EU expects home-team advantage in Brexit talks

Thorny issues like financial settlement and citizens’ rights after Brexit will dominate initial rounds of talks.

The European Commission intends to conduct Brexit negotiations with the U.K. government in Brussels, rather than alternating with London, and sees the talks taking place in “rounds” as has been the case with EU trade deals, according to officials in Brussels.

The Commission and European Council’s plans for handling the divorce are beginning to take shape as they await official notification of Britain’s departure via Article 50, expected in mid-March. Officials at both institutions clearly expect to have the home-team advantage and to make a strong initial impact on the U.K. by bringing up some of the toughest issues, including Britain’s bill for leaving the European Union, in the early stages of play.

In Brussels’ view of how the negotiations will pan out, the U.K’s financial settlement with the EU, the rights of EU citizens in the U.K. and vice versa, and the future of the U.K.’s borders with the EU will be among the eight initial areas for discussion.

That order of priorities would push any talk of parallel negotiations on the future EU-U.K. trading relationship to 2018 at the earliest, an example of how the apparently bureaucratic issue of how to format the talks will have huge political implications both for Theresa May’s government — which is keen to show Britons they will have a bright future outside of the EU — and Brussels, which will instinctively want to discourage other countries from leaving.

The Commission wants to structure any future EU free-trade deal with the United Kingdom as a “mixed agreement,” mirroring the format of the EU-Canada trade deal approved this year, one of the EU officials said. That would enable parliaments across the EU to veto parts of the text — the same way Belgium’s Walloons held up the Canadian deal — while keeping other elements as the exclusive competence of the EU.

That could be a particular concern for London, as it could delay an agreement and subsequent trade deal with the remaining EU27 while individual countries could hold up a deal on issues ranging from access for U.K. financial institutions to the rights of EU workers in Britain.

The issue with the greatest risk attached is that of the financial bill to be presented to the U.K. as it leaves the EU.

The figure, which the EU estimates to be around €60 billion, cannot be precisely calculated until the day the U.K. leaves the EU, Commission officials told national diplomats in Brexit coordination meetings that were held on February 6.

In the meantime, the European Commission and some national governments are already split on how Britain’s payment should be determined

While the Commission’s Brexit negotiator Michel Barnier wants to avoid giving the impression that any such calculation is designed to punish Britain for leaving, some national governments — including France and Germany — are in no mood to find ways to reduce the financial impact on the Brits. Those countries reject the idea of reducing the payment to be made by the U.K. by deducting its notional share of the EU’s estimated €154 billion in assets, such as property, cash and other financial holdings.

From the U.K. side, a point of tension will be whether it should pay any of its existing commitments (for example, contributions to the EU’s 2014-2020 budget) beyond the date at which it leaves the EU. National diplomats have discussed 2023 as a possible final due date for the payment.

Guaranteed residency

At a February 22 meeting of Commission officials, diplomats from the 27 countries that will remain in the EU, and members of the European Parliament, the main topic of discussion was the reciprocal rights of EU citizens living in the U.K. and British citizens living in Europe. The Commission and EU diplomats agreed both categories of people should be guaranteed the right of residency in the country where they are living on the date of U.K. withdrawal, said one EU official close to the talks.

“The question was how do we count? And when do we start counting? From the notification or withdrawal? The Commission agreed that the withdrawal would be a relevant date,” said the official, adding that the pension rights of both categories of people should also be protected. “If you have lived in the U.K. for years, you have acquired rights, and these can’t be contested, and same for Brits living in the EU.”

Representatives of countries including Austria, Belgium, Denmark, Spain, Finland, France, Germany, Hungary, Italy, Poland, Slovakia and Portugal had expressed in the February 6 meeting that the Brexit agreement must guarantee such rights in writing to ensure they are upheld by Britain.

One month ahead of the U.K.’s self-imposed deadline for triggering the start of negotiations, other basic questions remain unanswered. While Barnier will lead negotiations for the EU and Brexit Secretary David Davis for Britain, it’s unclear how involved they will be in day-to-day negotiations.

Barnier has yet to receive any official mandate from the EU’s national leaders, and will in any case have to report back to them for instructions on a regular basis. He will receive his negotiating mandate only in April, at a summit of EU leaders called to discuss the triggering of Article 50.

Of the two chief negotiators, the Frenchman appears to have the tougher challenge. While Theresa May is quick to rebuke ministers who stray from her hardline Brexit message, Barnier has to satisfy 27 national leaders, and has toured EU capitals to seek a unified position on what his mandate will be, before it is subjected to a Council vote on a qualified majority basis. He is now in the middle of a second tour of capitals, this time to engage with national parliaments, including Germany’s Bundestag on March 7.

The interplay between the negotiators and national capitals promises to be fraught: Once technical agreement has been reached on any point up for negotiation, national leaders may be tempted to re-litigate elements that prove political contentious, or even to take over the talks directly if their underlings fail to agree. Officials on both sides of the Channel are extremely sensitive about what information reaches the public domain during the negotiations, particularly on sensitive issues such as the U.K.’s final bill for leaving the EU.