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Factbox: What progress? EU's price for Brexit breakthrough
November 23, 2017 / 6:11 PM / 22 days ago

Factbox: What progress? EU's price for Brexit breakthrough

BRUSSELS (Reuters) - Prime Minister Theresa May will hold talks in Brussels on Friday as Britain and the EU try to orchestrate a deal on divorce terms in the next three weeks that can unlock negotiations on post-Brexit trade.

Anti-Brexit protesters wave EU and Union flags outside the Houses of Parliament in London, Britain, November 14, 2017. REUTERS/Peter Nicholls

These are key points EU officials and diplomats say she must be ready to concede by the time she returns for talks on Dec. 4, if EU leaders are to be ready to tell her at a Dec. 14-15 summit that Britain has made “sufficient progress” toward a withdrawal agreement and talks on a future relationship can begin.

FINANCIAL SETTLEMENT

The EU estimated at some 60 billion euros ($71 billion) what Britain should pay to cover outstanding obligations on leaving in March 2019. May has promised that the other 27 states will not lose out financially before the end of 2020 -- an indication Britain will maintain its current roughly 10 billion-euro annual payment to the EU during a two-year post-Brexit transition.

The EU wants May to commit to paying a fair share of two big budget lines after 2020 -- funds for projects approved during Britain’s membership but not yet disbursed and staff pensions.

Brussels sees British media reports that May’s pro-Brexit ministers agreed to pay up to 40 billion pounds ($53 billion) as promising and is willing to help massage payment terms to help May sell the deal. Since 20 billion euros may be paid during the transition and London might forgo 15 billion in rebates, the amount paid on Brexit could be much lower than 60 billion.

Both sides insist there can be no agreement on a hard figure yet. Much will depend on future economic developments. But observers will be quick to make ballpark calculations. And EU leaders are set on binding May to a written commitment to pay specific elements of the bill to avoid haggling later on.

CITIZENS RIGHTS

The second of three conditions, on all of which “sufficient progress” must be recorded, that may be the least problematic now. However, the EU is still seeking further commitments from May that the rights of EU citizens in Britain after Brexit will be guaranteed under EU judicial supervision, not just British -- still a potential stumbling block to Britain’s agreement.

Member states, some of which have taken a tougher line than the Brussels negotiators, insist Britain also make concessions on family reunion rules and moving social benefits.

IRISH BORDER

The EU wants more detail on a British pledge to avoid a “hard border” at the new land frontier on the island of Ireland that might disrupt peace in Northern Ireland. London says the detail depends on the future trade agreement which the EU will not discuss until after agreeing on sufficient progress. But Dublin has stepped up its complaints that assurances of good intentions from Britain do not go far enough.

EU officials argue that the broad possible outlines of a trade pact are already obvious and mean that a hard border can only be avoided if commercial regulation remains identical on either side. One solution would be for Northern Ireland to stay in a customs union with the EU. But Britain, and May’s crucial Northern Irish parliamentary allies, insist there should be no new barriers between Northern Ireland and the British mainland.

The EU says that means the whole of the UK would then have to maintain regulatory conformity, something Brexit campaigners do not want. Brussels and Dublin note that Northern Ireland has some different rules from Great Britain and want more clarity.

TIMETABLE

On Dec. 6, two days after May meets European Commission President Jean-Claude Juncker and Brexit negotiator Michel Barnier, EU-27 envoys meet to start drafting the conclusions for the summit. They may need the whole week to secure all states’ agreement that there is “sufficient progress” -- or not.

At the Dec. 14-15 summit, if they agree to move ahead, the 27 leaders could approve formal negotiating guidelines for a future trade deal. However, that may take more time. Diplomats have differing views on whether agreeing guidelines immediately is desirable. In any event, there will need to be some weeks of further internal preparation in the EU before trade talks start.

Even with sufficient progress, detailed negotiation on the divorce deal -- or Withdrawal Treaty -- will continue. Barnier hopes to have a text by October or November next year to give time for ratification by the European Parliament by Brexit Day.

The EU has responded to May’s request for a transition period of about two years to give time to establish a new trade deal by saying Britain can effectively stay in the Union, as long as it pays its dues and loses its vote on legislation.

Barnier has said a trade deal could be launched by January 2021 if talks start after Christmas. But many EU diplomats say Britain may need further transition terms before one is ready.

Reporting by Alastair Macdonald; Editing by Robin Pomeroy

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