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In Brexit Poker, Clock Narrows Transition Options

Oct 12, 2017 | ,

BRUSSELS (Reuters) – Nerves are fraying in the Brexit talks, negotiators are trying to work out if the other side is bluffing about walking away, and a ticking clock is fast narrowing British options come March 2019.

Philip Hammond, Britain’s finance minister, echoed recent EU assertions when he said that a transition period to some new relationship was a “wasting asset”, the value of which would “diminish significantly” for both sides if its form remains unclear to businesses much after the start of the new year.

As negotiators in Brussels make little progress before Prime Minister Theresa May meets EU leaders next week, a warning about a breakdown in talks from a minister seen strongly to favor a business-friendly “bespoke” transition out of the EU came a day after the EU summit chair spoke of a similar new year deadline.

Donald Tusk said on Tuesday that if London fails to settle divorce terms by December, and so unlock talks on the transition and future trade pact, then the EU would reconsider its objectives. That reflects mounting doubts across Europe that any legal exit deal can be struck.

The longer the stand-off goes on, EU negotiators said, the more Britain’s choice come March 30, 2019, will be between the “hard Brexit” by which it will simply quit all EU systems and be treated like, say, Australia, and a virtual status quo, staying in most EU systems, without voting rights, rather like Norway.

“The closer we get, the less there is to discuss about a transition and the more it just goes to a standstill transition, with Britain still in everything, but without a vote,” one said.

“Pretty soon,” said another, “It will be Norway or nothing.”

While all such commentary reflects the sides’ jockeying for negotiating advantage, the evidence this week is that they remain far apart and are getting tetchy. May and the EU traded jabs over whose court “the ball” is in after the prime minister made concessions in a speech at Florence on Sept. 22.

Behind closed doors, British negotiators voiced outraged surprise that her offer was seen as insufficient to launch talks on the future relationship. “It’s hard to say it was genuine,” one EU official said of the show of emotion. “It’s a form of pressure.”

Brexit Secretary David Davis and EU negotiator Michel Barnier are due to give a news conference around noon (1000 GMT) on Thursday to give an update on the week’s progress.


Businesses are sounding the alarm. A German industry federation warned members to start preparing for a “very hard Brexit”. A senior representative of London’s financial services industry told a Brussels audience this week that a legal transition agreement must be reached by the end of this year.

“Most importantly, it must reflect the status quo,” said Catherine McGuinness of the City of London Corporation. “There is no feasibility in asking firms to transition to a transition. If uncertainty continues, businesses will vote with their feet.”

Hammond ruled out budgeting — yet — for more customs and border facilities, and few on the continent believe threats of a walkout they say would hurt Britain more than them.

So leaders will watch May’s struggle to unite her government and sit tight. One senior EU diplomat said British counterparts were in such a weak position that “sometimes I feel sorry them”.

For many in Brussels, that makes a virtual status quo after Brexit the increasingly likely outcome: “In March 2019, Britain will formally leave,” said another EU official.

“But de facto most of the existing arrangements will remain … They will have their celebration of ‘independence’ and then we will sit down to talking business again.”

May insists a two-year transition period is enough to agree a new free trade pact, but many question that.

John Bruton, the former prime minister of Ireland, has recommended an alternative to either no deal at all or a virtual status quo transition — just keeping Britain fully in the EU for four years beyond 2019.

Arguing that the two-year deadline set by Article 50 of the EU treaty raises the risk of talks collapsing, and that agreeing first a transition and then another accord is complex, Bruton said this week that Britain and the EU should agree to a six-year negotiating period, with Britain only leaving in 2023.

Neither wants any extension. But Bruton warned: “The present tight time frame … increases the likelihood of miscalculation and of the UK leaving the EU with no deal at all.”

Additional reporting by Luke Baker and Richard Lough in Paris and Alissa de Carbonnel in Brussels; Writing by Alastair Macdonald; Editing by Hugh Lawson

Our Standards:The Thomson Reuters Trust Principles.

Brexit talks hit cash impasse, Barnier eyes move by December

BRUSSELS (Reuters) – British and EU negotiators hit a dead-end over money in four days of talks, the European Union’s Michel Barnier said on Thursday as he ruled out discussions on future trade being allowed to start by EU leaders next week.

Nonetheless, Barnier told a news conference, there was some movement on other elements of Britain’s divorce settlement and he spoke of possibly acceding in the next two months to British demands for talks on a trade pact and a transition period after withdrawal in March 2019 — if the political will was there.

Brexit Secretary David Davis said Britain was still pushing for EU leaders to give a green light to those talks on the future relationship when they meet Prime Minister Theresa May at an EU summit in Brussels next Thursday.

Barnier made clear, however, that despite new momentum from concessions given by May in a speech at Florence on Sept. 22, the British positions on money, expatriate citizens’ rights and the Irish border still fell short of the “significant progress” set as a condition for opening the trade negotiations.

May said Britain would ensure that the other 27 countries do not lose out financially from Brexit in the current EU budget period to 2020 and would honor commitments — but Barnier said London was failing to spell out just what it was ready to pay.

“Regarding that question we are at an impasse, which is very worrying for thousands of projects everywhere in Europe and also worrying for those who contribute,” he said.

“I am still convinced that, with political will, decisive progress is within reach in the coming two months. With David Davis, we will organize several negotiating meetings between now and the end of the year ”

Of the overall talks this week, which included some advance on citizens’ rights and technical progress in addressing issues in Ireland, Barnier added: “We worked in a constructive spirit, and we clarified certain points, without, however, making any great steps forward.”

Britain’s Brexit minister David Davis recognized that much work was to be done, but said he was confident an agreement on citizens’ rights could come soon, notably regarding how those rights would be guaranteed in courts. Barnier repeated Brussels’ desire to see EU citizens in Britain having recourse to EU judges but London has been refusing to accept that.

“I make no secret of the fact that to provide certainty we must talk about the future,” Davis said. “I hope the leaders of the 27 will provide Michel with the means to explore ways forward with us on that.”

“As we look to the October Council next week, I hope the member states will recognize the progress we’ve made and take a step forward in the spirit of the prime minister’s Florence speech.”

Barnier was pressed to say in public whether he would ask EU leaders’ permission to make some preliminary exploration of what a transition after March 2019 would look like. EU officials and diplomats say he has raised that issue with governments.

However, he told the news conference that he would follow a mandate ruling out any discussion of the future before issues arising from Britain’s past membership are settled and said it was important to respect the “sequencing”.

Additional reporting by Lily Cusack and Robert-Jan Bartunek; writing by Philip Blenkinsop and Alastair Macdonald; editing by Robert-Jan Bartunek

Our Standards:The Thomson Reuters Trust Principles.

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