Negotiations formally start today. The EU envisages around 22 four-week cycles to the negotiations in which each cycle addresses specific issues, with a week of preparation, a week of exchange of papers and explanation, a week of negotiation to find a deal and a week of reporting back to secure agreement with what the negotiators have agreed as potential compromises.
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The 27 other EU countries want to settle first all the legal questions triggered by a country leaving the EU (rights of citizens affected, budgetary liabilities, borders) before moving onto the future relationship (on trade and many other matters) between the EU and the UK. Britain wants these two sets of questions dealt with in parallel. The EU will get its way – Britain is the one walking out and is the supplicant in most aspects of the negotiations. But some clarity from the outset as to what Britain wants for its future relationship with the EU would be helpful.
Yet almost a year after referendum, and nearly three months after handing in the Article 50 notification, we still with no clarity as to what the badly divided UK government wants. There are essentially four main possibilties, and Britain needs to decide what it wants before meaningful negotiations start. They are:
- to leave without a deal, with no legal issue solved and, in economic terms, immediately facing tariffs on trade with the EU under WTO rules and needing to seek rapid agreement with countries around the world to replace the ones we currently have through the EU.
hard Brexit, leaving the EU, including the single market and the customs union, but securing a free trade deal with the EU for most goods and some services and asking for time to negotiate new trade deals with third countries.
soft Brexit options (various permutations around staying in single market and/or customs union, possibly through the EEA), keeping the economic advantages of membership, but involving continued acceptance of single market rules.
- to remain, as we can always change our mind.
And here the divisions within the Conservative party, between it and the DUP, and more widely in the House of Commons and the Lords come into play. Those close to industry – or simply with a greater awareness at what is at stake for Britain’s economy, for jobs, prosperity and public finances – want to at least stay in the customs union and often in the single market for the reasons I outlined last week.