MS Risk Blog

Latest Brexit Talks:Progress But Not Enough to Open Trade Discussions

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The latest round of Brexit talks have ended, with top negotiators disclosing late last month that the European Union (EU) and Britain made progress in the latest round, though not enough in order to move to the next phase of discussions on a transition period after Brexit or a future trade agreement.

Speaking to reporters, chief EU negotiator Michel Barnier disclosed “we have had a constructive week, yes, but we are not yet there in terms of achieving sufficient progress. Further work is needed in the coming weeks and months,” though he praised a “new dynamic” which was created by concessions made last week by British Prime Minister Theresa May. Barnier highlighted two key areas of disagreement. Firstly, on citizen’s rights, he welcomed a confirmation from his British counterpart, Brexit Secretary David Davis, that the withdrawal treaty guaranteeing the rights of 3 million EU citizens in Britain should have “direct effect” in British law – effectively, Britain cannot change them via new legislation. The EU however continues to demand that people also have the right to pursue grievances at the EU’s own court. Secondly, Barnier disclosed that Britain had clarified that an offer by Mrs May that the other 27 states should not lose out financially from Brexit during the current EU budget period concluding at the end of 2020 would cove payments only in 2019 and 2020. That, he said, was not enough. Commitments agreed in the current budget also lead to outward payments in subsequent years. Further on the money issue, which both sides say has become the most intractable, Barnier disclosed that Britain had yet to specify which commitments it would honour after Mrs May stated that it would do so. The EU has estimated that Britain will owe tens of billions of euros to cover outstanding liabilities. Barnier added, “for the EU, the only way to reach sufficient progress is that all commitments undertaken by the 28 are honoured by the 28.” Davis declined to put a figure on what Britain might pay.

Meanwhile Davis disclosed that they had made “considerable progress” in four days of talks in Brussels. He further repeated his eagerness to move on to discuss what happens after Brexit in March 2019.

Mrs May had hoped that a speech she made in Florence, Italy late last month would unblock the three-month-old talks and pave the way for the EU to open discussions on a post-Brexit free trade deal by allowing Barnier to tell EU leaders that there is “sufficient progress” on three key “divorce” issues – rights for expatriate citizens, the northern Irish border and how much Britain owes.

The two sides are due to meet again in just over two weeks, on 9 October. Were Barnier to judge that they have made “sufficient progress” – a deliberately vague term set by the EU 27 – he would be in a position to recommend to leaders at a summit on 19 – 20 October that they let him launch trade talks. However he has already warned that it could be “several months” before talks move on to discussions about trade.