London looks to raise game for Brexit transition talks

London and Brussels are making final preparations for the imminent start of Brexit transition negotiations. Following December’s first phase exit deal, hopes are growing in the UK Government that Prime Minister Theresa May will finally get on the front foot with Chief EU Negotiator Michel Barnier’s team.

Yet this is unlikely after about six months of prior negotiations, which saw continual UK defeats and backtracking. For instance, last December’s deal saw a huge change of position on divorce costs with London ultimately folding to Brussels, as was always likely if the UK is to secure an ambitious post-Brexit trade deal.

While the text of the Brexit phase-one agreement released last month includes no figures, UK commitments to meet all the financial requests of the EU indicates a divorce bill of an estimated £40 billion. This underlines just how wrongheaded it was to have argued, as numerous Brexiteers did in 2016 prior to the referendum, that the UK could leave the EU and secure a new trade deal virtually cost-free.

The reasons for the strength of the EU-27 with regard to the UK in Brexit negotiations to date reflects factors that were fully transparent in advance. This includes the in-built advantages that Brussels has in the two-year Article 50 process.

But there have also been issues that were unanticipated a year ago. This includes the frequent chaos within the UK government whose bargaining hand was weakened with the EU-27 after a disastrous general election in June, which badly undermined the prime minister.

To be sure, any UK government would have had difficulty in the Brexit talks. However, what has made this immeasurably worse is the political wobbliness of May, underlined by the disarray in the UK’s negotiating position in 2017.

Yet the weakness of the UK Government is only part of the story. Once May triggered Article 50 last spring, the initiative was handed over to Brussels. For example, under Article 50 it was for the EU-27 alone, not the UK, to decide whether “sufficient progress” was made in the first-phase divorce talks to justify moving to the next stage, fortifying the bloc’s already strong position.

As well as adjudicating the process in this way, Brussels has also controlled the timetabling too. This is exemplified, for instance, with the decision of Brussels to delay until this March substantive talks on the future UK-EU relationship, including over trade. While May and her team made a diplomatic push to bring this forward, Brussels has insisted that transition talks must come first.

Barnier has also made clear to May that, before those final settlement talks can begin, it is important first to know more in early 2018 about the UK’s negotiating positioning on “what (she) would like and what they are prepared to accept with the new (long-term) partnership” once the UK leaves the EU. To date, this remains unclear with widespread disagreement within the Cabinet over whether a harder or softer outcome is best.

Moreover, to put maximum pressure on the UK, Barnier has also insisted talks move swiftly to try to ensure they are wrapped up by this October, a hugely ambitious task, to allow for any finalized agreement to be ratified before March 2019 when the Article 50 period ends. It is already clear that the negotiations in 2018, on the transition and final settlement, will be the toughest negotiations yet in what may overall prove to be the most complex peacetime negotiation that London has ever undertaken.

This is because this year’s discussions encompass not just the nature and length of Brexit transitional arrangements; and the parameters of the newly defined UK-EU relatonship, including a new trade deal; but also issues not fully resolved in earlier UK-EU divorce discussions, including the Irish border issue. Yet, despite this long list, the time-limited two-year Article 50 process can only be extended with the unanimous consent of the EU-27.

The size of the task ahead underlines why the talks could still breakdown in 2018. Indeed, Lord Kerr of Kinlochard, the author of the Article 50 clause, has previously asserted that there is at least a one-in-three chance that no final overall agreement will emerge; and ultimately also that there is only a 50 percent likelihood of an orderly Brexit.

If the talks do remain on track, however, 2018 is most likely to broadly continue the pattern of last year, which saw continual backtracking by May and her government. While this was always likely, partly given the previous over-optimism of some Brexiteers, it has been made much worse by the post-election weakness of the prime minister.

• Andrew Hammond is an Associate at LSE IDEAS at the London School of Economics.