In just five pages, Donald Tusk, the president of the European Council, has delivered a forceful rebuff to Britain’s plans for post-Brexit ties with the EU.
The draft guideline he circulated on Wednesday, the first draft of a text the bloc’s leaders are expected to adopt at a summit this month, warn of “frictions” and "negative economic consequences” as a result of Britain’s choices.
The final text will guide EU negotiators as the two sides seek to agree a deal ahead of Britain’s scheduled March 2019 departure.
Here Alex Barker, Brussels bureau chief, analyses what the guidelines say - and the meaning behind the words.
Select the highlights to read the annotations.
In accordance with Article 3(1) of the Rules of Procedure of the European Council, delegations 1 will find attached the draft guidelines prepared by the President of the European Council, in close cooperation with the member of the European Council representing the Member State holding the six-monthly Presidency of the Council and with the President of the Commission.
1. [The European Council welcomes / notes the progress achieved in negotiations on an orderly withdrawal and transition, including on the consolidation of the text of the Withdrawal Agreement.] Why open with brackets? This just makes clear that negotiations on transition and divorce are ongoing, and the EU has yet to take a view on the level of progress achieved before the March 22/23 summit. Note there is no reference to transition in this language. Both sides acknowledge the full withdrawal agreement -- including transition -- can only be agreed at the end. But Britain wants concrete political assurances over a standstill transition. There are various ways to do it, butthis document does not engage with the options. The European Council recalls that negotiations can only progress as long as all commitments undertaken so far are respected in full, and calls for intensified efforts on the remaining withdrawal issues. The European Council reiterates that nothing is agreed until everything is agreed.
2. The European Council recalls and reconfirms its guidelines The guidelines are the EU’s version of the Brexit bible for negotiators. They frame the mandate for Michel Barnier, the EU’s chief negotiator. This is the third set. The first covered the broad principles for Brexit; the second elaborated on the EU’s approach to transition; the latest set offer a precise view of what model of future relations the EU envisages with Britain. of 29 April and 15 December 2017, which continue to apply in full and whose principles will have to be respected by the future relationship with the UK.
3. The European Council restates the Union's determination to have as close as possible “As close as possible” -- this echoes language used by Theresa May. But unlike the British prime minister, the EU offers no creative thinking on how that might be possible. The rest of the guidelines essentially explains the political limits of what if feasible. a partnership with the UK in the future. Such a partnership should cover trade and economic cooperation as well as other areas, in particular the fight against terrorism and international crime, as well as security, defence and foreign policy.
4. At the same time, the European Council has to take into account the repeatedly stated positions of the UK, which limit the depth of such a future partnership. Being outside the Customs Union and the Single Market will inevitably lead to frictions. Divergence in external tariffs and internal rules as well as absence of common institutions and a shared legal system, necessitates checks and controls to uphold the integrity of the EU Single Market as well as of the UK market. This unfortunately will have negative economic consequences. Here we see the big political message: Brexit has consequences. Donald Tusk, the European Council president, described it as the only free trade agreement ever done that reduces levels of access. Here the EU makes clear that its plans are based not on outcomes the UK want to achieve, but the redlines it put down. So that means it assumes Britain will be leaving the single market and customs union, ending the jurisdiction of EU courts, and reducing budget contributions. The implication of that is more trade friction of the kind Canada faces in its partnership with the EU.
5. Against this background, the European Council sets out the following guidelines with a view to the opening of negotiations on the overall understanding of the framework for the future relationship, that will be elaborated in a political declaration Remember these guidelines are working up to nothing more than a “political declaration” at the point of Brexit. That is a non-binding agreement, which is quite different from a full trade deal. That is to be negotiated in full after Brexit. The declaration would frame expectations of what is possible in that negotiation. The detail could vary between 20-30 pages, to something more substantial and precise. But given the limited time available, expectations are low in Brussels. accompanying and referred to in the Withdrawal Agreement.
6. In this context, the European Council reiterates in particular that any agreement with the United Kingdom will have to be based on a balance of rights and obligations, and ensure a level playing field. A non-member of the Union, that does not live up to the same obligations as a member, cannot have the same rights and enjoy the same benefits as a member.
