1.Since May 2018, when we last published a report examining the state of the negotiations, there has been some progress on the draft Withdrawal Agreement. However, the Government and the European Union still need to resolve significant differences in a limited amount of time. In May, Michel Barnier and the Rt Hon. David Davis MP, then Secretary of State for Exiting the European Union, said that 75% of the draft Withdrawal Agreement had been agreed in principle. By the end of July, Michel Barnier said this had increased to “more or less 80%”. The principal negotiators have seen each other with much more frequency than was the case previously. Both have said their task is to get a deal and that they believe one is achievable.
2.The Government and the European Commission had a shared ambition to finalise the draft Withdrawal Agreement and the Political Declaration on the future EU-UK relationship by the October European Council. However, on 21 August 2018, Michel Barnier said, “I’m not going to say [the deal must come in] October. A few days here or there, beginning of November. But not much later than that, certainly”. On 24 August 2018, in an interview, the Rt Hon. David Lidington MP, Chancellor of the Duchy of Lancaster and Minister for the Cabinet Office, said that the European Union would accept an emergency European Council meeting to finalise the deal and that a November deadline would be “manageable”. Nevertheless, the Prime Minister has said since that, “we are all working to the October deadline”.
3.The major sections of the draft Withdrawal Agreement that have not been agreed are contentious but both sides have agreed that they are necessary for an orderly UK withdrawal from the European Union. The first of these is the ‘backstop’ that is needed to maintain a frictionless border on the island of Ireland, should no other option be agreed or prove to be workable to secure that objective. Both sides agreed in the December 2017 Joint Report that it is necessary to include such a measure in the Withdrawal Agreement. The Joint Report makes it clear that it is the UK’s responsibility to propose specific solutions to address the unique circumstances of the island of Ireland, and sets out the degree of alignment with the rules of the Internal Market and Customs Union that the UK will agree to maintain if no such specific solution can be agreed as part of the negotiations on the future relationship. The second outstanding part focuses on the governance arrangements for the Withdrawal Agreement. A range of smaller separation issues also remain outstanding. Solutions are also needed for matters affecting the UK’s sovereign bases in Cyprus and the Overseas Territory of Gibraltar. These are subject to bilateral negotiations between the UK and Cyprus and the UK and Spain respectively.
4.The UK and the European Union will also need to agree the text of a ‘Political Declaration on a Framework of the Future Relationship’, a document which will sit alongside the Withdrawal Agreement and will set out the parameters of the future EU-UK economic, security and foreign policy relationships. The European Council published guidelines for the European Commission on the nature of the future EU-UK relationship in March 2018. These said that the future relationship would be structured around a “balanced, ambitious and wide-ranging free trade agreement” and close cooperation in security, foreign affairs, justice and home affairs.
5.On the UK side, the Government has now set out its vision of the future EU-UK relationship, following a Cabinet meeting at Chequers. On 12 July 2018, the Government published a White Paper which included its objectives for the future economic and security and foreign policy relationships. It also set out the Government’s position on cross-cutting issues, such as data, fisheries and mechanisms for dispute resolution. However, on 24 July 2018, Oliver Robbins, the Prime Minister’s Europe Advisor and UK coordinator for the negotiations, told us that there had been no discussions between the two sides on any draft texts of the Political Declaration. Michel Barnier told us on 3 September 2018 that he had found much that was positive and helpful in the White Paper and that the Political Declaration would need to be quite specific and precise.
6.Since the publication of the White Paper, more attention has been devoted to preparations in the event of a no deal scenario. Businesses and other representative industry bodies expressed concern publicly over the impact of no deal on commerce and just-in-time supply chains. On 19 July 2018, the European Commission published a document that provided advice on how countries, companies and individuals should prepare for the possibility of no deal. It has also published notices on preparations in specific sectors of the economy, including health and food safety, financial services, customs, transport, and company law, among others. On 23 August 2018, the Government published the first tranche of its own technical notices advising businesses and individuals on what to do in the event of the UK leaving the European Union without a Withdrawal Agreement.
