Brexit breakthrough

Posted in UK and EU legal framework

The President of the EU Commission, Jean-Claude Juncker, has confirmed that, in his opinion, the UK and the EU have made ‘sufficient progress’ in the Brexit negotiations to begin talks about the future trading relationship.

As noted previously, the EU had consistently maintained that talks on future trade could only commence once sufficient progress is made in relation to key aspects of the UK’s withdrawal. From the EU’s perspective, this comprises agreement relating to: the UK’s financial settlement on exiting the EU, the rights of EU citizens living in the UK and the border between Ireland and Northern Ireland. The President’s confirmation suggests that sufficient progress has now been achieved on all three fronts.

Recently the parties appeared to have reached substantial accord on the questions of the UK’s financial settlement and citizens’ rights. However, the issue of the Irish border had remained contentious. In particular, it was unclear how to marry the aspiration of maintaining a soft border between Northern Ireland and Ireland with the apparently contradictory intention that the UK will no longer be part of the Single Market or of the Customs Union post-Brexit. 

Nevertheless, it appears that the parties have managed to bridge the gap – at least to sufficient degree to enable the start of talks concerning future trade. Initial reports earlier in the week had suggested that the UK had agreed to “continued regulatory alignment” with the Single Market and Customs Union as regards Northern Ireland: this raised objections from the Democratic Unionist Party, on whose support in Parliament the UK Government relies. In particular, the DUP raised concerns that this meant that there could be regulatory divergence between Northern Ireland and the rest of the UK, which they oppose.

In a joint statement, the UK has now confirmed that it “remains committed to protecting North-South co-operation and to its guarantee of avoiding a hard border”. Moreover, it confirms that, in the absence of any other agreement between the EU and the UK, it will maintain “full alignment with those rules of the Internal Market and the Customs Union which, now or in the future, support North-South cooperation, the all-island economy and the protection of the 1998 [Good Friday] Agreement.”

What this means in practice is unclear, perhaps intentionally so. The choice of the word ‘alignment’ is presumably not intended to equate to remaining in the Single Market or the Customs Union. Earlier in the week, David Davis sought to reassure Parliament that ‘regulatory alignment’ did not mean the same as ‘harmonisation’. On the other hand, the use of the word ‘full’ in the final statement reduces the scope for ambiguity or for the argument that it requires no more that ensuring that rules do not actively work to contradict each other or that there is some minimum of consistency.

Legally, the joint statement is no more than an agreement to agree and ultimately, a considerable amount of further work will need to be done. Those things which are unclear, deliberately or otherwise, will need to be clarified. Nevertheless, some form of compromise was clearly required in order to break the deadlock in negotiations and if the above agreement holds and leads to progress on future transition and trade deals, that is something that will be warmly welcomed by business.

Brexit: planning for the future as negotiations continue

We have created this Brexit blog to provide up to date analysis and legal commentary as the new Brexit landscape evolves, addressing key questions and topics of interest to our clients across the different industry sectors in which they operate.

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