The European Union agreed on December 15, 2017, to progress Brexit negotiations to the second phase, accepting a joint proposal from the United Kingdom and the European Commission as a framework for discussion. The proposal is captured in a joint report that EU and UK negotiators released on December 8, 2017.1 The non-binding joint report indicates no change to the previously announced withdrawal date of March 29, 2019, and outlines, among other topics:

1. Rights of UK citizens in the EU and EU citizens in the UK;

2. Framework for addressing Northern Ireland and its land border with Ireland; and

3. UK-EU financial settlement.

Citizens’ Rights: Reciprocal Protection for EU and UK Citizens

An estimated three million EU citizens are living in the UK today, and one million Britons are living in the EU. The report states that free movement applies from now until the withdrawal date, March 29, 2019, but will only provide rights to those who enter the reciprocal area by that date. In essence, it sets the withdrawal date as the “cut-off” date for EU citizens moving to the UK, or UK citizens moving to the EU, to acquire free movement rights. Thus, anyone who arrives in the reciprocal areas before March 29, 2019, will have the right to remain, work, and study. 

The report confirms that the overall objective of the Brexit withdrawal agreement with respect to citizens’ rights is to provide reciprocal protection for EU and UK citizens, specifically noting:

Right to Remain. UK citizens in the EU and EU citizens in the UK, as well as certain dependent family members, will have a right to remain in the host state if they legally reside in the host state by the withdrawal date.

Family Reunification. Certain dependent family members of EU citizens or UK national rights holders not residing in the host state by the withdrawal date will be able to join the citizen/rights holder after the withdrawal date for the citizen’s/rights holder’s lifetime.

Court Proceedings. UK courts will preside over enforcing the rights of EU citizens in the UK but can refer unclear cases to the European Court of Justice for up to eight years after the withdrawal date.

Permanent Residency. EU and UK nationals who reside in a host country for five continuous years before the withdrawal date will acquire permanent residency. The process for giving EU citizens residency rights in the UK will be under a new procedure, referred to as “settled status.” EU and UK nationals who acquire permanent residence rights in the host state can be absent from its territory for a period not exceeding five consecutive years without losing the right to residence.

While the report provides a framework for the phase two negotiations, resolution of multiple issues related to the migration rights of EU and UK nationals following March 29, 2019, remain unanswered. These issues include:

• The rights of UK nationals seeking to live and work in EU member states after the exit date remain unresolved. Finalization of the rights of UK nationals may require negotiation with EU member states on a country-by-country basis, or a further resolution of the European Council may provide uniform rights throughout the EU.

• The rights of Britons living in the EU remain subject to the next round of negotiation, including whether EU-resident UK citizens will be protected if they move to another EU member state after the withdrawal date. Whether the free movement ability to work cross-border in the EU, which UK citizens who are in the EU prior to March 29, 2019 acquire, will continue after the withdrawal date has not been decided.

• The report does not make clear what registration process will be required to prove residency rights. The report states only that administrative procedures for applications to prove residency rights will be “transparent, smooth, and streamlined,” and those who already have residency rights in the UK will have their document “converted” free of charge but will be subject to identity, criminality, and security checks. What the criminal check process will be is unclear as well, with the only express reference in the report being that the criminal checks, which may be conducted for “all” applicants, should have a “proportionality” approach.

Ireland

• The Belfast Agreement reached on April 10, 1998, between the UK and Irish governments continues to mandate collaboration between the parties. 

• The UK remains committed to avoiding a “hard [Irish] border.” Specifically, the UK and Ireland remain committed to no border infrastructure along the border between Ireland and Northern Ireland, while also ensuring that Ireland is not aligned with Northern Ireland in a manner different from its alignment with Great Britain. Details regarding customs arrangements and regulatory alignment between Ireland and the UK remain unresolved.

Financial Settlement

• The report provides a framework for how the UK’s EU exit fees will be calculated. Initial estimates of the settlement range from £35 billion to £39 billion.

• The UK will continue to make financial contributions to the EU until the end of 2020. This includes the UK contributing its share of EU liabilities incurred before December 31, 2020. While not noted in the report, this time period reflects a transition period from March 2019 to December 2020.

Reactions to the Report

EUROPEAN COMMISSION

The European Commission noted that the nonbinding joint report is “a deal between gentlemen” and that there is a “clear understanding that it is backed and endorsed by the UK government.”

UK

While UK Prime Minister Theresa May stated that “nothing is agreed until everything is agreed,” she also showed optimism for the deal by declaring that “I fully hope and expect that we will confirm the arrangements I have set out today in the European Council later this week.”

OTHER EU MEMBER STATES

France

The report did not produce many reactions from the political arena in France. French Minister of Foreign Affairs Jean-Yves Le Drian commented that, although the negotiations between the EU and the UK are moving in the right direction, it is nevertheless critical to clearly define the terms and conditions under which Brexit will occur before opening the second phase of the negotiations.

Germany

German Chancellor Angela Merkel has indicated that she welcomes the interim result of the negotiations between the EU and the UK, and a government spokesman confirmed that “it’s a move in the right direction.” The federal government of Germany will now closely examine the joint report and expects a highly complex second negotiation phase.

Impact on Free Movement

EXAMPLES

Case Study 1:

Catherine is a French national who will have been a UK resident for 10 years on March 29, 2019, when the UK exits the EU. Catherine may continue to exercise her free movement rights to live and work in the UK until March 29, 2019.

Given that Catherine has lived in the UK for over five consecutive years (including without an absence of more than two years following those five years), she immediately qualifies to apply for settled status subject to criminality and security checks. But she must apply by March 29, 2021, if she intends to stay in the UK.

Case Study 2:

Alfred is a Luxembourg national working in the UK but will only have been a UK resident for four years on March 29, 2019. After the UK’s withdrawal, Alfred can live and work in the UK without having to submit an application until March 29, 2021. In 2020, after having been in the UK five years, he will be entitled to apply for settled status that will allow him to live and work in the UK permanently.

Case Study 3:

Margarita is a Spanish national who will have been a resident in the UK for only one year by March 29, 2019. Margarita will be able to continue to live and work in the UK during the two-year period after the withdrawal. If she wishes to continue to live in the UK after March 29, 2021, she must apply to the UK Home Office for a temporary residence status. This will allow her to continue lawfully living and working in the UK until she meets the five-year threshold, after which she can apply for settled status.

KEY TAKEAWAYS

EU citizens have until March 29, 2021 to apply for settled status in the UK. The British government is expected to introduce a voluntary application process during the second half of 2018 so that qualifying EU nationals can apply early. A large increase in applications at the March 2021 deadline will likely strain government resources and result in a delay of applications, so affected EU nationals are advised to apply early in the application period. 

On the Horizon

Approval of any Brexit withdrawal agreement by the UK will be required to pass a vote of Parliament before it is finalized, as confirmed by a vote by the House of Commons on December 14, 2017. This approval authority will provide Parliament with the opportunity to debate changes to the bill and provides Parliament with flexibility to adjust the March 29, 2019, exit date if unforeseen circumstances arise. Further debate will continue to weigh whether the postBrexit regulatory environment will remain similar to the current EU regime or whether there will be a further departure from UK alignment with the EU.

Further Brexit negotiations are expected to continue throughout 2018, with a goal of reaching an agreement by September 2018 to give individual EU countries time to approve it before the Brexit deadline on March 29, 2019.