7.On 24 July 2018, in preparation for the final stage of the Article 50 negotiations, the Government announced machinery of Government changes. In a statement, the Prime Minister said that she would lead the negotiations with the European Union, “with the Secretary of State for Exiting the European Union deputising on my behalf”. She said that staff would be transferred from the Department for Exiting the European Union to the Cabinet Office. The Rt Hon. Dominic Raab MP, who became Secretary of State for Exiting the European Union after the resignation of the Rt Hon. Davis Davis MP, has said that he intends to inject “renewed energy, vim and vigour” into the negotiations and on 21 August 2018 the Government and the European Commission agreed that, henceforth, negotiations would be conducted “continuously”.
8.We welcome the fact that the Government has published a White Paper that sets out a more detailed vision of the future EU-UK relationship. However, we note that this came 26 months after the EU Referendum and 17 months after the Government triggered Article 50, and we regret that the White Paper was not published sooner. We have heard from all sides that the Political Declaration on the Framework for the Future Relationship, which will be informed by the Government’s White Paper, should be detailed, but there are not many weeks remaining for negotiators to address the detail of the Government’s proposals. We note that Michel Barnier said he was ready to negotiate the Political Declaration.
9.The White Paper includes the Government’s objectives for the future EU-UK internal and external security relationships. These include the UK’s participation in cross-border data sharing agreements, continued cooperation with the EU’s law enforcement and criminal justice agencies, and the UK’s place in Europe’s foreign policy and defence architecture. We were encouraged to hear from Michel Barnier that there is a great deal of convergence and agreement between the two sides on the White Paper’s chapters on security. These matters are of paramount importance to the safety and security of the people of the UK and the European Union. We note that in recent months, the Home Affairs Select Committee and the House of Lords’ EU Select Committee have considered these issues in wide ranging reports.
10.Since Article 50 was triggered on 29 March 2017, we have published a series of reports on the state of the negotiations and the progress of the draft Withdrawal Agreement. In this report, we examine the outstanding issues that remain to be finalised in the draft Withdrawal Agreement as well as the Government’s White Paper on the future EU-UK economic relationship.
11.We draw upon evidence from the Rt Hon. Dominic Raab MP, Secretary of State for Exiting the European Union, and Oliver Robbins, the Prime Minister’s Europe Advisor. We also took evidence on the Chequers statement, which predated the Government’s White Paper by a matter of days, from Allie Renison, the Head of Europe and Trade Policy at the Institute of Directors, Henry Newman, the Director of Open Europe and Michael Dougan, Professor of European Law and Jean Monnet Chair in EU Law at the University of Liverpool. Furthermore, we took evidence on the Government’s proposals for the future EU-UK economic relationship from Catherine McGuinness, the Policy and Resources Committee Chairman at the City of London Corporation, Adam Minns, the Executive Director of the Commercial Broadcasters Association, Huw Evans, the Director General of the Association of British Insurers and Giles Derrington, the Head of Policy: Exiting the European Union for techUK. On 3 September 2018, we visited Brussels and met Declan Kelleher, the Irish Permanent Representative to the European Union, Sir Tim Barrow, the UK’s Permanent Representative to the European Union, and Michel Barnier, the European Commission’s principal negotiator. We are grateful to everyone who has contributed to our inquiry so far.
1 Exiting the European Union Committee, , Fifth Report of Session 2017–19, HC 1060, 24 May 2018
2 European Commission, , 14 May 2018
3 European Commission, , UK Secretary of State for Exiting the EU, 26 July 2018
4 The October European Council meeting will take place on 18 & 19 October
5 Reuters, , 21 August 2018
6 Guardian, , 24 August 2018
7 Guardian, Guardian, , 28 August 2018
8 European Commission & Department for Exiting the European Union, , 8 December 2017, para 49
9 European Commission and HM Government, , 8 December 2017, para 49
10 Commission and Department for Exiting the European Union, , 19 June 2018
11 European Council, , 23 March 2018
12 The Government published a statement following the Chequers meeting which prefigured the Government’s White Paper on the future EU-UK relationship. See, HM Government, , 6 July 2018
13 Department for Exiting the European Union, , 12 July 2018
16 European Commission, , 19 July 2018
17 European Commission,
18 Department for Exiting the European Union, , 23 August 2018
20 Financial Times, , 19 July 2018
21 Guardian, , 21 August 2018
Published: 18 September 2018