How the UK and EU line up for the third round of Brexit negotiations

How the UK and EU line up for the third round of Brexit negotiations

David Davis and Michel Barnier are putting their heads together around the negotiating table once again this week as the third round of Brexit negotiations gets underway in Brussels. The agenda for the talks sets up four days of meetings before a press briefing to close the talks on Thursday, which will be jointly held by Davis and Barnier if everything goes according to plan.

However, David Davis has already raised the stakes for the talks with a threat to snub the final press conference if a more constructive approach from the EU is not forthcoming, as frustration builds on the UK side at what they see as the “stubborn and unreasonable” attitude taken by the EU towards the UK’s recent negotiating proposals. A series of seemingly condescending tweets last week from Barnier himself were seen as particularly inflammatory, with the EU’s Chief Negotiator tweeting out a series of nine EU position papers one-by-one, in a supposed demonstration of how the EU had been “clear and transparent since day one”.

After the UK’s recent flurry of activity, there are in fact now eleven UK negotiating papers to go with the EU’s nine, on everything from citizens’ rights to the confidentiality of diplomatic documents. The principal source of tension, however, has not been so much what is in the negotiating documents but what is not, with Brussels determined to keep discussion of the two sides’ future relationship, particularly in the areas of trade and customs, firmly off the table at this stage.

The UK continues to insist that many of the areas in the withdrawal agreement cannot be meaningfully resolved without some discussion of the future relationship between the UK and the EU. This is particularly pertinent in the case of the Irish border and legal enforcement of the agreement, which will be the key topics on the agenda at the all-important coordinators’ meetings taking place on Wednesday.

Here BrexitCentral takes you through all twenty position papers, what each side’s key demands are, and where a solution could be found, along any problems likely to arise on the way.

Citizens’ Rights

Position Papers: UKEU

What the UK wants: The UK’s basic position is that EU citizens living in the UK should have equivalent rights to British citizens themselves, unlike the current system where EU citizens actually enjoy greater rights in areas such as export of benefits and immigration rights for non-EU spouses. However, the UK has already softened its position considerably in a number of areas, with its opening offer proposing that EU citizens will be able to keep more of their so-called ‘super-rights’ than initially expected.

What the EU wants: The EU’s basic position is that EU citizens living in the UK and UK citizens living in the EU should keep the same rights as they do now, including those ‘super-rights’ which they hold over and above British citizens in the UK. The EU has also shown a willingness to compromise in these areas, although new disagreements have opened up over its hardened stance in other areas, such as over local election voting rights and the right to move between different member states for UK citizens in the EU.

What’s the solution? As we set out ahead of the last negotiating round, the UK and the EU were already much closer together than many expected, and this was reflected in the joint technical note published by both sides at the end of the negotiating week, which identified 44 negotiating areas, 22 of which the UK and EU had already reached agreement on, along with 8 which required further discussion, and 14 on which there was “divergence”. Most of the outstanding disagreements should be possible to iron out with a few more concentrated negotiating sessions.

What’s the catch? This is a big one – how all the rights set out in the agreement should be legally enforced. The EU has demanded that the European Court of Justice maintains a direct ability to enforce EU citizens’ rights in the UK after Brexit, while the UK has been adamant that the direct jurisdiction of the ECJ will end. Both sides have set out their positions in separate position papers (see below).

Financial Settlement

Position Papers: UK (none) | EU

What the UK wants: To pay as little as possible, and to agree on payment as late as possible. The UK has committed to paying what it believes it legally owes, but so far its approach has been to critique the EU’s proposed financial settlement, rather than submit a proposal of its own. British officials are concerned about being “salami-sliced” by the EU over the ‘bill’ and are hoping to hold out for as long as possible before agreeing to any figure, in order to maximise the UK’s leverage when it comes to issue of the future trading relationship later on in the negotiations.

What the EU wants: The EU is anything but frugal, and the UK’s impending departure leaves a net €12bn hole looming in its annual budget. Failure to secure a significant sum from the UK would force the EU into the uncomfortable position of either having to go round the remaining wealthy member states with a begging bowl and asking them to to cough up more, or having to cancel future projects funded via the EU budget. Money, and lots of it, is a key priority for the EU in the negotiations.

What’s the solution? An old-fashioned haggle over money is far removed from some of the high-level principles being invoked in other areas of the negotiations, but this is very much a key battleground for both sides. A number of wildly varying figures have been thrown around, but €40bn is looking like the area where a mutually acceptable deal could ultimately be done. Then the question is when and how the money is paid.

