Brexit Bulletin 13 October 2017

Contents Brexit Countdown ...... 2 Summary ...... 3 Latest News & Developments ...... 4 Conservative Party Conference: ‘It’s time for some optimism’ ...... 4 May’s Statement to Parliament – and white papers ...... 4 Negotiations: A ‘Disturbing Deadlock’ ...... 6 Where now? ...... 7 The Fortnight Ahead ...... 9

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Brexit Countdown

• The UK government triggered Article 50, formally starting the process of the UK’s exit from the European Union. 29 March 2017

• The UK general election saw Theresa May lose her majority, despite having called the election with the express intention of increasing it, supposedly 8 June 2017 in order to strengthen her position in the Brexit negotiations.

• Talks between the two sides started, amid accusations that the UK was unprepared. The initial stage of negotiations will focus on the details of 19th June 2017 withdrawal, such as citizens' rights, payments, and the UK-Ireland border.

• The European Commission will make a recommendation on whether it is possible to move onto negotiating a ‘framework for future relations’, October- preferably by the next European Council meeting (19-20th October). The December 2017 next Council meeting after this will be on 14-15th December.

• The final deal will need to be agreed, so that it can be ratified over the next six months. October 2018

• Deadline for securing a deal. 29 March 2019

• Potential transition phase, with technical talks on the future relationship continuing. ?

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Summary

• The Conservative Party Conference gave us little in the way of further detail on the UK’s position, although David Davis expressed hope that a deal on citizens’ rights could be obtained ‘soon’.

• Theresa May gave a statement to the House of Commons on the progress of the Brexit negotiations, saying that the ‘ball is in [the EU’s] court.’ This coincided with the publication of new white papers on trade and customs.

• After the end of the latest round of negotiations, Michel Barnier said that the talks had reached ‘deadlock’.

• It looks almost certain that the European Council will decide at its meeting on 19-20 October that there has not been ‘sufficient progress’ to move on to talks about the transitional period or the future relationship. However, a draft document suggests that the member countries will start preparing for these between themselves.

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Latest News & Developments

Conservative Party Conference: ‘It’s time for some optimism’ If there was one common theme emerging from the speeches of the Brit triumvirate of David Davis, Liam Fox, and , it was the triumph of rhetoric over detail. Fox set the overall tone, starting his speech with the declaration that ‘It’s time for some optimism.’ He spoke about his vision ‘of a UK that trades its way to prosperity, stability and security’, but also about some of the practical details: tabling new trading schedules at the World Trade Organisation, translating EU trade agreements into UK law, and establishing working groups with other countries. David Davis spoke about ‘a one-off time-limited extraordinary opportunity’ which ‘allows us to be more international’ and ‘to lead a race to the top’. He was ‘certain’ that a deal on citizens’ rights could be obtained ‘soon’, but said that a deal on the financial settlement could only be finally settled in the context of ‘the prize on offer at the end of the process.’ Domestically, he spoke about the Repeal Bill and confirmed that ‘there is a determined exercise underway in Whitehall devoted to contingency arrangements’. Johnson’s speech made the point that ‘the only way to win the future is not to retreat from the world, not to abandon globalisation but to play our part, as we always have, in making the world safer and freer – and therefore more prosperous and that is why we must believe in global Britain.’

Theresa May’s speech had been much-anticipated, with many commentators wondering how she might reconcile her conciliatory approach in Florence with the need to give the Conservative Party faithful some red meat on Brexit. In the event, her speech’s content was largely overshadowed by a series of unfortunate events – a prankster, her cough, and the backdrop falling apart – but she had little to say on Brexit. She said that her ‘first and most important duty’ to the country was ‘to get Brexit right.’ She spoke of the need for a ‘deep and special partnership’ between the UK and the EU, in which ‘the United Kingdom is a sovereign nation once again.’ Having said that this was the UK’s offer, she said that she looked ‘forward to that offer receiving a positive response.’ Finally, she reached out to EU citizens in the UK to tell them that ‘you are welcome here’ and expressed hope that agreement would be reached ‘quickly’ on this point.

