We have now seen Theresa May’s Article 50 notification letter and Donald Tusk’s brief and sombre response. Brexit is on: bar a unanimous agreement to extend negotiations, the UK will be out of the EU in two years. They will be painful. Already the two sides disagree on the sequencing of talks: whether to postpone negotiating about the new relationship until agreement has been reached on the terms of exit or to conduct the two in parallel.
But there are some points on which it should be easy to agree, and which all sides could benefit from bringing to a public agreement fast — if for no other reason than because Article 50 requires the talks to “take account of the framework for the future relationship”.
Here are three quick wins that both sides should be able and willing to agree for that framework with little delay. A formal agreement could take much longer, but it should be possible to reach a deal in short order that the following three principles should govern the continuing EU-UK relationship.
Reassure long-term residents
Much has been made of the uncertainty into which the UK has thrown European citizens exercising their right to free movement, including British citizens elsewhere in the EU. Some of that uncertainty is unnecessary — the UK could have made a unilateral gesture, recognising that Britain, not the rest of the EU, is acting to undo existing rights. But some of the uncertainty is actually unfounded. The directive on free movement is made effective through national law — in the UK’s case, the Immigration (European Economic Area) Regulations last updated in 2016. As a matter of UK statute, EU citizens (and their family members) “acquire the right to reside in the United Kingdom permanently” when they have resided in the the UK under free movement rights for five years.
If the UK leaves the EU on March 29 2019, that means all EU citizens whose continuous free movement presence started on March 29 2014 or earlier are automatically permanent residents on (or before) the day of Brexit, as a matter of UK law. No application is necessary (except to acquire the card that documents the holder’s residence status); no reciprocal deals or special rule changes are necessary to ensure this because it is already the law of the land. Of course the UK government could, in future, revoke permanent residence already acquired — but it would have to actively do so. That is quite a different matter than the incorrect perception that the government has to actively do something in order for people’s rights not to lapse.
The UK government would do well to proclaim this point of law clearly, loudly and repeatedly. The same legal fact will apply to British citizens in other countries, which could also make that very clear. On this could be built an agreement to grant permanent residency rights to people who have been in the country for less time. But even without one, a lot of stress and bad blood can be avoided by clarifying who has already acquired permanent residence automatically under national law.
Agree to tariff-free trade in goods
The UK government claims to want an ambitious trade relationship with the EU. In fact, given that it wants to leave the single market and the customs union, it has set its sights very low. It is largely asking for a “free-trade agreement” that prevents tariffs on any goods, but this will recreate the trade frictions that the single market was set up to get rid of.
But precisely because it is unambitious (it will do nothing for Britain’s important service exports), an FTA in goods could be straightforward to agree. It involves agreeing not to introduce tariffs where none exists currently (even as the UK lets product rules diverge and throws up a customs border between it and the EU). To agree this in principle — no tariffs to be introduced — should be doable early in the process.
It is worth taking Ceta, the new Canada-EU trade deal, as a model. In rough summary, it eliminates tariffs in manufactured goods and almost all agricultural goods. The unprocessed farming products that it excludes will also be the hard ones for Britain and the EU-27 to agree to maintain tariff-free. But it should be easier to keep tariffs at zero, which is the current situation, than to reduce existing ones, which is what Ceta had to do. And quickly agreeing to maintain zero tariffs almost across the board will leave time to seek agreement on the most sensitive agricultural goods as well. Both sides have reason to do so given the importance of agricultural trade for Ireland and Northern Ireland.
Copy Ceta’s system of investment courts
One of the many challenges of Brexit that was not discussed in the referendum is how to protect cross-border investors in case of disputes. Between the UK and other EU countries, this protection has been secured through the freedom of movement of capital, enforced by European courts. Between other countries, the much-reviled standard practice for “investor-state dispute settlement” (ISDS) is to use private and opaque arbitration panels. But now the UK wants to be outside the jurisdiction of the European Court of Justice. One solution could again be to use Ceta, which broke new ground with a system of investment tribunals. Since the UK government does not want to comply with ECJ judgments, but does admit that some process for settling disputes is needed in international trade, this may be an attractive solution. And if the EU can do this with Canada, it can also do it with the UK.
There are more than enough hugely complex challenges in negotiating a new economic and political relationship. But these three need not be among them. Getting agreement established early is both useful in its own right and likely to improve the mood in the room for the more difficult issues that follow.
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