Brexit Briefing No.27 – Detente on Defence and beyond?

We are less than a month away from the original deadline for the UK and the EU to seal the agreement on the transition period which will govern relations immediately after the UK leaves the EU in March 2019 & before the future trade agreement comes into force.

This was the timeline that was set out in the phase one withdrawal agreement reached in sunnier times in December. However it is already beginning to look ambitious. The UK was unable to begin talks with the EU until the remaining 27 member states had agreed their negotiating stance amongst themselves, which took until the end of January.

Since then talks have not exactly gone smoothly. Michel Barnier, the EU’s lead negotiator has threatened to cut UK access to the single market during transition if the UK diverges from EU rules, and stated any kind of transition period is not a given at all, raising fears of a so-called cliff-edge no deal Brexit on the 29th March next year. The Commission has been distributing information to many business sectors warning them to prepare for just such a scenario. Meanwhile the UK has responded to Mr Barnier and the Commission by threatening to withhold its promised payments to the EU budget in the event of no deal. Perhaps most troubling of all there is still no clear path to a solution on the Irish border, even as Belfast remains in political deadlock and Northern Ireland inches closer to its third election in two years, the last election having failed to resolve the political crisis in Stormont. The EU27 responded to the UK/Commission spat by reining in the wording of Mr Barnier’s ‘punishment clause’, removing its worst excesses but not removing the possibility of access being cut.

Stormont

All of this may make a deal on transition sound impossible, the timeline is certainly ambitious, but there are signs both in public and behind the scenes that the two sides are keen to avoid the middle of next month turning into the Ides of March.

Both are keen to move onto the much more vital future relationship negotiations, the longer the transition talks continue, the less time there will be to agree the new partnership before the transition period’s suggested end on the 31st December 2020. That end date is already beginning to look ambitious itself, given the complexities of disentangling the UK-EU relationship, which will be nearly 50 years old by January 2021.

A UK paper this week suggested that the end date of the transition period could be flexible and could go beyond the end of 2020 if necessary.

After the low point of 10 days ago the EU and the UK are both hinting at a desire to compromise on transition and avoid slowing the whole process down unnecessarily. Behind the scenes on both sides a lot of work is going on, often unnoticed, which will move the negotiations forward significantly.

The EU27 clipping the Commission’s wings on transition clauses is one such smoke signal. The UK has sent up another one by outlining some concessions in other areas over the weekend, and by launching a behind the scenes lobbying blitz outlining UK compromises to national governments.

Theresa May

The world’s biggest security conference in Munich has been the scene of many détentes over the years. Over the weekend Munich again played host to a rapprochement, this time between the UK and the EU. Prime Minister Theresa May proposed that the UK could accept a continued role in some justice and law enforcement areas, such as the European Arrest Warrant and even that the UK could accept some ECJ jurisdiction in that area post-Brexit. This was an important, if inevitable concession although the details of that will still need to be worked out.

The European Arrest Warrant (EAW) for example is an EU policy, there is no mechanism for a non EU country to be part of it, so if the UK wishes to retain the benefits of it post Brexit, it is most likely to need to negotiate a new EU-UK extradition treaty which replicates much of the existing EAW. This in itself would give the UK a chance to tighten up some of the problems with the EAW which has led to it being controversial in some quarters in the UK

The other justice and security areas which are valuable to the UK relate mainly to information sharing through the various EU criminal databases and access to Europol. In these areas precedent does exist for non EU countries to take part but they often have a much slower process for accessing information and they have no say over how the information is collated and managed. In addition these are all under ECJ jurisdiction.

However given the UK’s huge contribution to these databases and the strength of our intelligence services in general, it was always likely that some cooperation under the existing systems could be continued, it just requires some acceptance of the ECJ role in the system, which the UK now seems prepared to accept.

Europol

The Prime Minister was also at pains to restate the UK’s commitment to European security, saying they were one and the same. The EU Commission President Jean Claude Juncker responded in kind, acknowledging the UK’s critical role as a guarantor of defence and security on the continent. The UK and France remain the only significant defence spenders in Europe, whilst Germany’s military remains underfunded and vulnerable to misspending.

This is an area where the UK voice has significant clout within the EU and will continue to have outside it. So both sides are keen to explore areas of fruitful cooperation going forwards, and the UK hopes to repeat this model in other parts of the future EU/UK relationship, even if the EU is less keen on setting that precedent.

The Prime Minister’s speech in Munich was the second leg in the government’s Road to Brexit series of speeches, the third stage was delivered by Brexit Secretary David Davis on Tuesday in the heart of old Europe, Vienna. Mr Davis again signalled a need to compromise, allaying EU fears about a bonfire of regulations, recognising regulations and standards are increasingly global, and hinting at flexibility on cooperation models in a big bid for mutual recognition across a raft of sectors of the economy. Such widespread mutual recognition has never before been agreed between the EU and a third country, but the two sides start at the same point on regulation. The EU will require guarantees on UK regulatory divergence to maintain that mutual recognition going forwards, which probably limits the scope for the UK to radically change existing EU regulations. However this was never a realistic option given the global nature of standards today.

Behind the scenes government ministers are touring European capitals to outline the details in private of what the Cabinet is prepared to offer concessions to reassure the EU it will not diverge too much from EU regulatory standards, on product safety and the environment in particular (where Michael Gove has already outlined a high standard agenda) but also on state aid rules, where the Europeans are worried British governments may attempt to enhance the country's attractiveness with tempting offers of state support, currently banned under EU rules, to European companies.

So compromises have already been mooted, and more still will be needed to keep the negotiations on track, but as ever, whenever talks look close to collapse one side or both sides do enough to inch them forwards.