Brexit today: game on or game over?

The Bratislava Conclusions

Under the slogan of “underpromise and overdelivering” the Bratislava Summit^[1] took place on 16 September giving the remaining 27 Member States the possibility to discuss, in addition to a more workable setting for 27 instead of 28 at one summit table, their common future without UK. Leaders agreed on the so-called Bratislava Declaration and Roadmap, which set out the key priorities for the next months. From these documents it seems clear that Brexit was not at the top of the Bratislava agenda. Tusk laconically said in the Bratislava Declaration: “although one country has decided to leave, the EU remains indispensable for the rest of us”. As much to say that the EU will be a success even with 27 Members and the 27 will work for it.  In the meanwhile, UK has not yet triggered Article 50 TEU, giving rise to a lot of doubt.

Article 50: when, how and with who

The positive result of the referendum in UK raises a fundamental question. Who, when and how to trigger Article 50 TEU? The answers to these simple questions are not immediate. What only seems clear from the reading of Article 50 is that the European legislator never thought the exit proceeding would ever really be used. It is simplistic and leaves many key procedural issues unclear or unanswered.

Article 50 provides that:

“1. Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements. 2. Member State which decides to withdraw shall notify the European Council of its intention. […]”.

Unlike most EU Member State, the UK does not have a written constitution. Legal opinion in the UK is divided as to whether Article 50 con be invoked by Prime Minister alone, or whether parliamentary approved will be required. The House of Lords issued an opinion in late September stating that Article 50 could only be triggered by Parliament. Court cases have been taken the issue to the UK Supreme Court. Decisions are not expected before Christmas.

Whatever the constitutional position in the UK, Prime Minister Theresa May has already made it clear that she will not trigger Article 50 until a UK approach and objectives for negotiations is put together and agreed within the country.

The exiting Member State can invoke Article 50 by giving notice to the European Council of its intention to withdraw from the EU. Notice of withdrawal is unilateral. The consent of the EU Member States, European Parliament or Commission is not required.

“3. The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement, or, failing that, two years after the notification referred to in paragraph 2 […]”.

Article 50 does not specify when notice must be given. Once the notice is served, unless those negotiations proceed to the satisfaction of all participants, UK will withdraw from the EU within 2 years during which all EU laws continue to apply to the leaving state.

It seems more and more clear that that the UK must negotiate, on the one hand the agreement to withdraw and on the other hand an agreement on future relations. The new relationships are potentially complicated and detailed – covering at least as much as the 120 and more agreements that make up the EU-Swiss arrangement. The first step will be to negotiate a transitional arrangement between the UK and the EU. In the meanwhile will be negotiated the agreements for what comes next and what the new trading agreement with the EU is.

The future effects on jurisdiction Further reflection on the withdrawal agreement

Considering that Article 50 defines the first step of the withdrawal by a Member State, the EU Institutions and Member States jurists must resolve many issues. For example: While the exit agreement will be a bilateral agreement between the EU and the UK the future agreement is likely to be a series of bilateral agreement between the UK and the EU and each Member State. And in the case of trade agreements and exclusive competences of the EU (agriculture, fishery) UK will negotiate directly with the Commission?  It’s our opinion that the choice of the counterparty is not only a formal legal issue but a substantive one. It will depend on the object of the agreement.

Moreover, it is not completely clear what the EU must do in order to bring into force a withdrawal agreement with the UK. The European Union has two requirements which need to be fulfilled for the conclusion of a withdrawal agreement: first, European Council acting by qualified majority must approve the withdrawal agreement. Secondly – pursuant to Article 50(2), the European Council must consent to the agreement.

Timing is beginning to take on a crucial role in this affaire. Immediately after the referendum results, the EU institution leaders warned that the UK should give notice and trigger Article 50 as soon as possible: “[…] the will of the British people must now be put into effect as quickly as possible” said European Commission President Jean-Claude Junker.  The negotiations must be completed in time in order to enable the EU to go through its internal processes. After the EU completes its internal processes, the agreement is ready to be apply immediately.

