LEADING THE WAY OUT OF THE EU

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Tuesday 28 March

On the eve of the beginning of Britain’s official withdrawal from the EU Leave.EU looks into the infamous Article 50

Keen observers of Article 50 will be all too aware of the stumbling block in the form of the EU’s £52bn demand from the UK to cover its many liabilities – there is no pension fund for those legions of overpaid bureaucrats for instance. It is still not clear what the intention is, whether to intimidate the UK, or to simply buy time, as this blog has suggested in the past.

Another dispute at the heart of this one centres on how the negotiations should proceed. A treaty of the EU’s importance would lay out precisely how a signatory can pull out, but the Treaty on European Union is not rational, and neither is Article 50. Credit goes to the former UK ambassador to Brussels, Lord Kerr who drafted it.

The only firm contents of Article 50 are the timeline of two years and the criteria for an agreement on the terms of the replacement arrangement among the other 27 member states along with the European Parliament. Oh! and how to rejoin one day.

Article 50 is so limited it does not even indicate whether negotiations elapse along with membership after the two years, nor does it define the process for leaving. It is little more than a couple of paragraphs to the effect of, “this is the article in the Lisbon treaty that says you can leave this sinking ship without forcing your way out of the treaties.” Or, in Lord Kerr’s words:

“Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements”.

The EU’s own “constitutional requirements” are barely drawn out. Article 50 is at its most specific when it refers to a paragraph in a separate article on negotiating procedures for foreign policy decisions. 218(3) is even shorter than Article 50, all it explains is that the EU’s mega-bureaucracy, the European Commission shall submit recommendations for the procedure to the institution representing the Member States – minus the UK – the European Council, which “authorizes” the negotiations and nominates the “Union negotiator”, that man, we know already will be Michel Barnier, working on behalf of the Commission.

Article 50 is therefore whatever the other EU States say it is once the departing member pulls the trigger, leaving the question of whether it is simply a divorce procedure, or a negotiation towards a replacement trade deal as well. This is very much open to interpretation:

“In the light of the guidelines provided by the European Council, the Union shall negotiate and conclude an agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union”.

Clearly, by the letter of text, the future relationship is a lower priority than re-apportioning liabilities, resolving the Northern Ireland question and coming to an agreement on EU/UK migrants, namely the divorce.

The text does not make it clear whether these two separate negotiations can be conducted simultaneously or sequentially, with the separation talks coming first as Brussels and Berlin have stated is their preference. What is certain is the EU Council’s advantage in being bestowed with the role of setting the agenda and therefore the decision of whether to go one after the other or both at the same time. The pathway it chooses is one of the big discussions overshadowing the whole process.

In the run-up to the Article 50 trigger date, both Theresa May and her opposite numbers in Europe have been engaging in brinksmanship with the effect of getting many commentators into a tremendous flap. May claims no deal is better than a bad deal – true although it is unlikely she believes as such – while the EU has been demanding the aformentioned £52 billion. The EU is also threatening to devote the first stage of discussions exclusively to the divorce, a tactic designed to run the clock down on the precious replacement trade deal, putting the UK in an inconvenient position.

Another of Article’s 50s many grey areas is whether a departing Member State can untrigger the decision to leave. Downing Street has ruled the possibility out, which only serves to confirm the suspicion that there will be no certainty over Brexit until the UK has left.

Brussels is playing a risky game. If it is banking on a dive in the UK economy facilitating a swing among voters towards remain, the EU is likely to be sorely disappointed. There is also the sticking point of ratification.

Technically, under Article 50 the UK could agree on the terms of a new trade deal without the full agreement of all the EU27 so long as a majority of members of the European Parliament were on board. The objections of seven Member States could be pushed aside so long as they did not constitute more than 35% of the EU’s population.

But for that outcome to materialise, the replacement trade deal would have to skirt around so many trade powers it would eventually constitute the dreaded “bad deal”. Enter Article 218, paragraph three of which is referred in Article 50, but no more than that.  Article 218 lays down instructions for an international trading agreement between the EU and a third party. Ratification requires the unanimous approval of the Member States, which is contingent on the consent of national and regional parliaments, a much more challenging negotiation.

The terms of the replacement trading arrangement therefore looks set to either be packaged into one comprehensive treaty or divided between a deal negotiated under the auspices of Article 50 and a separate commercial treaty that fills in the gaps Article 50 alone could not cover. Time will tell, but the EU’s strategy should at least become clearer when it releases the negotiating agenda in late April.