Theresa May surprised many by linking trade with security in her letter.NEIL HALL/Reuters
The divorce proceedings between Britain and the European Union have barely started and the process has already been described as difficult, complicated and confrontational.
British Prime Minister Theresa May kicked off the proceedings on Wednesday, formally triggering the EU exit mechanism with a six-page letter to the union that laid out her government's objectives. The EU responded on Friday with a nine-page document setting out its priorities and preconditions. Both sides now have just two years to unwind 44 years of interconnections that cover every aspect of modern life, from commerce and law to communications, health care, security, social welfare and much more. It's a mammoth task that has never been done before and it's one that will reverberate across Europe and around the world.
Here's a look at some of the big issues at play and what each side is seeking:
Trade ties
Ms. May made it clear in her letter that she wants to use the two-year timetable to negotiate the terms of Britain's exit and a comprehensive trade deal at the same time. A trade deal is crucial for Ms. May because she is eager to keep as much access to the European single market as possible, particularly for London's financial sector, which will lose "passport privileges" that allow firms to register in London and offer services across the EU. In total, about 44 per cent of all British exports go to the EU, so keeping smooth, unfettered trade is vital to the country's economy. But on Friday the EU flatly rejected the idea. "Starting parallel talks on all issues at the same time, as suggested by some in the U.K., will not happen," said Donald Tusk, president of the European Council, which represents EU leaders. Instead, Mr. Tusk said the EU wants to deal with the exit issues first, including the fate of EU nationals in Britain and the amount Britain must pay upon leaving to cover obligations such as pension liabilities and other commitments. In its document, the EU said it will decide "when sufficient progress has been achieved" on those issues before moving on to the trade talks. The EU also warned that any new trade agreement will not amount to anything close to free access to the single market.
The bill for Brexit
The EU signalled on Friday that it expected Britain to pay up before leaving, and some say that could total as much as €50-billion, or $71-billion. The union must ensure "that the U.K. honours all financial commitments and liabilities it has taken as a member state," Mr. Tusk said Friday. "It is only fair towards all those people, communities, scientists, farmers and so on to whom we, all the [EU members], promised and owe this money." Ms. May hasn't agreed to an amount and some members of her cabinet have suggested Britain shouldn't pay anything. But in her letter on Wednesday she acknowledged that "we will need to discuss how we determine a fair settlement of the U.K.'s rights and obligations as a departing member state."
Ireland border
Both sides acknowledged the importance of dealing with the border between Ireland and Northern Ireland, but this could be one of the thorniest issues. The border has been virtually eliminated since the 1998 Good Friday Agreement ended "the Troubles" and removed security checkpoints along the 500-kilometre frontier. People, goods and services now move back and forth freely and many people live in one country and work in the other. Any return of a hard border would impact the economies of Ireland and Northern Ireland, but neither have a direct say in the Brexit talks. Ms. May and Mr. Tusk said they don't want a hard border and hoped to find "creative solutions" to the issue. But many experts have said some kind of border is inevitable given the importance of immigration and security controls.
Security issues
Ms. May surprised many by linking trade with security in her letter, suggesting that if the EU did not conclude a trade deal with Britain, Europe's security could be jeopardized. "In security terms a failure to reach agreement would mean our co-operation in the fight against crime and terrorism would be weakened," she said, adding that "Europe's security is more fragile today than at any time since the end of the Cold War." The EU said on Friday that it wanted to keep close co-operation with Britain on security, but it should not be tied to trade. "Especially after the terrorist attack in London, it must be clear that terrorism is our common problem," Mr. Tusk said. "That is why I rule out this kind of interpretation and speculation that security co-operation is used as a bargaining chip. It must be a misunderstanding.… I am absolutely sure no one is interested in using security co-operation as a bargaining chip."
Transition
British businesses have been adamant that there should be some kind of transitional arrangement to smooth the move toward a new trade and economic relationship. Ms. May has said she preferred a short transition, of a couple of years, and in her letter she called for this to be negotiated early in the process. On Friday, the EU didn't commit to an early resolution of the issue and said any transition would have to be "clearly defined, limited in time and subject to effective enforcement mechanisms."
Not an easy process
Ms. May and the European Union have been remarkably frank in recognizing how difficult the negotiations will be. Ratification of any new trade deal will take months if not years, and upcoming elections in France, Germany and Italy could alter the tone of the discussions. In her letter, Ms. May said that there will be "consequences for the U.K. of leaving the EU: We know that we will lose influence over the rules that affect the European economy. We also know that U.K. companies will, as they trade within the EU, have to align with rules agreed by institutions of which we are no longer a part – just as U.K. companies do in other overseas markets." Mr. Tusk was even more blunt on Friday, describing the negotiations as "damage control." The talks "will be difficult, complex and sometimes even confrontational. There is no way around it. The EU27 does not and will not pursue a punitive approach. Brexit in itself is already punitive enough," he said. He added that "after more than 40 years of being united, we owe it to each other to do everything we can to make this divorce as smooth as possible."
Gibraltar
The EU has given Spain an effective veto over how Gibraltar is treated in the discussions, something that won't sit well with Ms. May. "After the United Kingdom leaves the union, no agreement between the EU and the United Kingdom may apply to the territory of Gibraltar without the agreement between the Kingdom of Spain and the United Kingdom," the EU said Friday. Britain has long been leery of Spain's claim over Gibraltar, which was ceded to the U.K. in 1713 under the terms of the Treaty of Utrecht. In recent years, Spain has argued the territory is a colonial relic and it should be returned. However, the people of Gibraltar have consistently said they want to remain part of Britain. Last year Gibraltar voted overwhelmingly to remain in the EU and Spain has sought to play that up.
Paul Waldie