EU sticks to tough Brexit line as governments revise treaty text

March 13, 2018 - The European Union failed to water down proposals for the Irish border that Theresa May said no prime minister could ever accept in the first revision of the draft Brexit treaty.

Revising the first draft of the document published by the European Commission two weeks ago, diplomats from the 27 remaining EU countries retained the focus on keeping Northern Ireland in the customs union and parts of the single market. The officials signaled some concessions on the U.K.’s status during a transition period.

The draft, which must get Britain’s consent if there is to be a Brexit deal, will make agreements on the financial settlement, citizens’ rights, the Irish border and a transition period legally binding. Haggling over its contents is likely to dominate negotiations over the next year before the U.K. leaves the bloc in March 2019.

Britain, which played no formal role in drawing up the draft, objected to the section on avoiding a hard Irish border which set out in detail proposals to keep Northern Ireland in the EU’s customs union. The EU said this was a “fallback” option if the U.K. couldn’t come up with other solutions. Prime Minister May said the option was unacceptable.

While not significantly altering the Irish border wording, EU diplomats have added an entire section on “good faith.” The new text says the U.K. must act “in full mutual respect.”

Britain and EU “shall refrain from any measures which could jeopardize the attainment of the objectives of this agreement,” the draft treaty says in a new article added. “The parties shall, in full mutual respect and good faith, assist each other in carrying out tasks which flow from this agreement.”

Some aspects of the U.K.’s relationship to the EU during a potential transition period have been changed to Britain’s benefit in the latest revision. According to the revised draft, dated March 13, the EU will consult with the British government when drafting new laws that will affect the U.K., the country’s officials will be able to attend some meetings on EU foreign policy, Britain will be consulted on fishing quotas and may be invited to opt in to some justice and security matters.

The transition period, which the U.K. hopes to reach agreement on this month, would run from March 2019 until the end of 2020 and would see Britain remain bound by the EU’s rules and laws without any influence on decision-making.

Future Relationship

A fresh draft of the guidelines for the EU’s negotiations on the future relationship between the two sides, to be signed off by the bloc’s leaders at a summit later this month, was also circulated on Tuesday and obtained by Bloomberg.

The updated document, dated March 13, adds a demand that cooperation between the U.K. and EU continues on ”global challenges” such as climate change and sustainable development. The draft also adds a reference to the need to strike an agreement on road transport.

While sticking to the substance of the previous draft, which was circulated last week, EU diplomats added a sentence to dispel any hopes that they would accept a trade deal which would include generalized access for British banks to the bloc’s single market: “the Union will protect its financial stability and its regulatory and supervisory autonomy,” according to the new draft.

The negotiating guidelines reiterate that frictionless trade between the two sides isn’t possible if the U.K. leaves the bloc’s customs union and single market. “This unfortunately will have negative economic consequences, in particular in the United Kingdom,” the revised text reads.

Source: Bloomburg