The UK government has triggered Article 50 of the Treaty on European Union on 29 March. Upon notification, the UK has two years to complete negotiations for an Exit Agreement. This effectively means that the UK will exit the EU by March 2019, unless the UK and the 27 remaining member states agree to an extension.
In a speech held on January 17, Prime Minister May also explained that the UK would not seek to be part of the EU’s customs union, but would be looking to establish a 'comprehensive' trade agreement with the EU. In tandem, she noted that the UK would no longer accept the jurisdiction of the European Court of Justice.
Pursuant to Article 50, the UK may negotiate an Exit Agreement. The primary purpose of this agreement would be to address the immediate or transitional consequences of exit. The Exit Agreement could also 'take into account' the future relationship between both parties – but in light of the wording of Article 50 and the two-year time constraint, it is unlikely that the Exit Agreement could go into the detail of what this future trade relationship will be.
This would require the UK and the EU to negotiate a Trade Agreement, probably timed differently, and in any event under different procedural rules as far as the EU is concerned.
This memorandum seeks to highlight the main implications of these developments on EU–UK trade relations and answer the following questions:
- How will a post-Brexit future relationship be achieved?
- What will the scope of the Exit Agreement and Trade Agreement include?
- What are the key procedural issues in a potential UK–EU Trade Agreement?
- What are the potential effects of Brexit on core trade matters?
This post comes to us from Cleary Gottlieb Steen & Hamilton.