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Brexit comment - breakthrough in talks

Brexit comment - breakthrough in talks

  • Europe
  • Brexit

08-12-2017

After a false start on Monday 4 December the exit negotiations have finally moved the second phase, which means talks on a trade deal and transition period, subject to agreement of the European Council on 15 December. This has only been possible because some kind of compromise  has been reached over the nature of the border post Brexit between Northern Ireland and the Republic of Ireland. On Monday Mrs Foster, leader of the DUP, totally rejected the proposition that a different status should be accorded to Northern Ireland from the rest of the UK on Brexit. This has meant that the way the border will work will have to apply to the whole of the UK in the same way - and  the only way to avoid a hard border is through " regulatory alignment" between the UK and the rest of the EU. It remains to be seen for the long term how far that regulatory alignment will go after any transition period comes to an end.

A transition period is also clearly on the table and looks remarkably like continued membership of the single market and the Customs union whilst a trade deal is negotiated. President Tusk has said the UK would have to " respect the whole of EU law, including new law" as well as contributing to the EU budget. This closely resembles the situation of Norway, who are not members of the EU and have no seat at the EU legislative table, but are the eighth largest contributor to the EU budget in exchange for membership of the single market. Norway is not a member of the Customs union so is free to negotiate its own trade deals with the rest of the world. Furthermore the " off the shelf solution" to staying in the single market would be to remain in the EEA during the transitional period. Notice to leave the EEA (which unlike Article 50 is only 12 months) has not yet been given and may now not be given for another two years.

It was essential for Mrs May to get trade talks started now the method of  calculating  what the UK will pay on exit has been substantially agreed.  It also  seems  clear that to get the trade agreement talks started the UK has had to accept the continued jurisdiction of the Court of Justice of the European Union but that in return the EU has accepted businesses should only have to adapt to one regulatory change now postponed to the end of any transitional period - and this has to be good news for business.

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