What’s the catch? Any significant payment presents the UK with its own problems in terms of selling the deal politically at home. While there is some logic to the claims that Britain should not be paying at all – can anyone imagine the EU handing over a large lump sum in the case of a net recipient such as Poland or Greece deciding to leave – this is ultimately an area where long-term benefits outweigh the short-term costs for the UK. Phasing the payments over a transitional period could make it more palatable to the UK, as the ‘bill’ could then effectively take the form of Britain continuing with a similar level of annual budgetary contributions for a couple of extra years.

Northern Ireland-Ireland Border

Position Papers: UK | EU (none)

What the UK wants: The UK has made preserving peace and stability in Northern Ireland its top priority. To this end, it has unilaterally committed to a fully open and invisible border with no new physical infrastructure on the UK side of the border, preserving the Common Travel Area between the UK and the Republic of Ireland and the special status that Irish citizens enjoy in the UK, and writing the Good Friday Agreement into the Brexit withdrawal agreement directly to reaffirm all sides’ commitment to it. The UK has also called for a customs exemption for small- and medium-sized businesses, which are primarily engaged in local cross-border economic activity, and the use of technological solutions and mutual recognition schemes to ensure that any other customs checks can take place remotely.

What the EU wants: The EU has not yet published a position paper on the Irish border, despite identifying it as one of three key areas it wants to resolve at this stage in the negotiations, but in its earlier negotiating directives, it also committed to supporting peace and stability on the island of Ireland and respecting the Good Friday Agreement in full. However, its commitments to avoiding a hard border and respecting bilateral agreements like the Common Travel Area come with caveats about “respecting the integrity of the Union legal order” and being “in conformity with EU law.”

What’s the solution? Both sides agree on the top-level priorities of preserving peace and stability. The question is how far they are willing to go to support it. Preserving a fully open and invisible border inevitably means that border will be slightly “leaky” with regards to people and goods. The UK has made clear that this is something it is prepared to accept for the sake of peace and stability, so the solution essentially comes down to what extent the EU is willing to be flexible over the integrity of its Customs Union and legal order at its only future land border with the UK.

What’s the catch? The catch here is pretty hard to miss – coming up with any solution to how goods can move across a border is obviously not going to be possible until both sides have discussed what the customs arrangements for moving those goods will be. However, the EU has ruled out any discussion of trade and customs at this stage due to its rigid phasing of the negotiations. This internal contradiction may explain why they have yet to publish a position paper on the issue. Ultimately, the EU’s position may be that joint agreement on high-level principles satisfies its criteria for “sufficient progress” in this area of the negotiations, but the fact remains that no long-term solution will be possible until the EU engages on technical customs issues.

Future customs arrangements

Position Papers: UK | EU (none)

What the UK wants: The UK’s ‘future partnership paper’ outlines two possible models of a future relationship, although the UK’s intention at this stage appears to be primarily to spark further discussion about the relative merits of each scenario, rather than set out a definite position. One would involve maximising the use of technology and remote procedures to yield highly streamlined customs arrangements requiring a minimum of physical infrastructure and checks at borders themselves. The second essentially proposes the adoption of two parallel customs systems in the UK, one aligned with the EU and one with the rest of the world, although this has been dismissed by many critics as being too complicated to implement.

What the EU wants: The EU’s position is that any discussion of trade and customs at this stage is incompatible with its phased structure of the negotiations.

What’s the solution? While the future customs arrangements will inevitably depend heavily on what future trading arrangements the UK and EU agree, the technological advances involved in the “streamlined” model would bring benefits to both sides’ customs procedures, regardless of whether tariffs of some degree are imposed after Brexit. Streamlined customs procedures are an easy win-win for both sides – the talks would need to break down to a significant degree for there not to be enough goodwill on both sides to implement them at some stage.

What’s the catch? As covered above, the obvious catch is that the Irish border issues cannot be resolved until the EU talks customs, although this has now led to accusations from the EU side that the UK is trying to use the Irish border issue to force them to talk about trade earlier than they want to. In this case, however, it’s hard to argue that it’s not just common sense.