The European Council recalls that the four freedoms of the Single Market are indivisible and that there can be no “cherry picking” This section is a reprise of the EU’s redlines, which have been repeated ad nauseum in Brussels since the Brexit vote. “Cherry picking” has now entered the lexicon of the EU’s most important institution. I look forward to seeing the translations of this in all the other EU languages. through participation based on a sector-by-sector approach, that would undermine the integrity and proper functioning of the Single Market.
The European Council further reiterates that the Union will preserve its autonomy as regards its decision-making, which excludes participation of the United Kingdom as a third-country to EU Institutions, agencies or bodies. The role of the Court of Justice of the European Union will also be fully respected.
7. As regards the core of the economic relationship, the European Council confirms its readiness to initiate work towards a free trade agreement (FTA), to be finalised and concluded once the UK is no longer a Member State. Such an agreement cannot offer the same benefits as Membership and cannot amount to participation in the Single Market or parts thereof. This is the ‘we will treat you like Canada’ part. Britain’s relations with the EU will be based on a classic FTA model, similar to that negotiated with Canada and Japan. All the hybrid arrangements demanded by Britain -- a super-charged form of mutual recognition -- are rejected, as it would effectively amount to “participation in the single market or parts thereof”. The EU are refusing to engage with British ideas that they see as “single market light” or “customs union light”. The FTA model is used because it is the only model the EU can envisage using with a country that wants to retain its regulatory autonomy. This agreement would address:
7.i trade in goods, with the aim of covering all sectors, which should be subject to zero tariffs and no quantitative restrictions Zero tariffs maintain the status quo, but are at least better than the Canada deal. It was requested by Theresa May. And given the huge EU surplus in goods exports to the EU, it is something the EU will happily accept. with appropriate accompanying rules of origin. In this context, existing reciprocal access to fishing waters and resources should be maintained. Here is one of the UK’s main bargaining chips. France, the Netherlands, Belgium and Denmark rely heavily on access to UK waters for their fishermen. The reference to “reciprocity” here is a warning. UK fish exports are primarily to the EU. If they want to take a bigger share, or reduce EU access to catches, that will have negative consequences on market access.
7.ii. appropriate customs cooperation This is another classic part of an FTA. The EU is, in other words, not even acknowledging Mrs May’s ideas of a “customs partnership”, which would give the UK independence, while allowing it to carry on applying the EU customs code and collecting duties for the EU. Senior EU officials are hugely unimpressed by the concept, which even David Davis, the Brexit secretary, described as blue sky thinking. , preserving the regulatory and jurisdictional autonomy of the parties and the integrity of the EU Customs Union.
7.iii. disciplines on technical barriers to trade (TBT) and sanitary and phytosanitary standards (SPS) as well as a framework for voluntary regulatory cooperation. Again, no more here than would be envisaged in a classic FTA.
7.iv. trade in services, with the aim of allowing market access to provide services under host state rules, including as regards right of establishment for providers, Bad news for the UK. The level of ambition on services trade, as described here, is minimal. That is not unusual in a free trade agreement. But it would do serious damage to the UK’s service led economy. The reference to host state rules basically means no bilateral arrangements will be in place to facilitate cross-border trade. The right of establishment would allow a bank or an architect move to the EU, or UK, as long as they meet the respective national rules. In cynical terms, it is another way of saying the EU will be open to companies relocating from Britain. to an extent consistent with the fact that the UK will become a third country When it comes to services, being described as a third country has costly implications. Note too that no explicit reference is made here to financial services. They are dealt with in the same way as any other service, even though the volume of existing trade is far greater. The language makes clear that no consideration will be given to Britain’s ideas for special mutual recognition arrangements. Instead, the EU would treat the UK like US, Canda or Singapore. This allows for unilateral equivalence decisions -- where the EU accepts the UK’s regime as aligned sufficiently to offer access in limited areas. The trouble for London is that the access can be rescinded abruptly, and criteria for decisions is set by the EU alone. . and the Union and the UK will no longer share a common regulatory, supervisory, enforcement and judiciary framework. The FTA should include ambitious provisions on movement of natural persons as well as a framework for the recognition of professional qualifications. This is an important issue for many UK professional services and the EU is signalling its willingness to do a deal. Recognition of a qualification, however, does not mean an automatic right to provide a cross-border service.
