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Britain and E.U. Clear Way for Brexit Talks to Proceed Brexit Talks Headed for a Second, More Difficult Phase
(about 5 hours later)
LONDON — Britain and the European Union on Friday cleared the way to start a crucial new round of talks on British withdrawal from the bloc, announcing a breakthrough after months of deadlock, an internal political standoff in London and a dispute over the future of the Irish border. BRUSSELS — Now comes the hard part.
The deal would avoid a “hard” border in Ireland; set Britain’s divorce bill at between $47 billion and $52 billion, roughly double its original offer; and establish judicial protocols to protect the rights of the 3 million European citizens in Britain and the million British citizens in the European Union. Under severe constraints of time and internal politics, British Prime Minister Theresa May on Friday hammered out an initial agreement with the European Union to move British talks on exiting the bloc to the next, more serious phase.
Prime Minister Theresa May of Britain made a predawn flight to Brussels to make the announcement with Jean-Claude Juncker, the European Commission president, after she wrapped up tough negotiations with the small Northern Irish party on which her government depends. A senior European official, Martin Selmayr, even posted on Twitter a picture of white smoke billowing from a chimney, as if a new Pope had been elected. Yet, this initial deal was no miracle but a hard slog, with harder battles ahead.
The accord still needs the approval of European Union leaders, but Mrs. May apparently convinced negotiators that enough progress had been made in talks on Britain’s withdrawal from the bloc to move on to a new phase of difficult negotiations early next year. The pact resolved a trio of issues that had taken the better part of nine months to negotiate. It avoided a “hard” border in Ireland; set the mechanism to calculate Britain’s “divorce bill,” estimated at $47 billion to $52 billion, roughly double Mrs. May’s original offer; and established judicial protocols to protect the rights of the three million European citizens in Britain and the million British citizens in the European Union.
The agreement, a rare step forward in the nearly nine months since Britain formally announced that it would leave the bloc, should allow the start of negotiations on future trade relations with the bloc, as well as on a period of transition for the time immediately after Britain’s scheduled departure in March 2019, during which a full trade agreement can ideally be worked out. Mrs. May clinched the deal with a unilateral promise — details to be negotiated later — that Britain would not reimpose physical border controls between Northern Ireland and the Republic of Ireland, a member of the European Union, even if Britain ultimately fails to strike a trade deal with the bloc.
Mrs. May came back to Brussels after several days of negotiations in London with the Democratic Unionist Party, led by Arlene Foster, over language to rule out a so-called hard border between Northern Ireland, a part of the United Kingdom, and the Republic of Ireland, part of the European Union. Mrs. May relies on the 10 votes that Ms. Foster’s party has in Parliament. The pact put a patina of success on an effort by the government that was characterized by internal quarreling and an occasionally humiliating and ultimately hopeless effort to bend the European Union to its will. It was punctuated by a disastrous election that left a weakened Mrs. May with a minority government and numerous pretenders to her throne circling like sharks in a tank.
Mrs. May had to break off talks earlier in the week when Ms. Foster suddenly objected to a draft British-European Union statement on the border, while the government in Dublin was demanding pledges that there would be no re-imposition of controls on the Irish frontier after Britain leaves the European Union. Difficult as that was, most analysts agree that the second stage of negotiations will be far harder. In that phase, Britain and the European Union will begin to tangle with the finer details of the divorce settlement and the structure, at least, of the future relationship that Britain, as a nonmember, will have with the European Union.
But a deal was worked out overnight, and Mr. Juncker said the commission was satisfied that “sufficient progress” has been made. For that to happen, though, the badly divided cabinet members will have to stop bickering and begin to work out agreements among themselves about the future relationship. At the same time they will need to grapple at the negotiating table with a dominant European Union that is determined to make an example of Britain to any other member states thinking of cutting ties.
While negotiators managed to finesse the Irish border issue to reach this agreement, the matter seemed far from settled. It will now go to trade negotiators, and Prime Minister Leo Varadkar of Ireland noted approvingly that there was now a “backstop arrangement,” in case they do not resolve the issue. “This deal has only been done through a mixture of fudge and playing for time,” said Peter Ricketts, a former senior British diplomat with long European experience and a member of the House of Lords.
Under that deliberately ambiguous formulation, Northern Ireland and perhaps all of the United Kingdom would maintain “full alignment” with European rules as needed to “support North-South cooperation, the all-island economy and the protection of the 1998 Agreement” that ended the Troubles in the North. On the border, he said, “no one has solved the underlying problem of how to have a border if there is no deal with the European Union,” which will be the subject of further talks.
