The process for exiting the European Union and the Government's negotiating objectives Contents

3The Article 50 negotiation: what will it cover?


53.The formal process for the UK to exit the EU is set out in Article 50 of the Treaty on European Union (TEU) which states that:

(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(5)If a State which has withdrawn from the Union asks to rejoin, its request shall be subject to the procedure referred to in Article 49.

54.Although Article 50 specifies that the agreement should be negotiated “taking account of the framework for [the departing state’s] future relationship with the EU”, the precise relationship between the negotiation under Article 50 to give effect to exit and provision for negotiations to establish the terms of the UK’s future relationship with the EU is not clear.39 Sir Simon Fraser told us that:

the orthodox position [ … ] that has been taken by the European Commission has been that article 50 has to be completed before the article 218 or 207 negotiation begins. [ … ] In practical political terms, I do not think it is a very realistic position to take, and indeed article 50 itself says that article 50 will be negotiated and concluded, taking into account the provisions of the future relationship. There is an inherent contradiction there.40

55.Michel Barnier, appointed by the Commission to lead its negotiating team, has set out his views on the conduct of negotiations. At a press conference on 6 December, M. Barnier said that it was legally impossible for the EU to negotiate a “new partnership” agreement with the UK until the narrow terms of the UK’s “divorce” from the EU were complete. These “divorce” terms were reported to include demands for payments from the UK to cover pensions and other budgetary commitments, as well as a number of narrow technical and legal matters that would need to be resolved. M. Barnier also noted that the Article 50 negotiations would need to be concluded by October 2018 so as to enable the European Council, the European Parliament and the UK Parliament to ratify the deal. Reports have suggested that Michel Barnier has secured agreement with the 27 EU Member States for a “three phase divorce” plan, consisting of withdrawal, transition and then a new relationship.41

56.We asked the Secretary of State how Article 50 negotiations would be sequenced with negotiations on the future relationship given the provision in Article 50 that negotiations should “take account” of the future framework. He told us that the sequencing of negotiations, what would be included in the Article 50 negotiation and what would be included in a separate negotiation on the UK’s future relationship with the EU would be a matter for discussion with Michel Barnier:

I have every belief that he wants to get a practical outcome out of this as much as I do. I know Michel of old; I have known him for 20 years. He will be a tough negotiator but he will want the best outcome. The aim of this for all of us is the best outcome for the United Kingdom and the best outcome for the European Union. I am entirely persuaded that if we maintain that and we negotiate in good faith and are clear about what we are trying to do, we will get a good outcome.42

57.The Prime Minister told the Liaison Committee that she would be looking to negotiate the Article 50 “divorce” in parallel with negotiations on the UK’s future relationship with the EU:

It is also what is implied by article 50 and by the treaty itself, which makes it clear that you have to know the framework of the future relationship before you can finalise the deal for withdrawal. Of course, at the point at which we exit the European Union, we will need to know what our new relationship with the European Union is.43

58.The UK’s future relationship with the EU should be negotiated in parallel with the Article 50 negotiation so that there is clarity about both the divorce settlement and the new relationship at the moment we formally leave the EU. This would appear to be the intention of the wording of Article 50 and it would be in the best interests of both the UK and the EU-27 were this to be the case. However, this will not be in the Government’s gift to deliver; the sequencing of negotiations in this way will require the agreement of both sides in the negotiations.

Procedure for approving an agreement

59.Article 50 specifies that any agreement would be subject to super Qualified Majority Voting in the European Council and agreement by the European Parliament.44 However, there is some debate as to the scope of any agreement that could be agreed under the terms set out in Article 50. Professor Barnard emphasised the distinction between an agreement under Article 50, which she described as being “only about the divorce” and an agreement about future arrangements between the UK and the EU which would need to be adopted, like other EU agreements with third countries, using the procedure laid down in Article 218 TFEU.45

60.The agreement of the Article 50 “divorce” in the Council by QMV (with a role for the European Parliament but no role for national parliaments) is likely to cover matters which the EU can deal with alone, because they are legally within either the exclusive competence of the EU46 or competence is shared by the EU and Member States but is, as a matter of political choice, exercised by the EU. In this case, Member States would not have a separate role outside their participation in the Council.

61.There has, however, been some suggestion that the Article 50 Agreement could cover matters for which Member States must or can exercise their own competence.47 The agreement is “mixed” where either Member States have sole competence for some part of the agreement or there are matters of shared competence which they have chosen to exercise. A “mixed” agreement is entered into by the EU and its Member States acting in their own right. A mixed agreement would need to be agreed by each Member State separately, which in turn gives 34 national and regional parliaments some say in the process.