May’s Statement to Parliament – and white papers On Monday, Theresa May made a statement to the House of Commons on the UK’s plans for leaving the EU. She confirmed her rejection of both the EEA and ‘Canada-style free trade agreement’ models and set out her desire for a ‘a unique and ambitious economic partnership’ and a ‘bold new strategic agreement’ on security. She repeated her request for a ‘strictly time-limited’ implementation period based on the ‘existing structure of EU rules and regulations’. There would be a ‘registration system’ for immigrants from the EU, who would be subject to ‘new rules […] on long-term settlement’ and new trade deals would be prepared for implementation after the implementation period ended. However, she also opened the possibility of phasing in aspects of the ‘future framework’ (e.g. dispute resolution) during the implementation period and said that a ‘double lock’ should be in place so that the period does ‘not go on forever.’ On the three aspects of the current negotiations, she had the following to say:

1. Citizens’ rights: ‘Since Florence, there has been more progress, including reaching agreement on reciprocal healthcare and pensions, and encouraging further alignment on a range of

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important social security rights. I hope that our negotiating teams can now reach full agreement quickly.’ 2. Northern Ireland: ‘we have begun drafting joint principles on preserving the Common Travel Area and associated rights, and we have both stated explicitly that we will not accept any physical infrastructure at the border. We owe it to the people of Northern Ireland—and indeed to everyone on the island of Ireland—to get this right.’ 3. Financial settlement: ‘this can only be resolved as part of a settlement of all the issues through which we are working. I do not want our partners to fear that they will need to pay more or receive less over the remainder of the current budget plan as a result of our decision to leave. The UK will honour the commitments that we have made during the period of our membership. As we move forwards, we will also want to continue working together in ways that promote the long-term economic development of our continent […] we would want to make a contribution to cover our fair share of the costs involved.’

She also confirmed that the Government was preparing ‘for every eventuality’ and suggested that the when it came to the negotiations, the ‘ball is in [the EU’s] court.’ In answer to a question from Jacob Rees-Mogg, she confirmed that the implementation period might begin with the European Court of Justice ‘still governing the rules’ but that the Government would wish to bring forward a new dispute resolution mechanism at an early stage if it could, and that it was ‘highly unlikely’ that any new EU rules would be introduced during the implementation period that the UK had not been a party to discussions about. She also confirmed that a list of the sectors for which the Government had produced impact assessments would be issued ‘shortly’ (although not the assessments themselves) and that she was negotiating a date to either speak to the plenary or the Conference of Presidents of the European Parliament. The Prime Minister’s statement coincided with the publication of two new white papers. The Department for International Trade published a white paper on ‘Preparing for Our Future Trade Policy’ and the Treasury published a paper on ‘Customs Bill: legislating for the UK’s future customs, VAT and excise regimes’.

Whilst her statement on the continued jurisdiction of the European Court of Justice might have seemed likely to worry Brexiteers, May received backing from prominent leave campaigners including Boris Johnson and . Johnson argued that ‘what matters is the end state’, whilst Gove said that the UK needed to ‘be pragmatic over implementation’. , however, followed up May’s comments around preparing for all scenarios with a piece in The Times, where he said that ‘We are planning for every outcome and we will find any necessary funding and we will only spend it when it’s responsible to do so.’ This appears to suggest that Hammond does not feel that it was necessary to make any actual preparations for ‘no deal’ at the present time, just to have plans in place in case such preparations become necessary. For those who believe that Britain’s strongest card in the Brexit negotiations is its ability to walk away, this is worrying because a lack of concrete preparations (e.g. investment in expanding customs at UK ports) will make the threat of abandoning negotiations appear even less believable. According to , Michael Gove has been defeated in an effort to get weekly updates for the Cabinet on departmental preparations and spending on Brexit preparations.

On Tuesday, May appeared on LBC to take questions from the public, but was unable to answer how she would vote should there another referendum on EU membership. She told Iain Dale that ‘What I did last time around was I looked at everything and came to a judgement and I'd do exactly the same

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this time around. But we're not having another referendum and that's absolutely crucial.’ This line of questioning was continued when the First Secretary of State appeared on Channel 4 News, telling the programme that ‘I was on the board of the Stronger In campaign – nobody fought harder than me for Remain – so I don't resile from my views.’ As a result, we have the interesting scenario where the Government’s leading figures are unable to express whole-hearted support for its most significant policy.

