1Introduction
The Article 50 negotiations
1.The Article 50 negotiations are at a critical stage. If they are to be completed by October 2018, which is the deadline that has been set by the UK and the EU, there are only seven months left to reach agreement on a host of highly complex issues that will determine the UK’s future for decades to come.
2.Since our last report, the European Council and the UK agreed that ‘sufficient progress’ had been made on Phase 1 of the Article 50 negotiations which enabled Phase 2 discussions to begin on the UK’s Future Partnership with the European Union.1 On 28 February 2018, the Commission published a draft Withdrawal Agreement,2 which was based on the Joint Report that was agreed in December 2017.3 The draft Withdrawal Agreement has been circulated to the EU27 and to the European Parliament’s Brexit Steering Group for revision and agreement before being subjected to intense negotiations over the coming months. The UK Government does not accept the text relating to Northern Ireland.4
3.An enormous amount of work remains to be completed in the limited time that remains under Article 50. Negotiations on citizens’ rights, issues relating to the Northern Ireland/Republic of Ireland border, and a wide range of other separation issues are ongoing. Talks on the agreement of a transition/implementation period started in January 2018 and are expected to be completed by the European Council in late March 2018, although there remain significant points of disagreement to work through first. From late March onwards, Phase 2 negotiations are expected to begin. The UK and the European Union want to reach agreement on all these issues by October, to allow time for the texts to be ratified by the European Parliament (EP) and the UK Parliament.
4.The EU said that it was unable to start Phase 2 negotiations until after the March European Council—a gap of over four months since the Phase 1 agreement. On the UK side, the Prime Minister and Cabinet Ministers have set out aspects of the Future Partnership in a series of speeches, and have agreed that it should be based on a model of ‘managed divergence’. However, on 7 March, when Donald Tusk published the EU27 draft guidelines for a post-Brexit Free Trade Agreement between the EU and the UK, he appeared to reject the ‘managed divergence’ model saying that the only option available would be an off the shelf Free Trade Agreement.5 It remains to be seen what this will mean in practice and the extent to which the UK will diverge from the rules and standards of the European Union after the transition/implementation period.
This report
5.This is the second report in our overarching inquiry on the Article 50 negotiations. In this report, we consider the current state of the negotiations, the plans for the transition/implementation period, and the work to date on plans for Phase 2.
6.We have drawn upon evidence provided by the Rt Hon David Davis MP, the Secretary of State for Exiting the European Union, along with evidence from HM Revenue and Customs, the Police Service of Northern Ireland, organisations that specialise in exports and logistics, stakeholders in EU Agencies, and academics and think tank representatives specialising in EU law and politics. We have also undertaken a programme of visits. In December, we visited the Northern Ireland/Republic of Ireland border to learn more about how it might be affected by the UK’s withdrawal from the European Union. In January, we visited Cambridge to meet and take evidence from representatives of industry and academia who specialise in world-leading research into the life sciences. Later that month we also visited Dublin where we met Simon Coveney, Tánaiste and Foreign Minister, Heather Humphreys, Minister for the Department of Business Enterprise and Innovation, Members of Oireachtas Joint Committees, and academics and Irish business representatives. Finally, in February we visited Brussels where we met a range of interlocutors, including Sir Tim Barrow, Michel Barnier, Danuta Hübner MEP, Guy Verhofstadt MEP and representatives from the Norwegian and Swiss Missions to the European Union. We would like to thank everyone who has given evidence to the Committee and who met us to inform our inquiries.
7.We will continue to publish reports on the progress of the Article 50 negotiations at regular intervals. We plan to report next on existing EU-third country trade and partnership agreements, and the Future Partnership between the UK and the EU.
1 Phase 1 covered citizens’ rights, the Northern Ireland/Republic of Ireland border, the Financial Settlement and other separation issues
2 Commission, European Commission Draft Withdrawal Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community, 28 February 2018
3 Commission & Department for Exiting the European Union, Joint report on progress during phase 1 of negotiations under Article 50 TEU on the UK’s orderly withdrawal from the EU, 8 December 2017
4 HC Deb 28 February 2018, Vol. 636, Col. 823
Published: 18 March 2018