62.Given the depth and breadth of any agreement the UK would be likely to want to negotiate on its future relationship with the EU, a future arrangements agreement using the Article 218 TFEU procedure would, on the basis of current EU law and practice, be very likely to be a mixed agreement. It would, therefore, be likely to require agreement by unanimity in the Council (a higher hurdle than simply securing the votes of a super qualified majority), the consent of the European Parliament, and the involvement of up to 34 national and regional parliaments in the EU.48 Recent experience in ratification of CETA, the EU’s free trade agreement with Canada, has shown that regional or national parliament involvement can lead to unpredictable results. The CETA deal was signed over seven years after negotiations began and was held up by the Parliament of Wallonia, a region of Belgium. It has not yet been ratified.

63.There is currently a case before the European Court of Justice on the EU’s trade agreement with Singapore to determine the extent to which that relatively comprehensive agreement falls within exclusive EU competence or shared competence.49

64.The Prime Minister suggested to the Liaison Committee that the Article 50 agreement could include some matters of mixed competence that would need to be ratified by national Parliaments and agreed by unanimity in the Council. She noted that work was ongoing in this respect but questions did arise around the extent to which a future trade agreement with the EU would be a matter of exclusive EU competence or of mixed competence.50

65.Whilst the need for national ratification can undoubtedly delay agreements coming into effect, the delay can be alleviated if the agreement can be provisionally applied. Current agreements with third countries frequently include provisional application, such as the EU–Ukraine Association Agreement.

66.The key differences between an agreement made under the procedure laid down by Article 50 and one using the procedure set out in Article 218 TFEU (which would apply to a separate agreement on future arrangements between the UK and the EU) are that, as EU law and practice currently stands, the latter requires each Member State’s agreement (rather than a Qualified Majority) and also the possible agreement of up to 34 national and regional parliaments. However, if the Article 50 agreement were to be a “mixed agreement” its procedure would, in practical terms, be the same as for Article 218 TFEU agreement.

67.As these procedural considerations may well affect the outcome of the negotiations, we consider it important for the Government to provide early clarification of its expectations on whether or not the Article 50 agreement is likely to be mixed, the respective scope of an Article 50 agreement and a future arrangements agreement made under Article 218, and the room for flexibility in the choice between the two: If the expectation is that it is a mixed agreement, the Government should put plans in place at that time to engage with other regional and national bodies throughout the EU in order to ensure safe passage of the agreement.


68.Sir Simon Fraser was asked what level of detail would be expected in the Government’s formal notification under Article 50 of an intention to leave the EU. He noted that the form of notification would be important and that it was important to avoid any “mismatch of expectations”.51

69.The Secretary of State assured us that he had “an idea of what they expect” in terms of the form of the letter that is sent to trigger Article 50.52 He, understandably, declined to elaborate further.

Great Repeal Bill

70.The Prime Minister has announced her intention, through the Great Repeal Bill, to incorporate existing EU law into UK law. The Bill will raise a number of important questions around how legislative competence will be restored in a number of areas to the UK and what the implications are for the role of Parliament and the future of the devolution settlement. We have not yet explored the issues that will be raised by the Bill but will be looking to carry out detailed scrutiny of its provisions. We asked the Secretary of State whether this Bill would be produced in draft to facilitate full scrutiny by Parliament. He was unable to commit to this request.53 The Bill will be designed to provide legal certainty, ensuring that EU law will remain in force in the UK until the point where it may be repealed or amended by the UK Parliament.

71.The Great Repeal Bill will introduce the legislation that ought to provide legal certainty in the UK on the day after Brexit day. EU legislation will be incorporated into UK law and can then be either retained or repealed. Given the significance of the repatriation of legislative competences to the UK for the constitutional make-up of the UK, the Bill will also have implications for the devolution settlement. The Secretary of State must publish this Bill in draft to enable the fullest scrutiny to take place. The Great Repeal Bill, and the procedure with which it is dealt, will need to be consistent with the existing devolution settlement.

What must be agreed before the UK leaves the EU?

72.Article 50 provides that “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 [ … ] unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period”. It is therefore conceivable that the UK could leave the EU with no agreement.

73.The Foreign Affairs Committee is taking written evidence on the implications for the UK of a failure to reach any deal under Article 50 including for the UK’s status in international organisations and the implications of sudden withdrawal from EU regulatory and other bodies. We will follow their deliberations with interest.

74.There are a number of other areas in which, as a bare minimum, legal certainty will be required on the day of exit even if no agreement is reached under Article 50. These matters will need to either be covered by any Article 50 agreement, covered by a future relationship agreement that is already (at least partially) in force, or subject to other provisions.