What can be included in the withdrawal agreement remains unclear even if it is clear that it cannot result in amendments to the TEU or the TFEU. However the withdrawal agreement might have UK specific provisions in relation to the application of those treaties to the UK.

Single Market

The Single Market is the topic on which divisions almost disappear. All want to be in, including the UK. However the UK’s understanding of what the Single Market is differs from what the 27 consider it to be. For the 27 it includes the four fundamental freedoms of movement: people, services, goods and capital. The UK wants to exclude one of the four freedoms. The UK faces the prospect of having to establish new trade relationships, both with the remaining 27 EU members and other countries around the world. There are various examples that UK can take as model as a potential post Brexit option: Norway model, Switzerland model and Turkey model are some examples. The Norway model is based on the European economic Area (hereinafter the “EAA”). The EEA is an agreement between the EU and Norway, Iceland and Liechtenstein that grants these countries virtually full access to the EU’s single market. This means that the four freedoms of goods, services, capital and people apply within the EEA on the same basis as within the EU itself. Instead EU rules on agriculture, fisheries, justice and home affairs do not apply. The downside is that EEA members have no say over the rules of the single market are created. Continued EEA membership would therefore allow the UK to remain within the single market even post-Brexit. It is also important to consider – as obvious as it may seem – that the UK has a more important position than the EEA members (both Norway or Iceland or Liechtenstein). UK is a member of the G7 with a permanent seat on the UN Security Council, which can allow UK to set its long-term sights higher than EAA members. Both the UK and the EU need to quickly turn the page and focus on people’s needs, and geopolitical challenges. The European Parliament, which must consent to the withdrawal agreement, will contribute constructively to the negotiations. Its views need to receive the utmost consideration; without its input there could be no deal and the UK would be forced into a World Trade Organisation-style relationship, which is neither in the interest of the UK nor the EU.

Bremain: a possible scenario

If during the next year (2017) the European Council will decide for a Revision of the Lisbon Treaty, the UK could be a contracting party to the negotiations. At this point, Brexit will be stopped and article 50 will be not activated. How can the European Union reach this conclusion?

The reasons could be political and juridical. For the first aspect, a revision of the Treaty can help the Governments to reduce the risks of excessive criticisms by the citizens towards the European Union (France, Italy, Spain but also The Netherlands, Hungary, Poland and Czech Republic) and to take the opportunity for this Member States to play a role for building a “new Europe”. Juridical point of view, the start up of the new negotiations could “freeze” the article 50 and put it in stand-by, with some relevant internal legal consequences for the UK legislation on European Single Market.

Conclusions

Just as we are completing this note, Theresa May has spoken to the Conservative Party Conference in Birmingham. Whatever the words, a ‘hard’ Brexit is more and more likely. Access to the single market will have to be balanced against no role for the ECJ and limited implementation of the freedoms in particular free movement of persons. Parliament is to become sovereign again.

It is to be hoped that the words in Bratislava can turn into something positive for the EU (and hopefully for the UK, on its own, as well).

[1] European Council President Donald Tusk has organized this informal meeting in order to “diagnose together the present state of the European Union and discuss our common future”. Given that Bratislava Summit is an informal meeting, the 27 can’t make any decisions or issue formal conclusion. That being said, leaders agreed on the so-called Bratislava Declaration and Roadmap, which set out the keys priorities for the next months. The Bratislava Roadmap is a first step which aims to “bring back stability and a sense of security and effective protection”, as Tusk said on his remarks before the summit. The main issues discussed concern:

- General diagnosis and objective such as make a success of the EU at 27, find common solutions also where there are starkly differences among the remaining;

- Migration and external borders;

- Internal and external security;

- Economic and social development, youth;

- Way ahead.

These themes will be developed in the next formal European Council meetings.