The EU Engages: What We Learned About Brexit From Donald Tusk

EU's Tusk Says 'We Already Miss' U.K.

For nine months, European Union officials declared “no negotiation without notification” when asked for informal insights into their Brexit strategy.

Now that British Prime Minister Theresa May has formally notified the bloc of the U.K.’s intention to leave, EU officials on Friday began outlining their plans for the negotiations.

Donald Tusk holds the letter invoking Article 50.

Photographer: Jasper Juinen/Bloomberg

Here are the takeaways from the draft guidelines that EU President Donald Tusk circulated.

The EU Loves the EU

Brexit means a mistake in the eyes of the EU because Britain is turning its back on a project of peace and prosperity.

There will be no need for punishment though, because as Tusk argued “Brexit in itself is punitive enough.”

However, the U.K. was rapped on the knuckles for a decision which posed “significant uncertainties,” threatened the rights of citizens and undermined businesses’ confidence in the regulatory environment.

The inference was that Britons were hotheaded and the people of the 27 other countries now deserve some some calm or, as the EU put it, a “phased approach” and “orderly withdrawal.” 

No matter how much May would like to race ahead to forging her new “deep and special partnership” she’s going to have to bide her time while the split is conducted in measured fashion.

Divorce Terms First

The priority is to “settle the disentanglement.”

This means paying the infamous bill EU officials have pegged at around 60 billion euros ($64 billion), though no sum was given on Friday. “The settlement should cover all legal and budgetary commitments as well as liabilities, including contingent liabilities.”

Also to be determined are the rights of EU citizens already living in the U.K. and those Britons residing on the continent. And while some Brexit campaigners wanted an earlier cutoff, those rights should be guaranteed to anyone moving between now and Brexit and extended to their family members future and present, according to the EU.

Businesses will need to be assured there’s no “legal vacuum” and the Irish border will need addressing, with "the aim of avoiding a hard" one.

Pay to Play

Only when “sufficient progress” has been made on those matters can a chat about trade begin. Tusk said that could be by the Fall, but only if common ground can be found first.

That means May might get a crack at the commercial relationship she needs for her exporters, but she has to do some legwork first and some money may need to change hands. Her preference for debating trade and the breakup in tandem won’t be entertained. 

And, of course, any trade deal won’t “amount to participation in the single market” and no “cherry picking” will be tolerated. The U.K. has the best possible trade arrangement right now and it won’t be allowed to replicate it is the message. 

Trade Deals Take Time

While May speaks of a “bold and ambitious” deal wrapped up in two years, the EU speaks merely of starting work on a “framework.”

To underscore its preaching of patience, the EU said any deal couldn’t be concluded until Britain formally left the bloc in March 2019. At that point, it also becomes a third country, without access to the many international deals the EU has struck.

Also, if if talks on trade don’t begin until the Fall then the two sides realistically have just a year left given the need to have the divorce deal worked out by the end of 2018 to ensure parliamentary approval. 

Canada and the EU took seven years to strike a deal and financial services didn’t feature as much in that one as May would like in hers.

Unlike the divorce deal, a trade agreement also requires the approval of national parliaments. Belgium alone has six of them.

And even if miracles happen and every lawmaker in Europe backs the agreement, it takes time for full ratification.

Transition At a Cost

All that leaves Britain needing a transition to “bridge” the divide from Brexit to the new relationship.

While the EU said that might be possible, it noted it would be “time limited” and require the U.K. to keep paying money, accepting free movement of EU labor and observing EU law for its duration. 

That may be hard for May to stomach as the 2020 general election nears. Those who were the most voracious in campaigning for Brexit could make the case that she hasn’t really delivered it.

She might have to ignore them if she wants to avoid the sweeping tariffs and spike in uncertainty that would result from not having a stopgap.

No Divide and Conquer

May can think again if she wants to play the 27 capitals and the European Commission off each other. Last week she wrote op-eds in seven newspapers across the bloc, but such efforts will come to nothing if the EU has its way.

“The union will act as one” and “there will be no separate negotiations,” the guidelines said.

Even so, capitals do plan to have a say when negotiator Michel Barnier starts his work.

Calling May’s Bluff

May chose not to repeat her threat last week that “no deal is better than a bad deal,” but the EU is ready if talks do collapse.

The bloc promises to be “constructive,” but it also noted “it will prepare itself to be able to handle the situation” if the “negotiations were to fail.”

Walk if you want to, prime minister.

One more thing...

And as for May’s tying of trade to security provisions, the EU showed it can needle its opposite number too. 

The suggestion that Spain have a determining say on whether any Brexit deal will apply to the British territory of Gibraltar sparked a wave of grumbling from London.

What’s Next

The guidelines circulated by Tusk on Friday are just a draft. National government representatives, known as sherpas, will meet to discuss potential revisions on April 11 and 24. On April 27, European affairs ministers will sign off to the final document for the 27 leaders to adopt on April 29.

The European Commission will then circulate more detailed negotiating directives on May 3, which will also be discussed and potentially revised by government representatives. Ministers will adopt the final negotiating directive on May 22, giving the go-ahead for substantial talks to begin.

Until then, any discussions between Barnier and the British government will be about process, not substance.

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