75.The organisation UK in a changing Europe identified four aspects of the UK’s relationship with the EU that would have to be resolved by any Article 50 agreement:54

76.The UK’s relationship with the EU is deep and complex, not least in terms of the legal rights of parties in both the UK and the EU-27. It would be unsatisfactory and potentially damaging to both sides were the UK to leave the EU with no agreement having been reached.

Budget commitments and pension liabilities

77.According to Michel Barnier, the Article 50 negotiation would need to cover outstanding budgetary commitments and pension liabilities in addition to other technical and legal matters. Negotiations over the budget will include commitments to a wide range of EU programmes, including the Common Agricultural Policy, research funding and regional development funds. A percentage of these will be paid to UK recipients.

78.The Financial Times has estimated that the “cost” of exiting the EU (in respect of resolving ongoing obligations) would be up to 20 billion euros.55 However, Michel Barnier has suggested that his opening position may be that this figure should be as high as 60 billion euros. We have not yet conducted detailed analysis on the likely terms of this negotiation but will be undertaking scrutiny in the new year.

Location of EU agencies based in the UK and continuing participation in other EU agencies

79.The European Medicines Agency (EMA) and the European Banking Authority (EBA) are both based in London. Soon after the UK’s vote to leave the EU took place, there were reports that Member States had started to “jockey” for position to secure the relocation of the agencies to their jurisdictions.56 We are not aware of a precedent for an EU agency such as the EMA being based primarily outside of the EU.

80.The UK’s future relationship with both Agencies will be a matter to be defined by negotiations over the UK’s future relationship with the EU. These bodies perform an important regulatory function for EU Member States and it will be necessary for arrangements to be made for their continuing operation on the day after Brexit.

81.Dr Virginia Acha, Executive Director for Research, Medical and Innovation, Association of the British Pharmaceutical Industry (ABPI), told us that the EMA was already working in cooperation with national regulators which contributed to the EMA network to provide the evaluation and review required. She was optimistic that:

the precedent is there for co-operation, and indeed there is already a precedent of countries that are not members of the European Union being able to work through that co-operation. We would like, wherever possible, to be able to continue within that global, regulatory agreed process and to keep that co-operation as part of the network in a bespoke way.57

82.The UK has delegated a number of other regulatory functions to EU agencies. The extent to which the UK wishes to continue to cooperate with these bodies or continue membership, duplicate their functions in the UK or dispense entirely or partially with the function that they perform will be matters for domestic political decision and negotiation with counterparties representing the EU.

83.It will be essential to provide clarity as soon as possible, and certainly by the time the UK leaves the EU, about the Government’s preferred option for the UK’s future participation in EU regulatory bodies. If it is decided, however, not to seek to maintain membership of these bodies then the Government must set out the new arrangements it proposes to put in place to ensure that these functions are carried out in future.

Rights of EU citizens living in the UK and UK citizens living in the rest of the EU

84.Several witnesses emphasised the importance of clarifying the status of UK citizens living in the UK.58 The House of Lords Committee on the European Union has published a report on Brexit: Acquired Rights which examines the positions of EU nationals living in the UK and of UK nationals in the EU.59 The Lords Committee looked, in particular, at the Polish, Romanian and French communities in the UK and noted the uncertainty and anxiety caused by the referendum result. That Committee argued that the Government was “under a moral obligation to provide certainty and legal clarity to all EU nationals working, living and studying in the UK, who contribute so significantly to the economic and cultural life of the UK.”60

85.The Lords Committee similarly noted the anxiety of UK nationals in other EU states. We have received, as has the Lords Committee, powerful testimony from UK nationals across the EU raising questions about their residence rights and their rights to education, health and welfare.

86.Clarifying the status of EU citizens in the UK is within the gift of the UK Government, and the Prime Minister indeed indicated on 19 December that she wished to provide reassurance to this group early in the negotiations.61 Professor Barnard noted that “there is no quick-fix solution, because we have no record of how many EU nationals are living in the UK”.62 The Home Secretary has already said that all those who are given leave to remain will need “some sort of documentation”.63 This is a task that will be complex to administer and a matter to which we will return to take further evidence.

87.It is clearly in everyone’s interests to resolve the position of EU nationals currently in the UK and of UK nationals in other EU member states as quickly as possible so as to provide certainty and reassurance to the individuals, their families and the businesses and services that rely on them. We were struck by the fact that witnesses who were on either side of the referendum debate were unanimous, when asked, in expressing their opinion that EU nationals working in the UK should have their status assured. This must be an early priority for the negotiations.