Negotiations: A ‘Disturbing Deadlock’ Whilst much of the attention for the last two weeks has been focused on domestic developments, negotiations have been underway in Brussels. After the previous set of talks ended on a more positive note than normal, it seemed that the negotiations might be about to move up a gear. That did not happen. Instead, the Telegraph broke the news that the UK would not be discussing the details of the country’s financial commitments, Davis did not head over to the Belgian capital for the opening of talks and the agenda included no meetings on Wednesday. It was unsurprising that Barnier, speaking about the financial settlement, spoke of ‘a state of deadlock on this question, which is very disturbing’. However, optimists will have welcomed his talk of a ‘new dynamic’ since Florence, and his belief that ‘decisive progress is within our reach’.

David Davis Michel Barnier Secretary of State for Leaving the European European Commission Chief Brexit Union Negotiator Issue (remarks) (remarks) Citizens’ ‘On citizens’ rights, we have made further ‘We have two common objectives: rights progress to give British citizens in the EU and 1) That the Withdrawal Agreement EU27 citizens in the UK the greatest possible has direct effect, which is essential legal certainty about the future. Our legal to guarantee the rights of all orders will, in the future, be distinct and citizens in the long-term. different. So this week we explored ways of 2) That the interpretation of these making sure the rights we agree now will be rights is fully consistent in the enforced in a fair and equivalent way. And in European Union and in the United a way that gives citizens confidence that Kingdom. their rights will be upheld. […] In summary, I On these points, we will continue to work on think that this week of talks has brought us the specific instruments and mechanisms even closer to a deal that gives citizens rights which will allow us to translate this into to the legal certainty that they deserve.’ reality. This means for us the role of the European Court of Justice.’ Financial ‘we have undertaken a rigorous examination ‘The UK told us again this week that it still settlement of the technical detail where we need to could not clarify these commitments. reach a shared view. This is not a process of Therefore, there was no negotiation on this, agreeing specific commitments - we have but we did have technical discussions which been clear this can only come later. But it is were useful, albeit technical. We are, an important step, so that when the time therefore, at a deadlock on this question. This is extremely worrying for European

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comes we will be able to reach a political taxpayers and those who benefit from EU agreement quickly and simply.’ policies.’ Northern ‘I said last time that we were determined to ‘This week we advanced on the joint Ireland tackle the unique circumstances of Northern principles on the continuation of the Ireland by focusing creatively on specific Common Travel Area and I welcome this. solutions and we have begun to do so.’ […] There is more work to do in order to build a full picture of the challenges to North-South cooperation resulting from the UK, and therefore Northern Ireland, leaving the EU legal framework. […] This week, we agreed that the six principles proposed by the EU in September would guide our work on protecting the Good Friday Agreement in all its dimensions.’ Overall ‘Our negotiating teams have continued to ‘We worked constructively this week. We conclusions work constructively together in a clarified certain points. But without making professional and determined manner this any great steps forward. We still have a week. And they have developed as Michel common goal: the desire to reach an says, an increased sense of shared political agreement on the UK's withdrawal and to objectives. Now while there is still work to be outline our future relationship, when the done, much work to be done, we have come time comes. […] Since Florence, there is a a long way.’ new dynamic. I remain convinced that with political will, decisive progress is within our reach in the coming weeks.’ Verdict ‘As we look to the October European Council ‘My responsibility as the Commission's regarding next week, I hope the Member States will negotiator, on behalf of the European ‘sufficient recognise the progress we have made, and Union, and with the trust of President progress’ take a step forward in the spirit of the Prime Juncker, is to find the way to make progress, Minister’s Florence speech.’ while fully respecting the conditions of the European Council, as agreed unanimously on 29 April – which is my mandate – and in constant dialogue with the European Parliament who has twice voiced its opinion, by a very large majority. That is my mind-set a couple of days ahead of the next European Council.’

Where now? So, where does this leave the UK? The next step will be the meeting of the European Council on 19-20 October. This will have to make the decision about whether there has been ‘sufficient progress’ to move on to the next stage of the negotiations, but there seems to be a consensus that this will not happen. There had been suggestions that a compromise might be reached, allowing talks about a transition period to begin, but this also looks unlikely. A draft document obtained by several media outlets, including the BBC, suggests that the Council will decide to start making internal preparations for discussing a transitional period and the framework for the future relationship. It is important to note that this is not the finished version: this will be subject to agreement by the member states at the meeting. The next chance for ‘sufficient progress’ to be declared will be the European Council meeting on 14-15 December.

