Are we running towards a Brexit cliff-edge?

At the time of writing this article, it is a little less than 402 days until the United Kingdom is set to leave the European Union on 29 March 2019. While negotiators from both sides remain committed to find an amicable and orderly end to the UK's 42-year relationship with the European Union, recent statements from Chief EU negotiator Michel Barnier raise the possibility of Prime Minister Theresa May's government steering towards a Brexit cliff.

Barnier: Brexit transition period ‘not a given’

In November 2017, in a race to have EU Heads of State and Government agree that ‘sufficient progress’ on the three Brexit key issues had been reached, the UK’s Brexit Secretary David Davis agreed to far-reaching provisions on citizens’ rights, the Good-Friday Agreement and the Irish border as well as a Brexit divorce bill of up to €65bn. EU diplomats are now working with their UK counterparts to legally enshrine the sometimes ambiguous EU-UK Joint Report on Brexit into a Withdrawal Agreement before the next European Council Summit on 22-23 March.  

While all parties have, by now, accepted the need for a transition period to smoothen impact on both UK and EU businesses and citizens post 29 March 2019, the negotiations on its scope will depend on two crucial steps: reaching agreement on legally enshrining the Joint Report and endorsement by the EU Heads of State and Government on the Commission’s renewed negotiating mandate.

New phase, old conflicts

While there are no objections expected on the latter step, it is feared that no legal agreement will be ready in time for EU leaders to decide on. According to an update provided by Mr. Barnier in early February, progress on the translation of the Joint Report into a legal agreement continues to be held up. As Mr. Barnier voiced his surprise at the UK government’s unwillingness to legally enshrine what it agreed to late last year, he warned Theresa May’s government that a Brexit transition period was ‘not a given’.

However, as it was anticipated following the largely unambiguous wording of December’s Joint Report, any translation into a legal Withdrawal Agreement faces the enormous obstacles of Northern Ireland Good Friday Agreement, the overall question of the Irish border, citizens’ rights and the governance provisions of the transition period.

Moreover, according to the EU’s draft negotiating guidelines, any transition period would require the UK to commit to a whole range of obligations while losing its decision-making powers. These requirements prove, yet again, to test the red lines set out by Theresa May in her Lancaster House and Florence speeches.

Are we steering towards a Brexit cliff-edge?

To ensure a smooth progression to Phase 2, which will include the discussions on the UK’s future relationship with the EU, a finalized legal Withdrawal Agreement has to be ready latest by 20 March for the European Council to approve the revised negotiating mandate at its March Council Summit. Failure to agree on the legal terms would be a near catastrophe; it would inevitably delay any leaders’ endorsement until the next European Council on 28-29 June, thus giving Michel Barnier and David Davis a mere four months to set out a post-Brexit relationship and avert a potential Brexit cliff-edge before the European Council and European Parliament will want to see and assess the final Withdrawal Agreement on October.