The UK has served the withdrawal notice on the European Council (ie, Heads of Government / State of the EU Member States), as per the process outlined by Article 50 of the EU Treaty on European Union (“TEU”). The formal negotiations between the UK and the 27 EU Member States, excluding the UK (“EU27”), will now begin with a view to negotiating and concluding a withdrawal agreement. The withdrawal notice has set the two-year Brexit countdown clock in motion.

Article 50 states that the withdrawal agreement will set out arrangements for the UK’s withdrawal from the EU “taking account of the framework for its future relationship with the Union”. Article 50 TEU does not govern the process for agreeing future arrangements between the UK and EU, only the process for negotiating withdrawal. An agreement on the future arrangements between the EU and UK may be negotiated alongside the withdrawal agreement, however a different procedure applies to the negotiation of future arrangements.

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What Would a Withdrawal Agreement Look Like?

  • It is impossible at this stage to know the content of the withdrawal agreement, and any effect on trade / free movement / freedom to provide services between the UK and the EU.
  • It may provide for a transition period (or series of transition periods sector by sector) where EU law continues to apply in the UK, but is phased out and UK legislation takes its place.
  • The UK will likely want the withdrawal agreement to address the rights of its citizens and businesses during a transition period pending the entering into force of an agreement on future arrangements.

EU’s Opening Negotiating Position

Mr Barnier, in his opinion piece for the Financial Times on 27 March 2017 said that there is a need to address three significant uncertainties created by the UK’s decision to leave: (i) rights of the 4.5 million EU citizens faced with an uncertain future (ie, EU27 citizens in UK and UK citizens in EU27); (ii) beneficiaries of EU budget programmes and the need for UK to “settle… accounts”; (iii) Northern Ireland border as a new external border of the UK.

Timeframe

Notification to withdraw from the EU will automatically result in the UK ceasing to be an EU Member State two years after the UK notification unless either:

  • A withdrawal agreement sets a different date; or
  • The UK and the European Council agree unanimously to extend the two year time limit.

There is no express prohibition on the UK and European Council agreeing a lengthy extension of the two year time limit. However, a member of the European Council could veto the extension of the time limit, meaning the UK would be out of the EU after two years.

What would a lengthy period of UK withdrawal mean for Ireland?

It is likely a ‘business as usual’ approach would be adopted in terms of trade / free movement between the UK and Ireland, as the UK would still be an EU Member State pending conclusion of the withdrawal agreement.

Could the UK exit the European Union without a withdrawal agreement being reached?

Yes. The status of EU law in the UK would be in question if the UK leaves the EU without a withdrawal agreement providing for a transitional period for phase out of EU laws.

Future Arrangements Between the UK and EU

Article 50 does not govern the process for agreeing future arrangements between the UK and EU, only the process for negotiating withdrawal. Thus, a situation could arise where there are two sets of negotiations taking place in parallel; negotiations surrounding the terms of the withdrawal agreement and negotiations between the UK and EU governing future arrangements. Mr Barnier’s opinion piece in the Financial Times on 27 March 2017 stated that it is necessary to agree on “the orderly withdrawal of the UK before negotiating on any trade deal”.