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The path looks no smoother at home. The Government has been forced to delay the EU (Withdrawal) Bill, which had been due to have its committee stage next week. 300 amendments and 54 new clauses have been tabled, some with enough Conservative support to put the Government’s majority at risk. Concerns have been repeatedly raised about the presence of ‘Henry VIII powers’, in which the Government can alter legislation without proper Parliamentary scrutiny. As a result, the Government will need more time to try and reach compromises with concerned MPs so that it is not defeated.

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The Fortnight Ahead

Monday 16th October • Plenary of the British Irish Parliamentary Assembly, including addresses by (Northern Ireland Secretary) and Robin Walker (Brexit Minister). • Welsh Assembly External Affairs and Additional Legislation Committee visits Brussels. • Welsh Assembly Constitutional and Legislative Affairs Committee discusses the EU (Withdrawal) Bill.

Tuesday 17th October • House of Commons Exiting the European Union Committee takes evidence on ‘The European Union (Withdrawal) Bill’. • House of Commons Welsh Affairs Committee takes evidence on ‘Brexit: Agriculture, Trade and the repatriation of powers’. • House of Lords debates ‘Reports from the European Union Committee 'Brexit: agriculture' and 'Brexit: farm animal welfare'’. • House of Lords EU Justice Sub-Committee takes evidence on ‘Brexit: consumer protection rights’. • House of Lords European Union Committee takes evidence on ‘Brexit: deal or no deal’. • EU-27 General Affairs Council on Brexit, attended by Michel Barnier (European Commission Chief Brexit Negotiator). • Jonathan Portes (Professor of Economics and Public Policy at King's College London) speaks to the Creative Industries Federation on ‘The future of UK immigration and freedom of movement’. • Resolution Foundation and the UK Trade Policy Observatory release new analysis of the impact of post-Brexit tariff changes on prices. • European Policy Centre hosts an event on ‘How Scotland, Wales and Northern Ireland view Brexit’ with speakers including Michael Russell (Minister for UK Negotiations on Scotland’s Place in Europe) and Mark Drakeford, (Welsh Cabinet Secretary for Finance and Local Government).

Wednesday 18th October • House of Commons Exiting the European Union Committee takes evidence on ‘The European Union (Withdrawal) Bill’. • House of Commons Procedure Committee takes evidence on ‘Exiting the European Union: scrutiny of delegated legislation’. • House of Lords holds questions on ‘Creative industries and Brexit’. • House of Lords EU Energy and Environment Sub-Committee takes evidence on ‘Brexit: energy security’. • House of Lords EU Financial Affairs Sub-Committee takes evidence on ‘Financial regulation and supervision following Brexit’. • House of Lords EU Home Affairs Sub-Committee takes evidence on ‘Brexit: reciprocal healthcare’.

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Thursday 19th October • European Council leaders’ summit begins. • House of Lords holds a short debate on ‘Assessment of the impact on the economy of failure to agree a transition deal with the European Union’. • House of Lords EU Internal Market Sub-Committee takes evidence on ‘Brexit: competition’. • House of Lords EU External Affairs Sub-Committee takes evidence on ‘Brexit: sanctions policy’.

Friday 20th October • European Council leaders’ summit finishes, including a decision on Brexit negotiations. • David Laws addresses Regent’s Park College, Oxford on ‘Coalition and Brexit’.

Monday 23rd October • Progress and the Institute for Chartered Accountants co-host Kier Starmer (Shadow Brexit Secretary), discussing ‘The reality of Brexit: What does it mean for the professional and business services sector?’

Tuesday 24th October • House of Lords holds questions on ‘Discussions with the devolved administrations regarding Brexit’.

Wednesday 25th October • Scottish Parliament debates ‘Scottish Government Debate: Scotland and EU-UK Negotiations on EU Exit’. • House of Lords holds second reading of European Union (Approvals) Bill. • House of Lords EU Energy & Environment Sub-Committee takes evidence on ‘Brexit: energy security’. • House of Lords EU Financial Affairs Sub-Committee takes evidence on ‘Financial regulation and supervision following Brexit’. • House of Lords International Relations Committee takes evidence on ‘Beyond Brexit: the UK and the Balkans’.

Thursday 26th October • Charles Grant (Director of the Centre for European Reform) speaks to the Creative Industries Foundation on ‘What does the EU want from Brexit?’

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