The Brexit train is now in full motion. The EU and the UK have embarked on one of the most politically sensitive and legally complex international negotiations of modern times: those relating to the UK's withdrawal from the European Union.
The negotiations will focus on two main agreements. First, a divorce agreement on the terms of the UK’s separation from the EU, which needs to cover three politically-charged issues:
- the UK's outstanding EU budget commitments and other financial liabilities towards the remaining 27 Member States of the Union (the “EU27”);
- the rights of EU citizens in post-Brexit UK (and vice versa); and
- the border between Northern Ireland and the Republic of Ireland.
Second, an agreement on the future relationship between the EU27 and the UK. Importantly, the EU27 have made it clear that negotiations on the second agreement can commence only when sufficient progress has been made with the divorce agreement.
The difficulty of these negotiations is further compounded by enormous time pressure, as the agreements must be in place at the latest by 29 March 2019 when the UK will automatically leave the EU. On 22 September 2017, UK Prime Minister May proposed to implement a two-year transition period, starting on 29 March 2019, during which the UK and the EU27 would continue to have access to each other's markets on current terms. However, whether and under which conditions this transition period is accepted by everyone remains an open question.
Brexit will have wide reaching implications for international businesses. If the UK remains committed to leaving the EU Single Market and the Customs Union, they will lose the benefits of free movement of goods, services, people and capital across EU Member States. This would clearly have far-reaching implications on areas such as international trade, labour and employment and cross-border deals involving the UK.