Colleen Baehrend, J.D. Candidate, Columbia Law School 2017
The process of unravelling the partnership between the one of the largest economies in the world and the most prominent trade bloc comes down to only 261 words: the text of Article 50 of the Lisbon Treaty. With such brief guidelines and no precedent to work with, how exactly the divorce between the U.K. and EU will proceed is shrouded in uncertainty.
Starting at the source, Article 50(1) gives Member States the right to withdraw from the EU “in accordance with its own constitutional requirements.” Thus, Article 50 must be invoked in a way that is compliant with U.K. laws. Trade treaties typically fall within the Royal Prerogative, powers still held by the Crown and customarily exercised by ministers as the Queen’s representatives. Therefore, a declaration by the prime minister could be sufficient. However, given the depth of EU regulation and its connection to the EU rights of U.K. citizens, others believe Parliament must vote to invoke Article 50.
Regardless of how notice is given, only the U.K. can decide when to invoke Article 50. While there have been calls for the current government to give notice of the U.K.’s intent to leave the EU immediately, there are no provisions in Union treaties that allow the EU to forcibly expel a Member State. Under Article 7 of the Lisbon Treaty, the European Commission and the European Council can suspend the U.K. if the country breaches the principles of democracy, equality, and the rule of law. However, this mechanism has never been applied before and it is very unlikely that the U.K. has breached any such principles to the extent necessary for Article 7 to apply.
Once the U.K. gives notice, Whitehall has two years to negotiate its withdrawal agreement with the Union or automatically lose its membership and all the corresponding rights. This deadline can be extended if the European Council and all Member States unanimously agree. However, this may require additional concessions from the U.K. in order for them to win the votes of certain states. It may also be possible to select a membership expiration date in the withdrawal agreement that is outside of the two-year window, which would give the U.K. more time. Importantly, there is no suggestion in Article 50 that the UK can withdraw its notification. Thus, Whitehall will likely be unable to leverage Article 50’s negotiation process to obtain a better deal to stay in the EU. This two-year deadline places the U.K. in a very weak negotiating position especially as Brussels is incentivized to set a harsh precedent in order to prevent future EU referendums.
Article 50(4) strips the U.K. of its right to “participate in the discussions of the European Council or Council [of the European Union] in decisions concerning it.” Consequently, after the U.K. invokes Article 50, the European Council will draft guidelines for the negotiation process without the U.K.’s input. The European Commission is also able to make recommendations of guidelines to the European Council under Article 218(3) of the Treaty on the Functioning of the European Union (TFEU). Informal talks could take place prior to the U.K.’s invocation of Article 50. However, at the moment prominent European leaders including Jean-Claude Juncker, President of the European Commission, and Angela Merkel, Chancellor of Germany, are not willing to enter into such discussions until the U.K. invokes Article 50.
After the release of the guidelines the negotiation of the withdrawal agreement begins. This document needs to address many issues important for the stability of both the U.K. and the Union’s economies including: transitional arrangements covering access to Europe’s single market, passporting rights in the Union for U.K. based financial companies, the free movement of people, and the rights of U.K. citizens in Europe and EU citizens in the U.K.
The withdrawal agreement will not be a trade treaty. Under Article 50(2), the withdrawal agreement negotiation process must take “account of the framework for [the U.K.’s] future relationship with the Union”, implying that a separate trade treaty will be signed. These talks will most likely occur simultaneously with the terms of one having great effect on the other.
Upon completion the withdrawal agreement must be approved by a qualified majority of the Council, without the U.K.’s input, as well as by the European Parliament. As Article 50(4) only excludes the U.K. from the European Council and the Council of the European Union (the Council), U.K.’s Members of the European Parliament (MEPs) will be able to vote. To pass, the withdrawal agreement must receive a super qualified majority, 72% of the members of the Council comprising at least 65% of the population of the Member States without the U.K. Member States will not need to ratify the withdrawal agreement, but must approve any changes to trade treaties as a result of the U.K.’s departure.
The U.K. could avoid this long and arduous process by simply repealing the 1972 European Communities Act. However, this would not be the wisest move, as it would sour the tone of any future trade negotiations with the EU. In addition, the U.K.’s membership in the EU, including the right to participate in the Union’s trade agreements, would immediately end. This sharp rupture would further destabilize markets already in turmoil over the EU referendum. A slow transition would be more stabilizing for the economy and give Whitehall the time it needs to sift through EU regulations.
After more than 40 years of membership, thousands of EU regulations are enforced in the U.K. Many EU laws are automatically binding in the U.K. without any legislation, such as employment law and financial regulations. As soon as the U.K.’s EU membership expires these laws will no longer be valid leaving important regulatory gaps. Other EU laws necessitated U.K. legislation to be binding and thus these laws will need to be removed or amended by acts of Parliament. For example, the Scotland Act 1998 mandates that any Scottish laws which are incompatible with EU legislation are automatically void. In addition, many U.K. common laws have evolved from EU regulation and must now be changed by the U.K.’s court system or by statute.
Whitehall will need to sift through tens of hundreds of laws and decide which ones go, which ones stay, and which ones need amendment. This will take years, especially as the number of civil service employees has declined drastically since WWII, recently falling 15% from October 2010 to March 2015. The government could enact a “Brexit Bill” extending all EU laws until they have had time to review or repeal them. However, this may not sit well with the 51.9% of people who voted to ‘Leave’, many of whom wanted freedom from EU laws.
Alongside the withdrawal process, the U.K. also needs to negotiate a free trade agreement with the EU. The Secretary of State for Foreign and Commonwealth Affairs estimates this process could take up to a decade. Complicating the matter, the U.K. government is short-staffed; their 20 active trade negotiators will face the 600 well-seasoned trade negotiators at the European Commission. The trade agreement needs to be approved unanimously by all Member States and ratified by the relevant national legislatures, including each of Belgium’s seven different parliaments. This gives Member States ample opportunity to block the agreement to obtain more favourable terms for themselves at a cost to Britain. As an example of how gruelling this process can be, the EU-Canada Trade Agreement has been in the works for seven years and is still not ratified by the Council, the European Parliament, or Member States. Finally, the U.K. will also need to negotiate with over 60 countries outside of the Union to create new trade deals with them. However, these countries may want to wait to see how favourable a deal the EU gives the U.K. before entering into talks.
Brexit is a mammoth legal undertaking that will keep the U.K. government busy for years to come. During this time, the atmosphere in the U.K. and EU will be filled with political and economic uncertainty, hampering growth during a period of global financial fragility. Whatever the terms of the withdrawal and trade agreements, the next ten years are crucial in defining the economic prosperity and political cohesion of Europe for future generations.
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