Devil in the Detail: Brexit Talks Are Making Little Progress

  • From the divorce bill to health care, the two sides disagree
  • EU’s Barnier, U.K.’s Davis to speak to reporters around midday

Barnier Says Brexit Progress Far From Sufficient

Follow @Brexit for all the latest news, and sign up to our daily Brexit Bulletin newsletter.

The Brexit negotiations are deadlocked.

From the large issues like Britain’s divorce bill, to the small technical ones like reciprocal health care, progress is scarce. That makes the chances of the U.K. being allowed to move on to trade talks in October increasingly slim, according to Guy Verhofstadt, the European Parliament’s Brexit coordinator. The European Union blames Britain’s reluctance to set out its positions; Britain says the EU isn’t flexible enough to compromise.

"To be flexible you need two points, our point and their point," EU chief Brexit negotiator Michel Barnier told reporters on the sidelines of talks in Brussels on Wednesday. "We need to know their position and then I can be flexible."

Inside the negotiating rooms of Brussels there’s frustration at the stalemate. These examples, as related by people familiar with the U.K. negotiating position, show why a deal is so elusive.

Pile of paperwork.

The bill

Negotiations over the U.K.’s financial settlement have barely got started. The U.K. has refused to reveal its position because it thinks not showing its hand gives it more leverage. So far, British negotiators have restricted themselves to picking holes in the EU’s stance, the people said.

While the issue is highly political, some of the disagreements are deeply technical. The EU’s budget plan is worked out over a period of seven years, with the current one starting in 2014. The EU contends that because the U.K. signed up to this plan four years ago it’s liable for the ensuing commitments.

The U.K. argues that since each seven-year budget is broken down into annual portions -- which have to be agreed on each year by all EU governments -- it shouldn’t be on the hook for the years after it has left.

Speaking in Japan on Wednesday, Prime Minister Theresa May confirmed the U.K. was looking at the EU’s analysis.

“We’re a law-abiding country; we will meet our obligations, but there are still significant discussions to be had on what that should be,” she said.

Falling sick

British travelers get free emergency health care in the EU if they carry a European Health Insurance Card. It means hospitals from Lisbon to Warsaw get reimbursed by the U.K.’s National Health Service for treating a U.K. citizen. And it’s reciprocal: European travelers get the same benefits when in the U.K.

The U.K. wants this to continue after Brexit but says the EU won’t allow it because of what it sees as rigid adherence to regulations that say the program can only be used in their member states.

Supply chains

This was meant to be the easy bit. Both the U.K. and the EU have published positions on how to keep supply chains moving freely in the days after Britain leaves the bloc. With so many goods manufactured in more than one EU country, packaged in another and sold in yet another, an agreement is crucial.

Again, British officials believe the EU’s refusal to waver from the wording of their negotiating mandate, and a narrow interpretation of the supply chain, are blocking progress.

Read more: Britain’s Not-So-Sweet Options for EU Trade Deal

Cross-border commuters

Both sides agree that frontier workers -- people who live in one country and commute to work in another -- should have special rights under the Brexit deal. Neither the U.K. nor the EU wants Brexit to mean that people who live in, say, Brussels, and take the two-hour train to work in London every week, suddenly have to leave their jobs.

But while the negotiators have managed to agree in principle to the idea, there’s still argument over the definition of who should be classed as a frontier worker.

Being judged

The role of the European Court of Justice looms over much of the Brexit negotiations, not least how the overall deal should be enforced.

But there are more technical issues too, such as what to do about proceedings concerning the U.K. that are underway but not concluded when the country leaves the EU.

Britain says that while the ECJ should be allowed to rule on cases it’s already dealing with on Brexit day, it shouldn’t be able to start new ones, even if the facts occurred before the U.K.’s withdrawal. The EU argues that the ECJ should be able to deal with cases after the U.K. leaves if the facts occurred beforehand.

Read more: Why EU Court of Justice Is a Brexit Battleground

— With assistance by Alex Morales

    Before it's here, it's on the Bloomberg Terminal.