level playing field provisions, fisheries and law enforcement. On these, member states’ interests vary significantly, and would be reinforced if national parliaments had to ratify the deal – which seems likely.

The negotiations will also be held under immense time pressure as the transition period only lasts until the end of 2020. While this timeframe is too short to negotiate anything but a barebone free trade agreement at most, Boris Johnson intransigently refuses to request an extension. Per the withdrawal agreement, an extension would have to be agreed by 1 July, subject to reaching a deal on the highly contentious matter of fisheries.

COVID-19 infecting the negotiations

The disastrous economic consequences of the COVID-19 crisis for both EU member states and the UK should incentivise both sides to reach a deal to prevent adding fuel to the fire. Yet, the pandemic is likely to bear negatively on the negotiations. It not only further intensifies the time pressure by rightly shifting both resources and attention away from the negotiations, rendering any significant progress by July implausible.[2] The fallout among northern and southern member states over to how to fund the EU’s economic recovery and the perceived lack of solidarity with some member states like Italy have also created acrimony, which bodes ill for the necessary spirit of compromise and unity among the EU27.

Differences between member states with close and remote economic relations with the UK may also be highlighted, as the former now have even greater incentive to prioritise trade over other matters in the negotiations to soften the blow from COVID-19. And, perversely, Brexiteers in the UK could see an opportunity in not extending the transition, to mask the economic hit from Brexit by conflating it with the COVID-19 crisis.

The need for collective ownership

In this tough negotiation context, it will be even more important for the TF50 to continue its transparent and collaborative approach – and the first two rounds of negotiations indicate that it is doing just that. Maintaining the trust of the member states through extensive communication and coordination will be key, as the lightning speed at which the negotiations, especially on fisheries, will have to be held leave little room for scrutiny.

Furthermore, the diversity of interests among member states and likely need for parliamentary ratification across the continent necessitates a sense of collective ownership over whatever deal, if any, transpires. Hence, the TF50 should also actively involve other stakeholders, like national parliaments.

With no end of the COVID-19 crisis in sight, the only sensible decision for the UK and the EU is to agree on an extension. The EU should show flexibility on the condition of agreeing on a fisheries agreement as a prerequisite for an extension. Ultimately, however, it depends on the Johnson government’s will to put interests over ideology. Tragically, the Brexit fervour in the UK shows little signs of abating.

 

Leonard Schütte is a doctoral researcher at Maastricht University. He previously worked for the Centre for European Reform in London and studied at the University of Cambridge.

 

EPC

© European Policy Centre EPC