A two by four

18 May 2017

In yesterday’s blog, I argued that the EU is so committed to processes impairing a timely settlement that it will be tricky to get it to change course, hustling negotiators onto something of a runaway train. Turning from processes to underlying issues, there are just four:

What’s the terminal sum? EU bodies have recently put up figures of €100bn or more, which the UK naturally rejects. Actually these would be tolerable - around 3% of UK GDP. But the UK shouldn’t roll over without a deal elsewhere.

How to treat each other’s citizens? The Commission and Parliament seem bent on making a mountain out of a molehill, with talk of enforceable guarantees going well beyond international norms.

How to resolve disputes? Here too, EU bodies seem committed to the oddity of insisting on their own court, the ECJ, despite accepting arbitration elsewhere.

What trade regime? The EU refuses to talk about this till other matters are resolved, while the UK makes no secret that it wants something as close as possible to the status quo ante.

-o-

The disconnect between the two sides is worsening, with 68% of Britons now wanting to crack on with Brexit but Brussels reinvigorated by Macron’s victory. Indeed, the EU’s bellicosity is now so disquieting the US and Japan that both have asked Brussels to calm down. Perhaps nothing will do but the expedient of the Massachusetts quayside, “a whack upside the head with a two by four”. Hardly the most politic course with enduring neighbours, this may nonetheless be a moment when needs must. The following heads of agreement do the trick in less than 300 words, their conspicuous brevity a snappy rejoinder to Juncker’s pomposity and the EU’s constitutional wordiness.

1. On [the date of the ratification of the agreement arising out of these heads], the UK shall pay the EU the sum of [one euro] in full and final settlement of all claims between the parties prior to that date; save for the net of already agreed periodical payments which the UK hereby suspends for full and final settlement [five years thereafter].

Comment. This starts out by treating the terminal sum as a token while promising good-faith negotiation and prompt settlement - at least at these token levels. The suspension of the UK’s periodical payments is intended to grab Brussels’ attention, with the delay in its settlement serving as a retention to encourage the EU to take post-Brexit obligations seriously. The suspension may fail to have an effect - for example Berlin may underwrite the shortfall. But I’d be surprised ahead of the German election.

2. EU28 citizens resident in the territory of either party [thirty days after the date of the initialling of the agreement arising out of these heads] shall have indefinite right of abode, thereafter relieved of any extraterritorial legal relations with the parties.

Comment. This puts the timing up for negotiation, otherwise ruling out a continuing role for the European Court of Justice. It is odd that the European Parliament introduced this - presumably planning to give way down the line.

3. The parties affirm that their present regulatory accord provides for the indefinite continuation of trade as though prior to this agreement, save that disputes shall be settled as clause 5.

4. Future regulatory divergence may be challenged by either party, but only on the grounds of discrimination or anti-competition; and shall be settled as clause 5.

Comment. These two clauses will upset those wanting to “punish” the UK, as will raising “the future” at this point. That’s inescapable, as the UK wishes to place on the table its position on trade which also largely dispels the Irish question.

5. Disputes shall be settled by arbitration [in London under the laws of England and Wales].

Comment. This is less provocative than it seems. The EU uses arbitration elsewhere; London and English law are the international gold standard.

6. This and all following clauses shall be kept confidential, failing which these heads lapse and clause 9 shall apply.

Comment. Brussels’ inevitable leaks will give May the option to walk away at will.

7. These heads are open for initialling until [30 June 2017], failing which they lapse and clause 9 shall apply.

8. Initialling of these heads shall give rise to their engrossment within [fifteen days], and ratification within [fifteen days] thereafter, failing either of which they lapse and clause 9 shall apply.

Comment. Timing constraints were explored yesterday. These clauses are intended to reverse matters - to signal that May prizes good order so much that without confidence in a sensible deal, she must revert to “plan B” and truncate negotiations. As it happens, I see the UK’s drop-dead date as around the end of September (ie, as these clauses, after negotiating argy-bargy to extend the period by a couple of months), but this looks like a bee in my bonnet as no-one else is calling things this way.

9. Should any of clauses 6, 7, or 8 be violated, the UK shall hold the EU liable for the failure of negotiations…

Comment. This is also intended to grab the EU’s attention, by laying the ground for a campaign before the bar of world opinion if nowhere else.

...and such other damages as may be lawfully established.* 

Comment. These final words represent a second outing for another of the bees in my bonnet, the hint of an aggressive counterclaim as an attitude-adjuster, the footnote signalling its potential for asperity. Click here for draft heads.

-o-

If we go down this road, it will make sense to prime the EU’s member-states, both as a courtesy and to tee up what might always turn out to be their better sense. Regardless, paperwork of this kind on the first day of talks would seize the agenda, or at least put it back where it belongs - a matter for negotiation.


*  Damages may arise under

a. The Vienna Convention on the Law of Treaties (23 May 1969), where not in conflict with the “peremptory norm of general international law (jus cogens)” (Article 53).

b. The Treaty of Accession to the European Communities of the Kingdom of Denmark, Ireland, the Kingdom of Norway and the United Kingdom of Great Britain and Northern Ireland (27 March 1972).

c. The Treaty on European Union, otherwise the Treaty of Lisbon, (13 December 2007), establishing legal personality, that is

- I, Title IV, Article 47 (European Union);

- II, Part 6, Title 1, Section 6, Article 282.3 (European Central Bank);

- II, Part 6, Title 1, Chapter 4 (European Investment Bank);

- IV, Chapter III, Article 9.1 (European Central Bank);

- IV, Part 5, Article 28.1 (Subsidiaries of ECB); and

- V, 24 (European Union);

as well as

 -  II, Part Seven, Article 340 (Contractual and other liability);

 -  IV, 4, Article 35 Paragraph.3 (Judicial control of ECB, etc); and

 -  IV, 4, Article 46 (Limitation periods and jurisdiction).

    d. The consequences of various acts of the EU, its predecessor bodies, or its member states acting at its behest, including but not limited to the

 -  Schengen Agreement (14 June 1985);

 -  Treaty of Maastricht (7 February 1992);

 -  Stabilisation and Association Process for the countries of the Western Balkans (21 June 1999);

 -  Vehicle Directive (5 September 2007);

 -  Renewable Energy Directive (23 April 2009);

 -  Service Directive (12 December 2012); and

-   EU Ukraine Association Agreement (21 March 2014).