European Council president Donald Tusk today warned that Theresa May’s wish for “parallel talks”, i.e. negotiating Brexit alongside future trade talks, “will not happen”.
However, this statement may not be as straightforward as it sounds. Vincenzo Scarpetta, a senior policy analyst at think tank Open Europe, believes the UK government will be encouraged by Tusk’s statement this morning.
What Tusk said
Setting out his priorities, Tusk said exit talks would need to focus on:
- The rights of EU citizens who live, work and study in the UK
- Preventing a “legal vacuum” for companies that would stem from EU laws no longer applying in the UK after Brexit
- The UK honouring financial commitments and liabilities to the EU
- And a solution to avoid a hard border between Northern Ireland and Ireland.
Setting out his plan for a phased negotiation, Tusk said these four issues will be dealt with first and foremost.
He added: "Once, and only once we have achieved sufficient progress on the withdrawal, can we discuss the framework for our future relationship. Starting parallel talks on all issues at the same time, as suggested by some in the UK, will not happen.
"And when talking about our future relationship, we obviously share the UK's desire to establish a close partnership between us."
Strong ties, reaching beyond the economy and including security cooperation, remain in our common interest.
What this means
Open Europe’s Scarpetta speculated that this means talks on the future relationship could begin as early as the end of this year. He said today’s negotiation strategy indicated “definitely the European Council is open to holding parallel negotiations later in the two-year process”.
He said the European Council stance on parallel talks marks a compromise.
“In order for a negotiation to be successful, you meet half way,” he said.
"The initial request of the United Kingdom is to have parallel negotiations from the beginning, and on that point I think the guidelines make clear this is not possible.
"But… I think overall, the message from the guidelines is positive and encouraging for the UK government, because, as I said, it makes it clear that the 27 stand ready to discuss the future relationship during the two-year timeline."
What others think
Investment Association chief executive Chris Cummings said:
The EU27 negotiating guidelines outlined today are a pragmatic and constructive set of principles that bring clarity to the EU27's approach throughout the UK's withdrawal process. The challenge for both sides will be to continue the negotiations in that spirit over the next two years.
We will continue to play our part in working with the UK government and our partners across the EU to ensure that a mutually beneficial deal can be struck that safeguards financial stability and the interests of savers and investors both at home and across Europe.
Phillip Souta, head of UK public policy at law firm Clifford Chance, described the European Council approach as “firm but fair”.
The EU has maintained its position that an agreement on future UK/EU relations can only be concluded once the UK has left the EU. However, the positive willingness to engage in preliminary and preparatory discussions once initial matters are settled provides a roadmap for tackling this UK priority during the Article 50 negotiations. We should not underestimate the complexity of these negotiations, but this leaves open the possibility that an agreement could be ready to implement straight after the UK's departure.
Syed Kamall, Conservative MEP for London, said:
We were always going to be starting with talks about talks.
Mr Tusk calls for a phased approach. That makes complete sense - but that does not mean phases should not overlap or progress in tandem - either officially or unofficially.
I am confident that as well as the terms of our separation, we will soon be discussing other key issues too such as trade and security. They are too important to ignore for long.
This is the start of a long process. Sometimes there will be encouragement and sometimes attempts to pre-condition our expectations, but we would be wise to treat each with caution and polite persistence.
Joshua Mahony, market analyst at IG:
This morning has seen Tusk reject calls to start trade talks immediately, yet conceded that they could start when divorce (payment) discussions are sufficiently advanced. This is a clear move to separate the divorce payment from the trade discussions, whereas the UK would obviously see payment as a concession worth bargaining with. The problem is that with valuations over a divorce payments so far apart, there is a feeling that discussions over fees could be protracted.
With so much to do in the just two years, the UK needs negotiations to start as soon as possible.