Northern Ireland

88.The UK’s only future land border with the EU will be between Northern Ireland and the Republic of Ireland. The UK’s decision to leave the EU therefore raises a particular set of questions for Northern Ireland and for relations between the UK and the Republic of Ireland. The course of negotiations on the UK’s exit may have an impact on future cross-border trade and economic activity, depending on the extent to which the current soft border arrangements and the Common Travel Area are able to continue after the UK exits the EU.

89.The UK and Irish Governments are also co-guarantors of the Good Friday Agreement, which refers to them both as “partners in the European Union”.64 The Good Friday Agreement included provisions for both “North-South and East-West” cooperation. It also included recognition that people born in Northern Ireland are entitled to Irish citizenship. After the UK has left the EU, this provision would make Northern Ireland the only jurisdiction outside the EU whose citizens were entitled to EU citizenship.

90.We will examine the implications of Brexit for Northern Ireland further when we visit Derry~Londonderry in the coming weeks. However, we note the work on this subject carried out both before the referendum by our colleagues on the Northern Ireland Affairs Committee,65 and, since the referendum, by the House of Lords European Union Committee.66

91.The Secretary of State gave evidence that maintaining an open border between the Republic of Ireland and Northern Ireland after the UK has exited the EU was a “high priority”.67 He said he was optimistic that the EU would be helpful to the UK in this endeavour.68 He suggested that, as to how this might be done, the Committee might look at the Norway–Sweden border:

They are both in the single market but straddle a customs union, and it is a very open border, with particular arrangements designed to make the border a free border.69

He also explained how a Common Travel Area might continue to work when the Republic of Ireland is in the EU and Northern Ireland is not.70

92.It is essential that closer UK–Irish relations and stability in Northern Ireland and the Good Friday Agreement are not jeopardised by the UK’s exit from the EU. The Executive and the Assembly in Northern Ireland should be duly involved at every stage in the process. In the light of current developments in Northern Ireland, a way will have to be found to make this happen.

Cooperation in Justice and Home Affairs and Common Foreign and Security Policy

93.The House of Lords European Union Committee have published a report on Brexit: future UK–EU security and police cooperation.71 That Committee noted that the UK and the EU-27 shared a “strong mutual interest” in maintaining police and security cooperation after the UK had exited from the EU.72 However, it warned against any suggestion that this understanding of mutual self-interest might lead to a “false sense of optimism” about how negotiations in this area might proceed, raising questions about the extent to which the UK could continue to benefit from the same level of cooperation outside the EU:

There will in practice be limits to how closely the UK and EU-27 can work together if they are no longer accountable to, and subject to oversight and adjudication by, the same supranational EU institutions, notably the CJEU [Court of Justice of the EU].73

94.The Secretary of State has stated that, in respect of cooperation in Justice and Home Affairs matters, the UK Government wanted “as far as is possible, to replicate what we already have” after the UK leaves the EU.74 We will take further evidence ourselves on this important area in the coming weeks, including around any legal implications.

95.The Foreign Secretary told the Foreign Affairs Committee in October that the EU-27 want the UK “to stick with them in a broad way when it comes to foreign policy questions”.75 Withdrawal from the EU’s Common Foreign and Security Policy mechanisms will have a range of implications for the conduct of UK foreign policy. Key questions include the status of UK participation in ongoing EU military and civilian operations, such as the naval missions in the Mediterranean and off the Horn of Africa, and the extent to which the UK will wish to align itself with EU sanctions against countries such as Russia.

96.Robin Niblett stressed that the UK’s security was “intrinsically linked” to that of Europe and emphasised that it was in the UK’s interests to ensure that security cooperation was maintained:

whether it is how Russia decides to test the boundaries of its new sphere of influence, whether it is terrorism and being able to fight something that does not see borders, or whether it is migration. We are at the front end of movements of people into Europe, and some of them will spill into our direction. Ultimately a weak Europe is a weak Britain.

We cannot be successful if our main neighbours are weak or destabilised. NATO and the EU are part of a spectrum. NATO is at the harder end; the EU is at the softer end.76

97.Stephen Booth told us that security cooperation was an important component of the UK’s “relationship” with the EU-27 and he called on the Government to be constructive in this area:

the UK is entitled to say to the rest of Europe, “We pay 2 per cent towards NATO. We pay 0.7 per cent towards our aid budget. We are willing to continue and potentially use more of that for European ends, but let us move on from this discussion of cherry-picking because how many other countries around the table do that right now.” That is not threatening behaviour; that is just stating the facts.77

98.The Secretary of State told the House of Commons in September that the Government aims “to maintain or even strengthen” UK–EU co-operation on security, financial crime and defence policy after leaving the EU.78 We look forward to the Government setting out in its plan how it intends to achieve this.

