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July 16, 2018
Brexit Negotiations Explained
Celeste Li
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The referendum vote left the nation divided
52% of Brits voted to leave the EU — the “Leavers”
48% voted to remain — the “Remainers”
However, only 1/3 of lawmakers voted to leave
Even Prime Minister Theresa May was a Remainer until she was voted into office with a mandate to enact Brexit
Experts describe Brexit as the biggest and most complicated undertaking since WWII
Here’s why Brexit isn’t over yet
1. THE DIVORCE
After 43 years of marriage, the UK is leaving the EU
But before they can go their separate ways … comes the divorce settlement
There’s the money
The UK is expected to pay a “divorce bill” of £30-£40 billion
to cover outstanding bills and the like
There’s the kids (around 4.5 million of them)
The two parties need to agree on
the rights of 3.7 million EU citizens in the UK
and the 800 thousand UK citizens in the EU
Then there are the odds and ends to tidy up
Customs arrangements
Trade terms
Security
Northern Ireland border arrangements
Even then, many issues will need to be resolved after the deal
And course, the parties still have to live as neighbours no matter what
They get 2 years to agree.
The clock has been ticking since March 29, 2017, when the UK triggered Article 50.
So once the lawyers have hashed it out, the two just need to sign and that’s it, right?
No. This is where the divorce analogy falls apart
16 of the 27 national leaders in the European Council (representing over 65 percent of the EU population) need to agree on the deal
And a majority of the 751 members of the European Parliament also needs to sign the paperwork
And if they don't agree?
An extension can be granted to negotiations—but only if all 27 member states agree
And if they don’t all agree?
We’ll get to that later
2. LEAVING THE CLUB
“I don’t want to belong to any club that will accept people like me as a member.”
— Groucho Marx
No one wants to belong to a club that offers the same benefits to non-members as members
The EU will try to ensure the UK doesn’t get the benefits of membership without the costs
If it does, the deal risks undermining the EU’s existence
Membership means signing up to the four freedoms
Plus there are certain opt-ins like using the Euro and joining the Schengen open border zone
No one has ever left the club before
With business interests, regulations, and trade entwined among member states, experts warn it could take a decade to disentangle
3. HAVING YOUR CAKE
Foreign Secretary Boris Johnson famously said the UK would be able to “have its cake and eat it” in negotiating a new deal with the EU
“Brexit cake” has become a joke among EU leaders who insist the UK cannot come out with a better deal than it started with
The EU’s negotiation mantra is that “nothing is agreed until everything is agreed”
How far the EU might go in allowing a compromise is unknown
4. BREXIT SOFT OR HARD?
Brexit isn’t just a matter of being in or out of the EU
It’s about the future relationship with the EU—and that creates a sliding scale
… from soft to hard
The closer it is to status quo, the ‘softer’ the Brexit
The Norway model, for example, might be seen as a soft Brexit.
Norway is not a member of the EU so it cannot vote on EU laws and regulations
But it has access to the EU’s single market, allowing free trade
A ‘hard Brexit’ would mean much more independence, and also more barriers to trade
5. THE CLIFF EDGE
Negotiations are hurtling towards the deadline of March 29, 2019.
But if a deal isn’t in place, what happens?
If no deal is reached, then trade defaults to World Trade Organisation rules
Leaving with no deal is also called “crashing out” of the EU—the ultimate “hard Brexit”
Businesses are worried about a “Cliff Edge” scenario—the UK leaving the EU without new regulatory frameworks in place, or with too little time for them to adjust supply chains
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