Legal enforcement and dispute resolution/Governance

Position Papers: UK (paper), UK (technical note)EU

What the UK wants: A clear UK red line throughout the negotiations has been that Brexit means the end of the European Court of Justice’s jurisdiction over the UK. The UK maintains that this would be an unprecedented situation in modern international relations, and instead outlines a range of different legal mechanisms which the EU uses to enforce other international agreements, such as the arbitration panels which feature in the CETA trade deal with Canada, which it envisages as forming the basis of post-Brexit enforcement and dispute resolution mechanisms.

What the EU wants: The EU has so far stuck to its guns on its demands that the ECJ keeps the direct ability to enforce the withdrawal agreement in the UK, particularly over citizens’ rights, although there have been hints that its position may be softening. Another issue is that the ECJ itself has a track record of vetoing the creation of new EU legal bodies which impinge on its position as the sole body allowed to adjudicate on the interpretation of EU law, which could pose a legal headache out of the Commission’s direct control.

What’s the solution? As with many of the UK’s other ‘future partnership papers’ published at this time, this paper is intended more to define the boundaries of what the UK considers to be an acceptable negotiating space, rather than offering a finished proposal. The UK’s preference appears to be for a range of different mechanisms which could be invoked on an ad hoc rather than a standing court, but the EU’s preference may be for something more directly under its control, such as the EFTA Court. The stakes are high – if both sides can’t agree a compromise here, it has the potential to scupper all the rest of the negotiations.

What’s the catch?  There are catches on both sides here. One problem for the Commission itself is that the negotiating directives handed down to it by the European Council of member state leaders may not allow it to compromise on an issue as significant as this without approval from the Council first. In practice, this means waiting until after Angela Merkel has secured her likely re-election in the German federal elections on 24 September. The catch for the UK lies in the precise detail of the agreement. If the UK accepts a model too similar to the EFTA Court, in practice this could lead to the UK still effectively being overruled by the ECJ when it tries to sign future trade deals or reform EU law, depending on how any post-Brexit agreements are worded.

Ongoing judicial and administrative procedures

Position Papers: UKEU

What the UK wants: The UK is happy for legal cases already in progress at the Court of Justice of the European Union (of which the ECJ is one part) to continue after the day of withdrawal, but does not want new cases to be able to be brought to the CJEU after Brexit has happened, even if the facts of the case took place before withdrawal.

What the EU wants: The EU wants the CJEU to retain the right indefinitely to adjudicate over any legal case where the facts of the case took place before withdrawal, even if the case itself is not brought until years after Brexit.

What’s the solution? The obvious compromise would be for both sides to agree to meet somewhere in the middle, for instance with a statue of limitations setting a cut-off date of, say, five years after Brexit, after which no new cases would be able to be brought in front of the CJEU, giving businesses and individuals a reasonable window of time to ensure that any issues which arose prior to Brexit have been settled, without maintaining CJEU jurisdiction over the UK for an excessive length of time.

What’s the catch? The EU has seemingly gotten itself into a mindset where it is convinced that the UK is liable to become some sort of rogue state overnight with no regard for the rule of law, unless the CJEU maintains a degree of direct authority in the UK. Any compromise on legal issues will be hard to achieve until the EU is able to temper its overly paranoid attitude in this area.

Ongoing judicial cooperation

Position Papers: UK (civil)EU (civil)EU (criminal)

What the UK wants: The UK’s preferred option is to essentially keep the status quo by opting into existing EU regulations which govern the choice of jurisdiction in civil and commercial matters, for instance whether a dispute between a British and a German business should be heard in a British or German court. Otherwise, the UK would attempt to fall back on the Lugano Convention, which governs the EFTA states, or the Hague Conventions which apply more generally in international law.

What the EU wants: The EU’s civil and commercial paper is focused on resolving ongoing cases which are already in progress, rather than looking ahead to the future relationship, while the criminal cooperation paper also calls for the “orderly completion” of ongoing cases involving EU instruments such as the European Arrest Warrant. It also calls for both sides to be able to keep all confidential information exchanged by law enforcement agencies prior to Brexit.

What’s the solution? Both sides appear to be thinking in similar ways on these issues, with a large degree of overlap in the specific regulations highlighted in both sides’ papers, although the UK has yet to publish a paper on ongoing cooperation in criminal matters. The EU may well be receptive to what is on the table given that the UK is essentially offering to commit to the EU’s existing protocols.

