The UK has notified the EU that it will leave. What happens now?
According to the EU Treaties, the UK will stop being a member of the EU two years after the Article 50 notification. During this two year period, the UK and EU will negotiate a withdrawal agreement, also taking into account the framework for the UK’s future relationship with the EU. According to the Treaty, the UK stops being a member after two years, regardless of whether this agreement is completed or not, unless all other EU Member States agree to extend the negotiations.
How will the EU respond to the Article 50 notification?
The Article 50 notification is addressed to the European Council, which consists of the head of state from each EU country. The European Council is expected to acknowledge receipt of the notification and then respond with its own draft negotiating guidelines within 48 hours.
The heads of state will then come together for a special meeting on April 29th to agree a negotiating position which will then be given to the European Commission, which negotiates on behalf of the EU. This will form the EU’s opening position for the negotiations.
The European Parliament will also agree a resolution on negotiating priorities, which is not legally binding.
This means that during the month of April, a lot of political noise can be expected from Brussels and other EU countries as politicians set out their negotiating stances and work hard to agree a common position. Draft documents may leak out and can occasionally be reported as agreed EU policy before they are finalised. This means that some reporting and commentary may not be an accurate reflection of the situation in London or in Brussels. The CBI will be helping its members to cut through this noise.
Who represents the EU in the negotiations?
In practice, the negotiations will be carried out by the European Commission. The Commission has appointed Michel Barnier as its chief negotiator, a former European Commissioner for the Internal Market and Services. Barnier has already assembled a specialist team for the negotiations and will also be able to rely on other officials from the European Commission when their specialist expertise may be needed.
The European Parliament has appointed Guy Verhofstadt, a former Prime Minister of Belgium, as its chief Brexit negotiator, although the Parliament does not play a formal role during the negotiations.
How will the negotiations be structured?
The UK is planning to negotiate its withdrawal from the EU and future relationship at the same time although some EU sources have indicated that they would prefer to negotiate the withdrawal before discussing any future arrangements. It seems clear that the resolution of the UK’s outstanding financial liabilities to the EU plus any share of assets the UK is entitled to will be one of the first items up for negotiation.
How will the EU sign-off on the agreement?
Once an agreement is reached, it must be approved by the remaining 27 EU Member States and the European Parliament. Depending on the nature of the agreement, it may also require the approval of national parliaments. This means that in practice, negotiations will need to be completed by Autumn 2018 to allow time for approval.
What happens if there is no agreement between the UK and the EU?
If no agreement is reached after 2 years, and there is no mutual commitment to extend the negotiating period, the UK leaves the EU without any kind of preferential trading agreement or legal mechanism for cooperation.
For many sectors, this would mean having to rely on World Trade Organisation (WTO) rules for trading with the EU, including tariff and non-tariff barriers to trade. Other sectors which are not covered by WTO rules could face even greater difficulties trading with the EU, such as the aviation sector, which relies on EU agreements not just for flights to and from the EU, but also to and from other parts of the world, such as the United States.
The CBI can help you to work out what a no deal scenario would mean for your business.