How the Brexit deal came about
The FT’s world news and Brexit editors, Ben Hall and Daniel Dombey, discuss the deal announced on EU exit terms by UK Prime Minister Theresa May and European Commission President Jean-Claude Juncker, clearing the way for trade talks next year.
Produced by Filip Fortuna. Filmed by Andy Mitchell. Footage: Getty, Reuters and Bloomberg
The EU has struck a momentous deal with Britain on its divorce terms from the block. I'm joined by Dan Dombey, our Brexit news editor. Dan, how big a moment is this in the Brexit negotiations?
It's a huge moment, to be honest. Theresa May's government, and certainly the prime minister herself - the single biggest objective they have, the task that takes up almost all of their time and bandwidth - is to get a Brexit deal. And what happened today was a necessary condition of that. If it hadn't happened much later by today, it's a real question about whether we'd get any kind of deal in at all.
Now we know what the bill is for leaving the EU, how EU citizens in the UK will be treated afterwards. And we have kind of, sort of, an idea what's going to happen to Northern Ireland - the three big divorce issues. That allows talks to go on with future ties on the transition arrangement.
These are things which are really pressing Mrs May. If she hadn't got a deal today, her whole administration could have been in doubt.
Now did Britain and the EU manage to strike this deal essentially because the UK retreated on all the big, important issues, such as money, Northern Ireland, and citizens' rights? Or did Britain get anything out of this negotiation?
Well, there was a slightly awkward moment today when Michel Barnier was asked or had to consider what concessions the EU had made. Because we at the FT have run a piece on what seems to be a series of white flags the Brits have run up on everything, even starting from the sequencing and structuring the talks itself, which was going to be the fight of the summer. And Britain gave up on that issue at the very beginning of the negotiations, on day one, on hour one.
Barnier furrowed his brow, thought a little bit, and said, well, we're not necessarily going to fine the UK for the cost of moving agencies like the banking agencies and the medicines agencies out of London. One area which they would also say is that they've managed to structure some of the payments to the EU. Nevertheless, since we're talking about $40 to $60 billion in net terms, smaller is a relative term.
Now the big sticking point in recent days was the question of the border between the Republic of Ireland and Northern Ireland. What was the compromise that was agreed in Brussels this morning? And how will that play out in the years ahead, do you think?
Well, the phrase that everyone's been using to refer to this is constructive ambiguity, because there's certainly kind of - it's hard to understand how all these different provisions they've come up with can actually co-exist. What they've said is that if a final EU-UK deal doesn't itself avoid a hard border, the Brits will try and propose something specific for Northern Ireland that tries to avoid a hard border.
And if they aren't able to do something like that in a way that is accepted, then the fall-back will be at the whole of the UK will be in regulatory alignment with the rules of the EU's customs union and single market in so far as you need to keep things like cross-border trade going.
What does that mean? Does that mean that the whole of the UK will be in regulatory alignment with the customs union and the single market? The British government says no. What does alignment mean? Does alignment mean being in complete lockstep with the EU's rules? That's what Dublin believes it to mean. Or does it mean you have some kind of sort of approximation?
Very unclear what it actually means. But one thing is clear - this is in the text. The EU has a very rigorous understanding of its text. And if this doesn't stand, everything else will fall.
So this is going to come back. This isn't over by any means.
Now this preliminary phase, if you like, the divorce terms was incredibly difficult. But arguably, the bit about even transition talks, let alone the future relationship, is going to be altogether more challenging. What do you think the prospects are of an agreement?
Here, actually, it's very interesting. The EU has issued today guidelines on those transition talks and indeed on talks about a future relationship. And those go in two separate ways. The question of a future agreement, however, is a bigger and more important one and a less certain one.
Michel Barnier said today that what's on offer for Britain is a Canada-style deal. So it's mainly a goods deal with a bit of services thrown in. That may have big implications on Britain's services-based economy.
But also, how much time are you going to have to negotiate anything substantive at all? That looks like a more leisurely process. That means that we may get a mirror agreement, a slighter agreement, an aspirational agreement, which finally means that we're going to be waiting a long time for a real trade agreement. We may be leaving the EU on the 29th of March, 2019. We've only really a bit of a guess about where we're finally headed.