7.v other areas of interest to the Union, for example access to public procurement markets, investments and protection of intellectual property rights, including geographical indications. A reference to the EU’s interest in protecting goods such as Parmesan cheese or Champagne. Britain is largely supportive of the idea, not least because of the rather large whisky industry in Scotland.
8. In terms of socio-economic cooperation, the following could be envisaged:
8.i. regarding aviation, the aim should be to ensure connectivity between the UK and the EU after the UK withdrawal. This would require an air transport agreement, combined with an aviation safety agreement, while ensuring a strong level playing field in a highly competitive sector.
8.ii. regarding certain Union programmes, e.g. in the fields of research and innovation and of education and culture, any participation of the UK should be subject to the relevant conditions for the participation of third countries to be established in the corresponding programmes in the next Multiannual Financial Framework.
9. Given the UK's geographic proximity and economic interdependence with the EU27, the future relationship will only deliver in a mutually satisfactory way if it includes robust guarantees which ensure a level playing field. The aim should be to prevent unfair competitive advantage that the UK could enjoy through undercutting of current levels of protection with respect to competition and state aid, tax, social, environment and regulatory measures and practices. This will require a combination of substantive rules aligned with EU and international standards, adequate mechanisms to ensure effective implementation domestically, enforcement and dispute settlement mechanisms in the agreement as well as Union autonomous remedies, that are all commensurate with the depth and breadth of the EU-UK economic connectedness.
10. In other areas than trade and economic cooperation, where the Union has already signalled its readiness to establish specific partnerships, the European Council considers that:
10.i. police and judicial cooperation in criminal matters should constitute an important element of the future EU-UK relationship in the light of the geographic proximity and shared threats faced by the Union and the UK, taking into account that the UK will be a third country outside Schengen. The future partnership should cover effective exchanges of information, support for operational cooperation between law enforcement authorities and judicial cooperation in criminal matters. Strong safeguards will need to be established that ensure full respect of fundamental rights and effective enforcement and dispute settlement mechanisms.
10.ii. in the fields of security, defence and foreign policy there should be no gap in the EU-UK cooperation as a consequence of the UK withdrawal from the Union. A future partnership should respect the autonomy of the Union's decision-making and foresee appropriate dialogue, consultation, exchange of information, and cooperation mechanisms. As a pre-requisite for such cooperation a Security of Information Agreement would have to be put in place.
11. In the light of the importance of data flows in several components of the future relationship, personal data protection should be governed by Union rules on adequacy with a view to ensuring a level of protection essentially equivalent to that of the Union.
12. The governance of our future relationship with the UK will have to address management and supervision, dispute settlement and enforcement, including sanctions and cross-retaliation mechanisms. Designing the overall governance of the future relationship will require to take into account:
12.i. the content and depth of the future relationship;
12.ii. the necessity to ensure effectiveness and legal certainty;
12.iii. the requirements of the autonomy of the EU legal order, including the role of the Court of Justice of the European Union, notably as developed in the jurisprudence.
13. The above approach reflects the level of rights and obligations compatible with the positions stated by the UK. If these positions were to evolve, the Union will be prepared to reconsider its offer Here comes the disclaimer. Countries like the Netherlands, Ireland and Sweden have a deep interest in maintaining close ties with Britain after Brexit. This clause keeps the door open, if Britain should revise its red lines. That is particularly important with regard to the customs union, and Britain’s willingness to be a automatic rule-taker as a condition of access. in accordance with the principles stated in the guidelines of 29 April and of 15 December 2017 as well as in the present guidelines.
14. The European Council, with the support of the Council, will continue to follow the negotiations closely, in all their aspects, and will return in particular to the framework for the future relationship at its June meeting.