What’s the catch? The difference is over the scope – the UK is looking ahead to the future relationship while the EU is committed to resolving ‘separation issues’ first. However, given the UK’s desire to continue existing EU processes, it will probably deem the EU’s specific separation demands in this area to be largely acceptable.

Nuclear materials and safeguards (Euratom)

Position Papers: UK (paper), UK (technical note 1), UK (technical note 2)EU

What the UK wants: The UK is seeking continued close cooperation with the EU on nuclear issues along with a “smooth transition” to a new UK safeguards regime with “no interruption in safeguards arrangements”. The UK wants to prioritise minimising barriers to civil nuclear trade and ensuring continued mobility of skilled nuclear workers and researchers, along with continued collaboration on nuclear research and development, as well as resolving issues around ownership of existing nuclear materials and waste.

What the EU wants: The EU paper is more limited in scope, focusing mainly on issues of safeguarding arrangements and ownership of nuclear materials and waste. The EU also wants the UK to pay for the transfer of any safeguarding property in the UK as part of the financial settlement.

What’s the solution? Despite claims that it was a politically-motivated UK decision due to Euratom’s relationship with the ECJ, both the UK Government and the European Commission maintain their official position that withdrawing from Euratom is a legally required part of withdrawing from the EU, due to the way that Euratom is written into the EU treaties. Nonetheless, Euratom already cooperates closely with many other third countries to varying degrees, including Switzerland, the USA and Canada, meaning that continued close cooperation with the UK should be a feasible prospect.

What’s the catch? The UK’s heavy involvement in European civil nuclear activities mean that there is strong mutual benefit to both sides agreeing a deal. However, with a number of EU states shunning nuclear power altogether, including Germany, it may be lower down the EU’s list of priorities than the UK’s, although France’s heavy reliance on nuclear power should offset Germany’s indifference.

Goods already on the market

Position Papers: UK | EU

What the UK wants: The UK wants all goods already legally placed on the market at the time of withdrawal to continue to be able to be legally sold, as well as goods which have already undergone compliance procedures, even if they have not yet reached the market. The UK also wants services supplied along with those goods, such as maintenance and repair services, to continue to be supplied without added restrictions.

What the EU wants: The EU also wants goods already on the market to continue to be legally sold without added restrictions, although their paper does not address compliance-checked goods yet to go on sale or services accompanying goods, as proposed by the UK.

What’s the solution? Both sides agree on the general principle here, as well as on the need for some form of agreement and mutual exchange to ensure those goods remain compliant with pre-existing regulations.

What’s the catch? There may be disagreement over the scope, as outlined above, although it is possible that the EU had simply not got round to considering the additional cases outlined by the UK at the time of publishing its own position paper.

Confidentiality/Functioning of EU institutions in the UK

Position Papers: UK (confidentiality), UK (privileges and immunities), UK (technical note)EU

What’s the solution? This is largely diplomatic housekeeping from both sides, tying up loose ends over the continued confidentiality of official diplomatic documents and the functioning of various EU bodies physically located in the UK, as well as the status of officials on both sides. None of the issues here ought be particularly contentious here, at least in theory.

What’s the catch? However, the UK’s technical note published today challenges the EU to justify and clarify the scope of privileges and immunities it expects EU officials and others to continue to enjoy in the UK after Brexit, in light of what role the EU expects them to have in the UK after Brexit. This could potentially take the EU into ‘future relationship’ territory it is unwilling to cover.

Data Protection

Position Papers: UK | EU (none)

What the UK wants: The UK wants to preserve as close to the status quo as possible on data protection and data transfers between the UK and the EU. The EU’s new General Data Protection Regulation (GDPR) comes into force in May next year and will be implemented by the UK before its departure. The UK is seeking an enhanced version of the EU’s existing ‘adequacy model’ which it currently uses to grant approval to third countries for EU data sharing, including Switzerland and New Zealand.

What the EU wants: The EU has not yet indicated its position on data protection.

What’s the solution? This largely falls into the category of ‘future relationship’, so any significant discussion is likely to be resisted by the EU at this stage, although there are conceivably ‘separation issues’ which could arise, for instance over data which has already been shared between UK and EU companies.

What’s the catch? The decision to grant data protection ‘adequacy’ to third countries is a decision of the Commission which can be unilaterally withdrawn, while securing approval has often proved to be a lengthy and difficult process, with even Japan failing to receive approval in the past. The UK will want a more permanent bilateral agreement than this to ensure ongoing certainty.