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Background note: European Parliament blows hole in UK Government’s Brexit vision

On the day the Prime Minister said that the UK’s best days were ahead, we were given an insight into the EU’s thinking which undermines this rosy optimism. In truth, only risk lies ahead. 

The European Parliament makes clear that:

  • The UK will not be given even similar benefits as being in the single market and customs union, let alone the exact same benefits, as had been promised.
  • The UK is unable to start negotiating trade deals with non-EU countries in advance of its withdrawal. 
  • Parallelism is out: substantial progress has to be made on the withdrawal agreement before talks can start on transition or future trade, and a future trade deal can only be agreed once the withdrawal agreement is agreed
  • The EU expects a financial payment as part of the withdrawal agreement. 
  • A future trade deal would need to include equivalence in key areas including competition, trade and social policy, which means a bonfire of regulations is incompatible with a new UK-EU FTA.
  • There will be no sectoral deals that replicate the exact same benefits as being in the single market and customs union
  • There could be a transitional deal, but for a maximum of three years, during which period the ECJ would have legal authority.

Key points from the European Parliament resolution:

  • Being in the single market and customs union would have been “optimal” for the UK and the EU, but that this was not possible due positions taken by the UK Government.

“Whereas nevertheless a continued membership by the UK of the Single Market, the European Economic Area and, or the Custom Union would have been the optimal solution for both the UK and the EU-27; whereas this is not possible as long as the UK government maintains its objections to the four freedoms and the jurisdiction of the Court of Justice of the European Union, refuses to make a general contribution to the EU budget and wants to conduct its own trade policy”. 

  • The UK will not be given even similar benefits as being in the single market and customs union, let alone the exact same benefits, as had been promised.

“Hopes that under these conditions the EU and the United Kingdom will establish a future relationship that is fair, as close as possible and balanced in terms of rights and obligations; regrets the decision by the United Kingdom government not to participate in the Single Market, the European Economic Area or the Customs Union; considers that a State leaving the Union cannot enjoy similar benefits as an EU Member State and announces therefore that it will not consent to any agreement that would contradict this”. 

  • The UK is unable to start negotiating trade deals with non-EU countries in advance of its withdrawal. 

“Recalls that in this respect it would be contrary to EU law for the United Kingdom to

begin, in advance of its withdrawal, negotiations on possible trade agreements with third countries; stresses that such an action would be in contradiction with the principle of sincere cooperation laid down in Article 4(3) TEU and should have consequences among which the UK’s exclusion from the procedures for trade negotiations laid out in Article 218 TFEU”.

  • Parallelism is out: substantial progress has to be made on the withdrawal agreement before talks can start on transition or future trade, and a future trade deal can only be agreed once the withdrawal agreement is agreed

“Agrees that should substantial progress be made towards a withdrawal agreement then talks could start on possible transitional arrangements on the basis of the intended framework for the United Kingdom’s future relationship with the EU;

“Notes that a future relationship agreement between the European Union and United Kingdom as a third country can only be concluded once the United Kingdom has withdrawn from the EU”. 

  • The EU expects a financial payment as part of the withdrawal agreement. 

“Stresses that a single financial settlement with the United Kingdom on the basis of the EU's annual accounts as audited by the Court of Auditors, must include all its legal liabilities arising from outstanding commitments as well as make provision for off balance sheet items, contingent liabilities and other financial costs that arise directly as a result of its withdrawal”.

  • A future trade deal would need to include equivalence in key areas including competition, trade and social policy, which means a bonfire of regulations is incompatible with a new UK-EU FTA.

“Stresses that any future agreement between the European Union and the United Kingdom is conditional on the United Kingdom's continued adherence to the standards provided by the Union's legislation and polices, in among others the fields of environment, climate change, the fight against tax evasion and avoidance, fair competition, trade and social policy”.

  • There will be no sectoral deals that replicate the exact same benefits as being in the single market and customs union

“Opposes any agreement between the EU and the United Kingdom that would contain piecemeal or sectorial provisions, including with respect to financial services, providing UK-based undertakings preferential access to the Single Market and, or the Customs Union; underlines that after its withdrawal the UK will fall into the third country regime foreseen in EU legislation”.

  • The EU expect the UK to pay for participation in certain programmes, citing Erasmus as an example

“Notes that if the United Kingdom requests to participate in certain EU programmes it

will be as a third country including appropriate budgetary contributions and oversight by the existing jurisdiction; would welcome in this context its continued participation in a number of programmes, such as Erasmus”.

  • There could be a transitional deal, but for a maximum of three years, during which period the ECJ would have legal authority. 

“Believes that transitional arrangements ensuring legal certainty and continuity can only be agreed between the European Union and the United Kingdom if they contain the right balance of rights and obligations for both parties, preserve the integrity of European Union legal order, with the European Court of Justice responsible for settling any legal challenges; they must also be strictly limited in time, and should not exceed three years, and in scope as they can never be a substitute for Union membership”.

The draft European Parliament resolution is here: https://www.scribd.com/document/343381933/Draft-Resolution?secret_password=ZRpWCjIhKmIdH3FR1oiR#download&from_embed




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