The haziness surrounding the arrangement was cause for concern for Ms. Foster and the Democratic Unionist Party, who are determined above all to avoid a situation in which the rules governing Northern Ireland diverge from those for the rest of the United Kingdom. That direction, they fear, would ultimately lead to reunification with the South. Even then, he added: “This was the easy part, but now the British cabinet has to confront some real choices. Now, we get to the really divisive part about what kind of future trading relationship we want with Brussels.”
So, while welcoming the idea there would be no “red line,” or border, running through the Irish Sea, Ms. Foster said in a statement, “We cautioned the prime minister about proceeding with this agreement in its present form, given the issues which still need to be resolved and the views expressed to us by many of her own party colleagues.” That debate boils down to two opposing sides: those who want the closest possible future relationship with the European Union for the sake of trade and business ties, and those who want a sharper split, so that Britain can freely negotiate trade deals with countries like the United States and Australia without being hampered by allegiance to all of the European Union’s regulations and standards.
But that snag, should it develop at all, lies in the future, while Friday was portrayed as a day for celebration, however muted by recognition of the hard road ahead. The problem for the British government is that it is no closer to deciding the matter than it was when Mrs. May invoked Article 50 in March, initiating the process of withdrawal, or Brexit.
“This is a difficult negotiation but we have now made a first breakthrough,” Mr. Juncker said in a statement. “I am satisfied with the fair deal we have reached with the United Kingdom. If the 27 member states agree with our assessment, the European Commission and our chief negotiator Michel Barnier stand ready to begin work on the second phase of the negotiations immediately.” Mrs. May has declared only that Britain would not seek to remain a member of the single market or the customs union, while also saying that she wants the best possible trading relationship with Europe, which is, after all, where most of Britain’s trade goes.
The heads of the member states will meet next week and are expected to confirm the deal next Friday. Simon Fraser, a former senior British diplomat who runs a consulting company that focuses on Brexit, said that “Britain wants to move quickly to phase two, but in fact it does not have a policy for phase two.”
“This government will continue to govern in the interests of the whole community in Northern Ireland and uphold the agreements that have underpinned the huge progress that has been made over the past two decades,” Mrs. May said in a statement on the British government’s website. Brexiters argue that Britain is so important to Europe that London should be given a special or “bespoke” deal, given the 44 years of bloc membership. But the European Union is legalistic, bureaucratic and runs by precedent. And there are only a limited number of templates for a future relationship, Brussels officials consistently say.
With the 2019 deadline fast approaching, Mrs. May has been under growing pressure to make progress. Opponents have criticized the way she has conducted the negotiations, and British businesses have been increasingly anxious to know what rules will apply after British withdrawal, known as Brexit. Britain could work out a deal, much like Norway has, where it remains a member in everything but voting power and name — trading freely but subject to freedom of movement and labor for European Union citizens and continuing to pay into the union’s budget. That seems unacceptable to Britain, which voted to leave in large part to stop freedom of movement.
Mrs. May, who lost her parliamentary majority in elections earlier this year, has been assailed by numerous problems at home, where her cabinet is deeply divided over Brexit policy and two ministers were recently forced to quit over separate issues. Or Britain, as a third country, could negotiate a free trade deal with the European Union, as Canada and Japan have done. But those deals have taken many years to finish and leave out services — in banking, investment, advertising — that make up 80 percent of Britain’s economy.
Although supporters of Brexit once insisted that Britain held all the cards in the withdrawal negotiations, it has been Mrs. May who has made nearly all the concessions. Nevertheless, the hard-line Brexit supporters in Mrs. May’s cabinet, who have at times said Britain did not owe the European Union anything and that the government should walk away rather than accept a bad deal, strongly supported the agreement. That is one reason Mrs. May, and British businesses, want a transition period of at least two years after Britain formally leaves at the end of March 2019. During that time its relations with Brussels would remain roughly the same, allowing breathing room to negotiate a trade deal and avoid a chaotic “cliff-edge” exit.
The foreign secretary, Boris Johnson, who had said the union could “go whistle” if it thought it would get a hefty payment, congratulated Mrs. May on “her determination in getting today’s deal.” The environment secretary, Michael Gove, said she had “confounded her critics.” Businesses have been warning that they need some clarity soon; otherwise executives would be forced to make decisions on future investments that assumed the worst. There was a touch of optimism and relief on Friday that talks would move ahead and that a transition period would provide more breathing space.
