Brexit deal far from decided ahead of crunch EU Summit
With European presidents and prime ministers making final preparations for this Sunday’s historic Brexit Summit, many issues remain up in the air. While many leaders want to get ratification underway, UK Prime Minister Theresa May is not alone in demanding significant final changes to the original draft that could yet upset the political applecart.
While negotiators on Wednesday said a new draft text had been agreed in principle, May is meeting for a last-minute session on Saturday with European Commission President Jean-Claude Juncker. The goal will be to try to get high-level signoff on the new text before the summit, but snags could still arise given the range of issues causing problems this week.
Take Spain, which earlier this week threatened to veto the Brexit deal over the thorny issue of the future of Gibraltar, the overseas territory on the southern Spanish coast that was ceded to the UK under the 1713 Treaty of Utrecht. Madrid, which maintains a claim to the peninsula, has long adopted a sharp stance on this issue.
It has become more politically sensitive in the context of forthcoming local elections, where the government of Socialist Prime Minister Pedro Sanchez has been criticized by the center-right Popular Party for not being robust enough.
Spain is the euro zone’s fourth-largest economy, and benefits economically around 300,000 British citizens residing in the country. It also has a significant trade deficit with the UK that, other things being equal, favors softer negotiating positions on Brexit.
Yet this picture is complicated by Gibraltar. And after reading the draft Brexit deal, the Sanchez government has demanded to Brussels that no future EU-UK trade or security deals can be applied to the territory without Madrid’s consent, and that any extension of the proposed UK transition deal would not automatically apply to it either.
Even if a deal is found to smooth these issues, it may only kick the can down the road, with tensions arising again in the future. Previous Prime Minister Mariano Rajoy and his Popular Party government had invited the UK to negotiations on Gibraltar’s future, including proposals for joint sovereignty.
Prime Minister Theresa May is under intense political pressure to show that she has won significant concessions.
Andrew Hammond
And in October 2016, Rajoy told May that such a joint sovereignty model could be, post-Brexit, the only way for Gibraltar to secure continued access to the European Single Market, which is crucial to its economy. However, the problem for Madrid is that the territory’s government, and by extension London itself, is vehemently opposed to Spain’s proposals.
Beyond Gibraltar, there are political grumblings about the draft Brexit deal from other EU members. For instance, France is leading a group of countries, including the Netherlands, pushing for an EU declaration that a future EU-UK free-trade agreement must rest on the UK granting comparable access to its fishing waters to that which exists now. This would be hugely politically contentious in the UK were May to concede.
France is also concerned that the withdrawal agreement, which provides the basis for at least a temporary UK-EU customs union and the possibility of a permanent free-trade agreement, does not provide strict enough conditions to prevent the UK enjoying an economic advantage.
There is, therefore, a push underway for so-called equalization requirements as a condition for any future EU-UK trade deal, which would try to prevent future unfair competition in areas such as taxation and employment policy.
The positions of countries such as France and Spain on these issues underlines how despite the EU-27 negotiating the last two years as a cohesive bloc, each country has distinctive political, economic and social interests that inform its stance on the UK’s exit.
These positions — which vary according to factors such as trade, wider economic ties and patterns of migration with the UK — are likely to come out more prominently in 2019 and 2020 if a Brexit withdrawal deal is agreed and negotiations move on to the future EU-UK relationship.
Yet for all this EU-27 upset, it is May who is pushing for the most changes at this weekend’s summit. She therefore continues to have intense pressure on her, with some big decisions still to make.
One of these decisions is the length of the transition period after the end of March 2019 if a Brexit withdrawal deal is agreed. Originally, this was planned to be until December 2020, but the EU’s chief Brexit negotiator Michel Barnier and UK Business Secretary Greg Clark this week suggested that the transition could last until at least December 2022.
May wants to make changes not just to the 585-page withdrawal document, but also to the accompanying political declaration on the future relationship between the UK and the EU, which is currently only seven pages. One of her key ambitions with the latter document is to make it longer and stronger.
The reason for this is that it will set the agenda — if the much longer, legally binding withdrawal deal is ratified by the UK and European parliaments — for the talks from April on the new relationship between the UK and the EU.
Moreover, with the price tag for the withdrawal deal set at about £40 billion ($51 billion), May is under intense political pressure to show that she has won significant concessions in her ambition to secure the widest and most comprehensive future free-trade deal with the EU. At present, many UK Brexiteers believe, in the words of former Foreign Secretary Boris Johnson, that the commitments the EU has so far given here amount to “diddly squat.”
As well as adding some text, there are also key elements of the current political declaration that May wants to see removed. For instance, Brexiteers have raised concerns about the reference to “combining deep regulatory and customs cooperation, building on the single customs territory provided for in the withdrawal agreement.” They suggest that this has the potential to become a permanent EU-UK customs union.
Taken overall, it is not just May but also other EU leaders who are unhappy with parts of the withdrawal agreement and the accompanying future-relationship declaration. Despite the political pressure to finalize the details at the summit, this could yet mean that there is an unexpected negotiating breakdown or that more time may be required to seal a deal, with the next scheduled EU leaders’ meeting in mid-December.
• Andrew Hammond is an associate at LSE IDEAS at the London School of Economics.
