News from Brussels
"While the EU and the UK is moving into the 'second phase" of negotiating a transitional agreement, it is clear that apart from high level policy agreements few details have been clarified and nothing has been written down. This is reflected in the very first point of the EU Council conclusions.
"The European Council welcomes the progress achieved during the first phase of negotiations as reflected in the Communication from the Commission and the Joint Report and decides that it is sufficient to move to the second phase related to transition and the framework for the future relationship. It calls on the Union negotiator and the United Kingdom to complete the work on all withdrawal issues, including those not yet addressed in the first phase, in conformity with the European Council guidelines of 29 April 2017, to consolidate the results obtained, and to start drafting the relevant parts of the Withdrawal Agreement."
The time has now come to set up working groups and start drafting the text of the withdrawal agreement all the while moving high level discussions to the transitional phase. The transitional phase is when the UK is no longer an EU member state but has no trade agreement with it either. In order to avoid a complete breakdown of trade, a transitional phase has been agreed upon but no one knows how long it will be. Parties are currently talking two years but the reality may be very different. The UK would like to have a transitional phase during which the same rules would apply to them as if it would be a full member (of course without being allowed to vote on anything) and based on today`s EU statement may be fine for the EU as well but this will also come with a price tag in addition to the 60 some billion euros that was already discussed. It may also mean that in cases where EU and UK interests are not aligned, and this can be an endless list from taxation through trade agreements to defense or energy policy, the UK will just have to sign up to whatever the EU decides without having a say. Therefore areas where contentious issues may arise would need to be clarified. It will be important to see whether the transitional agreement will carve out certain sectors where full harmonization will continue to apply and others where it won't.
Drafting a withdrawal agreement and at the same time negotiating and drafting a transitional agreement will be challenging for both parties but we will see where it takes us."
by Eszter Kantor, Kantor and Associates, Brussels.