99.It will be essential to maintain cooperation with the other 27 member states on defence, foreign policy, security, financial crime and the fight against terrorism after the UK has left the EU. It is clearly in the UK’s and EU-27’s mutual interests to do so and the negotiations should ensure that it happens.


100.The Secretary of State, appearing before the House of Lords EU Committee in September described the negotiations as maybe “the most complicated negotiation of modern times”.79 We asked him whether a “quickie divorce” with the UK exiting the EU in six months might be feasible.

I take the view that the best outcome is a negotiated free access to markets outcome and, with it, a negotiated outcome on justice, home affairs and security. I do not think that they can be done in six months either.80

101.The negotiations that the UK is about to embark upon will not be easy and they will certainly not be completed in six months. There will be an enormous amount of ground to be covered in what may be a period of as little as 18 months in order to provide time for any deal to be properly scrutinised by member states and their parliaments, the European Parliament and, of course, the UK parliament and the devolved national parliaments.

102.The Government has stated that it will be looking for the best deal that it can secure in respect of continued access to European markets without tariffs or other obstacles. It should look to secure a mutually beneficial relationship in other areas where the UK currently cooperates with other Member States and also seek a future relationship with the EU based on continuing close cooperation in Justice and Home Affairs, Security, Foreign Affairs and Defence Policy.

103.No one can predict how negotiations will unfold once Article 50 is triggered. However, as a bare minimum, by the time that the UK exits the EU, it is essential that clarity has been provided around:

39 Article 218(3) TFEU sets out the procedure for the EU to authorise the opening of negotiations and nominate the negotiator or the Union’s negotiating team. Where unanimity is required this can be achieved with Member States abstaining (but not voting against). The qualified majority required for the Council to conclude any agreement with the UK under this Article must comprise at least 72 per cent of the continuing Member States (20) comprising at least 65 per cent of their total population.

41 Politico, Europe’s three-stage Brexit divorce plan, 15 December 2016

43 Liaison Committee, Oral evidence from the Prime Minister, 20 December 2016, Q19

44 A super Qualified Majority requires 72 per cent of the Council Members representing at least 65 per cent of the EU population

46 Where the EU has exclusive competence, only it can exercise it, for example in respect of the common commercial policy

48 With the exception of Belgium, regional parliaments do not play a major role in the ratification procedure of international agreements, other than through their seats in second chambers. In Belgium, the agreement needs to be approved by the Belgian House of Representatives in the Federal Parliament (The Belgian Senate has no vote), at the regional level the Flemish Parliament, the Brussels-Capital Parliament, and the Parliament of Wallonia, and at the Community level, the Parliament of the French Community, Parliament of the German-speaking Community, and the Walloon-Brussels Federation. (Note the Flemish Parliament encompasses representation of the Flemish Community and the Flemish Community Commission, together with the Flemish region.) Ratification of international agreements by EU Member States, EP Briefing, November 2016.

49 Formal Opinion 2/15. Advocate General’s opinion delivered 21 December 2016, the Court’s definitive ruling expected in the first half of 2017.

50 Liaison Committee, Oral evidence from the Prime Minister, 20 December 2016, Qq72–74

54 Brexit and beyond: how the UK might leave the European Union, The UK in a Changing Europe for Political Studies Association of the UK, November 2016

55 Financial Times, UK faces Brexit divorce bill of up to €20bn, 12 October 2016

56 The Wall Street Journal, Two EU Agencies in London Face Uncertain Future, 26 June 2016

58 Fairbairn Q303; Longworth Q302

59 Brexit: acquired rights, Tenth Report of House of Lords Committee on the European Union, HL 82, Session 2016–17

61 Official Report, 19 December 2016, col. 1177

63 Official Report, 5 December 2016, col. 4

64 The Belfast Agreement, Agreement reached in the multi-party negotiations (10 April 1998)

65 Northern Ireland and the EU referendum, First Report of Northern Ireland Affairs Committee, HC 48, Session 2016–17

71 Brexit: future UK–EU security and police cooperation, Seventh Report of House of Lords European Union Committee, HL 77, Session 2016–17

74 Official Report, 1 December 2016, col. 1650

75 Foreign Affairs Committee, Oral evidence, 13 October 2016, Q181

78 HC Deb, 5 September 2016, col 38

79 House of Lords European Union Committee, Oral evidence from the Secretary of State for Exiting the EU, 12 September 2016, Q14

13 January 2017