The lone dissenter, it seemed, was Nigel Farage, the former leader of the U.K. Independence Party, who said on Twitter that the deal was “good news for Mrs May as we can now move on to the next stage of humiliation.” “Significant progress has clearly been made, particularly on citizens’ rights, but let’s not kid ourselves. Problems remain,” said Anand Menon, director of The U.K. in a Changing Europe.
Assuming that European Union leaders agree at their summit meeting in Brussels to proceed, detailed trade negotiations will begin soon, probably early in the new year. There will also be talks on a transition period, which Mrs. May wants to run for two years, during which very little will change as business gets ready for a new set of rules. However the specific issues play out, Mr. Fraser sees 2018 as extremely complicated, a rush to finish a withdrawal deal that fills in all the blanks in the current agreement and settles a host of other questions, like air travel and other logistics. It will have to be finished by October or November, he said, to allow time for it to be ratified by the member states.
Time is short. In March, Mrs. May triggered Article 50 of the Treaty of Lisbon, which lays down a two-year timetable for a country leaving the European Union to forge an exit agreement. That can only be extended with the agreement of all member nations. But that deal will also be dependent on negotiating a transition after March 2019, to which all member states must agree, and is likely to be one of the first orders of business early next year. Such a transition would take some of the heat off the negotiators trying to avoid a chaotic exit and would reassure businesses, airlines and tourists, too. But it would also mean Britain continuing to pay into the E.U. budget, which could anger Brexiters.
A trade and transition agreement will have to be concluded well before March 2019 — probably by the fall of 2018 — in order to provide time for it to be ratified by member nations and by the European Parliament. Most trade experts believe that it will only be possible to agree on an outline trade deal next year, and that negotiations will be extended into the transition period. Then there is the task of defining the “outlines” of a future relationship, which the British call a trade deal. But for Brussels, there can be no trade deal until Britain leaves the bloc. And few believe it can be negotiated in two years. The Canada deal, which did not include services and mostly stuck to agriculture and goods, took seven years with good will on both sides.
The tight time span is not Mrs. May’s only problem. Her cabinet has yet to agree on its ultimate objectives for Brexit, particularly the extent to which Britain would continue to adopt the standards and rules of the European Union, its neighbor and biggest trading partner. At best, Mr. Fraser and Mr. Ricketts believe, there will be an agreement in two more years on the “headline” understandings of a trade deal, which will have to be filled out painstakingly. And that can be done only after Britain decides how close it wants to remain to the European Union and its laws and standards.
“While being satisfied with this agreement, which is obviously the personal success of Prime Minister Theresa May, let us remember that the most difficult challenge is still ahead,” said Donald Tusk, the president of the European Council. “We all know that breaking up is hard, but breaking up and building a new relation is much harder.” Then there will be negotiations on Britain’s future security relationship with the bloc, which is one of Britain’s strengths. Britain, as a critical member of NATO, a nuclear power and a member of the Security Council, has vowed to preserve and even enhance its defense ties and commitments to Europe. Some Brexiters want to use that as a bargaining chip for a trade deal, but that idea is controversial and is resented in Brussels.
Mrs. May’s colleagues are split between those who want to remain close to the bloc, to minimize the disruption to trade, and hard-line supporters of Brexit, like the foreign secretary, Boris Johnson. He wants Britain to be able to adopt its own rules and regulations and to be free to strike new free trade deals with non-European nations around the globe. And then Britain has to figure out how to handle or renegotiate all the trade deals that the European Union currently has with third countries, of which Britain is now a part but will not be in the future. Can they simply be copied or redone? Countries that gave trading concessions to the huge European Union market of more than 500 million people may not be so generous in their dealings with Britain alone, a country of some 65 million people that is highly dependent on its service industries.
In a speech in September in Florence, Mrs. May said that while Britain would leave the customs union and single market, she wanted a much deeper free trade agreement than the one the European Union negotiated with Canada. Officials with the bloc insist that Britain cannot be outside the bloc’s main economic structures and still receive the same type of market access as those on the inside. “The real negotiations on the economics will be in the period of the transitional deal,” Mr. Fraser said. “But this British government may never get there,” citing the political weakness of Mrs. May and the fights to come among “the remainers, the Brexiters and the hard Brexiters in the cabinet,” he said.
“All those divisions will be exposed,” Mr. Fraser said. There has been a lot of noise so far. “It’s been debated, as opposed to being negotiated,” he said. “2018 is going to be a very difficult year.”