Brexit negotiations in Brussels

Susie Walker

Susie Walker

Partner & Head of Tax

David Davis, the UK Brexit Secretary, will return to the negotiating table in Brussels later this week, bringing ‘phase 2’ of formal Brexit discussions to a close. 

The four days of talks will shape the next few decades for the UK, both economically and politically. And it’s not going to be plain sailing – with the EU Parliament’s chief negotiator already calling for all UK rival party leaders to sign up to what the Conservative’s negotiation team in Brussels are calling for.  

The recent General Election result and weakening of Theresa May’s position in the UK has not gone unnoticed in Europe and a place for Jeremy Corbyn at the negotiation table could be imminent.  Theresa May’s position is that the UK will not seek to remain in the EU single market post Brexit, however she may need to reconsider this. Remaining within the single market would mean unlimited EU immigration.  A further priority of Mrs May’s is to reach a new Customs Union deal with the EU. 

What is the EU single market? 

This guarantees the free movement of goods, services, capital and labour within the EU as if it were a single country

What is a Customs Union deal?

This establishes a free trade area with a common external tariff, i.e. no customs duties are levied on goods travelling within the customs union and a common external tariff is imposed on goods entering the union. 

What has happened so far?

Theresa May triggered the two-year process for the UK to leave the EU on 29 March 2017. This period can be extended provided other countries agree. 

There’s work to be done

David Davis’ priorities this week are to get certainty for EU citizens living in the UK and for Britons living in the EU; and to reach agreement on the financial settlement that the UK will be required to pay to leave the EU – which some speculate could be as much as £90bn. The Irish border and how this split happens will be another key discussion and negotiation point. 

Only once these big matters are agreed will trade talks begin; so, it’s likely to be a long time through the process before we know on a practical level what leaving the EU will mean for UK businesses trading with the EU post Brexit. The trade deal for the UK post Brexit is likely to be the most difficult to negotiate as it will require so many European Countries to agree to it.  

The Great Repeal Bill

Following reference in the Queen’s speech on 21 June, a Repeal Bill was published on 13 July 2017, designed to transpose EU law into British law so that the same rules still apply on the day that Brexit happens.

The plan is for this Bill to complete its passage through Parliament well before the point at which the UK leaves the EU, to ensure a smooth transition; however, this means for devolved areas, the powers will go to Westminster in the first instance, before being passed to the devolved Governments. 

What could this mean for Scotland?

When we were operating within the EU, there was a common framework across a whole range of areas, from agriculture to fisheries, and devolution happened within the framework. In establishing what that common framework will look like on exiting the EU, concerns are mounting within the Scottish Government who argue that Scotland risks having to fight for powers that should rightfully belong to the Scottish Parliament.

For Fishing and Farming for example, Theresa May will seek a UK wide replacement for the Common Fisheries Policy (CFP) and Common Agriculture Policy (CAP), then pass the responsibility to deliver to Scotland.

The UK plans are for a Fisheries Bill to enable the UK to exercise responsibility for access to fisheries and manage UK waters, setting up its own fishing quotas after Brexit. 

Also planned is an Agriculture Bill, with the aim being to introduce a new subsidies regime and increase the level of exports of food from the UK.

Objecting to the prospect of such UK wide laws, The Scottish Parliament want a separate negotiation for Scotland, backed by 62% of Scots voting to remain in Europe in the EU Referendum. 

Keeping you informed

With just 20 months until we leave the EU, we await news on the outcome of this week’s negotiations and how we move forward.

In the meantime, should you have any questions or views on the likely impact of Brexit for your business, please visit our dedicated Brexit page to submit your views.