Posted: 22/3/2017



European Union leaders will give chief Brexit negotiator Michel Barnier instructions that will preclude negotiation of a future trade deal until a financial settlement with the U.K. and an agreement on citizens’ rights have been secured, EU officials told POLITICO.

Only if a satisfactory outcome is reached on financial terms, citizens rights’ and other key points, such as border issues with Ireland, will the EU27 expand his mandate to include a future trade or other partnership deal, the officials insisted.

By their definition of Barnier’s mandate, EU leaders aim to use the legal requirements under Article 50 to force the U.K. to settle the most important “divorce” terms first.

“As in human relations, to get to the terms of a new relationship you have to go through an orderly divorce,” a senior EU official said. “First, it’s the money and the kids, the car and the flat.”

The U.K. government has said it also wants a swift agreement on citizens’ rights and has acknowledged that the cost of Brexit will dominate early discussions. But London has also consistently maintained that “nothing is agreed until everything is agreed” including on future trading relations.

A hard opening position from Brussels that gives Barnier a narrow mandate may in part be intended to bolster the EU27’s negotiating leverage ahead of the opening of Brexit divorce talks. Other senior EU officials said that political reality will likely force them to negotiate all the aspects of a British departure altogether, including trade. But they sound united in wanting to begin the talks by exclusively focusing on the bill and citizen rights.

Forget Article 50 — it’s all about Article 218

U.K. Prime Minister Theresa May has said she will trigger Article 50 on March 29 and European Council President Donald Tusk said Tuesday that he would call a summit of EU leaders for April 29 to formally approve the negotiating directives to Barnier. The actual talks are expected to begin shortly after that.

While the directives are still being finalized, senior EU officials told POLITICO that the primary focus on divorce terms has long had the unanimous support of EU leaders.

While there would be a general conversation about how the U.K. envisions the future relationship during the initial talks, officials said there was no appetite in Brussels for detailed discussions until the more immediate issues are resolved — including a deal on the U.K.’s financial obligations, which some estimate at €60 billion, and agreement on the rights of the 3 million EU citizens living in the U.K. and the 2.5 million Britons living in EU countries.

Article 50 clearly requires that negotiators “take account of the framework” of a future relationship with the U.K. But EU officials and law experts said that the treaties also effectively block Barnier from negotiating such a relationship — whether that is a free trade deal, some kind of association agreement, or something else.

To do so, Barnier must receive new negotiating directives under Article 218, which governs how accords are reached with “third countries or international organizations.”

“You cannot conclude an agreement on trade with the U.K. on the basis of Article 50 because the aim, the content, of the procedures are different,” said Jean-Claude Piris, who served as director-general of the legal service of Council of the European Union from 1988 to 2010, and worked as a legal adviser during negotiations on the Maastricht, Amsterdam, Nice and Lisbon treaties.

If the negotiators overstep their legal authority, Piris warned, the European Court of Justice could invalidate any deal they reach.

“So the directives of the Council to the Commission … will not go on trade,” he said. “And they could be canceled by the court if it did.”

Piris added: “You need to act according to the legal basis given for each procedure.”

While Article 50 deals very specifically with the departure of a country from the EU, Article 218 sets out the procedures by which the EU can make all sorts of agreements including trade deals, strategic-political accords, or environmental agreements. Indeed, when it comes to negotiating a withdrawal agreement for the U.K., Article 50 mostly kicks the action to Article 218 Section 3, which describes how the EU should go about authorizing talks and appointing a chief negotiator.

But the rules under Article 50 and Article 218 are quire different. For instance, while a withdrawal agreement between the U.K. and the EU requires the support of only a qualified majority of EU countries, other agreements often require unanimity. Article 50 has a two-year deadline, while negotiations under Article 218 can drag on for years.

There are other key differences. For instance, Article 50 gives the European Parliament a veto over any withdrawal agreement; Article 218, by contrast, requires Parliament approval for some agreements but only consultation with the Parliament for others.

For this reason, legal experts have concluded the EU could not broker a future relationship with the U.K. under Article 50 even if it wanted to.

Uncharted waters

There are signs that the U.K. has already recognized the legal obstacles to negotiating a future trade agreement, which is why officials have quietly been exploring a back-up plan to use World Trade Organization rules in the absence of a new deal with the EU.

Because no country has ever left the EU, there is little precedent for what lies ahead. But the parameters are starting to come into focus.

Under Article 50, the EU and the U.K. have two years to reach an agreement that involves a mountain of practical details such as extricating the U.K. from the EU budget, relocating EU agencies headquartered in the U.K. and removing British members of the European Parliament, the European Court of Justice and other key institutions.