Christopher Howarth is a senior researcher working in the House of Commons. Prior to this he worked for Open Europe, as a Conservative Foreign Affairs Adviser and senior researcher to a Shadow Europe Minister.

It stands to reason that for the Brexit deal to work, it has to be in both sides’ interests. However, reason takes us only so far; an element of the EU27 have a self-imposed need to prove that leaving the EU is not something others should follow. They believe there must be some visible, if not actual, pain.

To this end, we have seen press speculation that the EU27 would try and mete out ‘punishments’ or even refuse to discuss cross-channel trade at all until after departure – insisting that all other matters, including a ludicrous demand for cash, be agreed first.

These are early days, but, contrary to the press reports, Donald Tusk’s draft EU27 negotiating mandate, circulated (and leaked) in response to the Prime Minister’s Article 50 letter, actually gives us reasons to be optimistic that a mutually beneficial deal can and will be found.

Sequentialism versus Parallelism

First, there is a hard-core EU element, mostly in the Commission, that insist that “sequential” deals are the best way to prove that leaving the EU is a difficult and painful affair. By contrast the UK has asked for “parallel” or concurrent withdrawal and trade talks achieving agreement at the same time.

Sequentialism would, however, be difficult for the EU27 to uphold, given that in the absence of trade talks there would be little to keep the UK at the table. However, the EU27 text seems to include a potential solution that would allow trade talks to kick off while giving the EU27 the formal exit deal they require. The wording of the text states that “after departure”:

“Any free trade agreement should be balanced, ambitious and wide-ranging. It cannot, however, amount to participation in the Single Market or parts therof.”

Far from creating a division, this wording is actually very similar to the Prime Minister’s desired trade agreement. It also, conveniently, allows those who believe the Single Market is the pinnacle of Western civilisation to mete out their punishment to the UK – we will be excluded whether we like it or not (we, of course, like it).

It is also possible for this trade agreement to provide for a smooth transition. While the draft states “an agreement…can only be concluded once the United Kingdom has become a third country”, there is nothing preventing concurrent negotiation followed by a conclusion at 00:05 on Saturday 30th March 2019. The guidelines go on to say “an overall understanding on the framework for the future relationship could be identified during the second phase of the negotiations” “as soon as sufficient progress has been made in the first phase”.

This seems to be the basis of a deal, an agreement on an outline orderly withdrawal from the EU followed by concurrent trade and exit talks covering future cooperation. While nothing is agreed until everything is agreed, to use a house conveyancing analogy, on departure we do a quick exchange and completion allowing it to come into force without a ‘cliff-edge’ or interruption. 

The EU desire for an exit payment need not hold things up

The first stumbling block could be the EU27’s demands for a golden goodbye cash payment. These ludicrous demands (helpfully calculated by the CER) could be a deal-breaker for the UK, based, as they are, on no legal authority and ignoring the UK’s counter claims.  The authors of the guidelines seem to have also considered how to avoid the talks falling at this first fence, stating that the withdrawal agreement should include appropriate dispute settlement mechanisms regarding the application and interpretation of the withdrawal agreement”. As the UK is clear it will pay what is legally due, and that it believes that what is legally due is very little or nothing, this issue could potentially be sent to an independent body to assess, freeing up the UK & EU to negotiate the other matters.

No “cliff-edge”

The EU27’s objectives overlap with the UK’s in a number of key areas. Regularising the position of EU and UK citizens and the desire to avoid a “cliff-edge” are the most important. The guidelines state that: “The main purpose of the negotiations will be to ensure that the United Kingdom’s orderly withdrawal so as to reduce uncertainty and, to the extent possible, minimise disruption caused by this abrupt change.” This seems to be a sensible recognition that it is in nobody’s interests to allow politics to get in the way of basic co-operation on issues such as aviation, data-sharing and the technicalities of co-operation with EU agencies and customs administration. This is also the basis of a deal.

The EU27 cannot avoid talking trade

While the EU27 have a tactical reason not to wish to front-end the trade element of the talks, at least one member – Ireland – has every reason to wish to see trade front-ended. Indeed, a desire to retain an open Northern Irish border is another point of agreement between the UK and the EU27. This begs the question as to whether the EU27 can demand that the border is kept as frictionless as possible while refusing to discuss free trade. They cannot avoid it.

Nobody expected the EU27 to immediately agree everything, or be anything other than melancholy at the prospect of negotiating a state’s exit. However, the EU27 have avoided most of the rocks and put forward some practical solutions to concluding a deal that should benefit both the UK and the EU. It looks perfectly possible that both sides can remain content: the UK will not get full Single Market access (demonstrating visible – to some – if not actual pain), while the UK will gain a trade agreement that benefits both sides.