-U.K. and EU agree Brexit transition period
The most important development last week was the EU’s approval of a draft text on guidelines for future trade relations with the U.K. after Brexit.
“Decision: EU27 has adopted guidelines for the future EU-U.K. relations after #Brexit,” Donald Tusk, president of the European Council, broke the news on Twitter on Friday morning.
Members of the EU have now formally signed off the negotiating guidelines for the next phase of Brexit talks between the parties. They have given a green light to talks over the bloc’s future relationship with Britain for the first time while giving hope to the business world to some extent that the deadlock is lifting.
The text lays out a limited, agreed-on transition period that will follow the Brexit date of March 29, 2019.
“The transition period terms have been agreed on,” said the chief EU and U.K. Brexit negotiators on Monday.
Michel Barnier said the U.K. would obey EU rules and regulations without any participation in the EU’s decision-making policies up to the ending of the transition period on Dec. 31, 2020. Calling the development a “decisive step,” Barnier said, “The transition will be of limited duration.”
The published guidelines state that the EU is determined “to have as close as possible a partnership with the U.K. in the future.”
This will cover “trade and economic cooperation as well as other areas, in particular, the fight against terrorism and international crime, as well as security, defense and foreign policy,” the guidelines document states.
Prime Minister Theresa May has long been criticized for not making enough progress during negotiations. However, last week’s agreement could work towards avoiding a cliff edge and moving the process forward towards a softer Brexit.
Last week, May welcomed the outcome at the European Council meeting.
“I welcome the fact that the EU Council this morning has agreed the details of the implementation period – that period after we leave the EU next March 2019 until the end of December 2020,” she said.
“This gives certainty to people and businesses, it gives them clarity to plan for their future, and it ensures that they will only have to make one adjustment, one change when we enter into the new relationship with the European Union in the future,” she said.
“I believe it is in the best interests of the U.K. and the EU that we get a deal that is in the best interests of both,” May added.
One way or another, last week’s agreement on a transitional deal might well pave the way for a free trade agreement. However, a free trade deal is highly likely to take longer to realize the transitional deal. In such case, the EU could be forced to extend the transitional deal for a few more years.