Arthur Cox is continuing to closely monitor Brexit developments, and to advise our clients in Ireland, the UK and further afield on the potential legal implications for their businesses. We are also mindful of the implications of Brexit for Northern Ireland and free movement of goods and people across the border. Together with our colleagues in our Belfast office, we have an all-island perspective on these issues.

Following months of negotiations between the EU’s negotiating team and the UK Government, the European Commission recommended, on 8 December 2017, that the European Council conclude that “sufficient progress” had been made on the first phase of the Brexit negotiations to allow the negotiations to move to the second phase. This recommendation followed agreement being reached between the UK Government and the EU’s negotiating team on a Joint Report on the same date.

Three issues had been identified as priorities for the first phase of negotiations: the border between Ireland and Northern Ireland, citizens’ rights, and the financial settlement, and the Joint Report set out various commitments and common understandings from both sides.

Regarding the border between Ireland and Northern Ireland, the UK reiterated its commitment to avoiding a hard border, and signalled its full support for Northern Ireland’s position as a part of the UK and its respect for Ireland’s position as an ongoing member of the EU.   Both the UK and the EU, in the Joint Report, recognised that the Common Travel Area between Ireland and Northern Ireland could continue, while the UK also committed to ensuring that no new regulatory barriers would be put in place between Northern Ireland and the rest of the UK.

Regarding citizens’ rights, the EU and the UK reached a common understanding that EU citizens legally living in the UK, and UK citizens legally living in an EU 27 Member State, in each case on the date that Brexit takes place, will have the same rights post-withdrawal as they had pre-withdrawal.

Regarding the financial settlement, the EU and the UK agreed a methodology for calculating that settlement, with the UK continuing to be involved in the 2019 and 2020 EU annual budgets. That methodology is based on three key principles: no Member State should pay more or receive less due to Brexit, the UK should discharge its portion of commitments assumed during its membership of the EU, and the UK should neither pay more, nor earlier, than if Brexit had not occurred.

Other issues for negotiation that were highlighted in the Joint Report included the UK’s withdrawal from Euratom, the continuing availability of goods, cooperation in civil and commercial matters, police and judicial cooperation in criminal matters, ongoing EU judicial procedures, ongoing EU administrative procedures, the functioning of EU institutions. The recommendation from the European Commission noted that discussions had not yet started in certain areas, notably intellectual property rights, public procurement, customs-related matters, and data protection.

On 15 December 2017, the European Council confirmed its agreement that sufficient progress had been made, and published Guidelines in which it called on negotiating teams to continue negotiations on all points, and to begin to draft the relevant parts of the Withdrawal Agreement. The European Council will publish further guidelines in March 2018, with a particular focus on the scope of the future EU-UK relationship. In the meantime, on 29 January 2018, it published Supplementary Negotiating Directives, detailing the position of the EU 27 Member States on the possible transition period following the expected entry into of the Withdrawal Agreement at the end of the two-year Brexit negotiation period in March 2019. It has proposed that any transition period end by 31 December 2020 and that, until that time, the UK would continue to be bound by the EU acquis as if it were a Member State, would be bound by any international trade agreements (but would not be allowed to participate in any institutions set up under those agreements), would continue to participate in the customs union and single market, but would no longer participate in any EU decisions or institutions (but may be invited to attend, without being given voting rights).

The second phase of the Brexit negotiations on the shape of the future relationship between the EU and the UK will not be straightforward. As emphasised by the Deputy Governor of the Central Bank of Ireland in a speech on 12 December 2017, the remaining negotiations will be complex and significant, with Brexit continuing to pose considerable risks to the Irish economy. Central Bank of Ireland Governor Philip R Lane emphasised, in a speech to the European Financial Forum on 31 January 2018, that the Central Bank will be “will be agile in responding to the regulatory implications of the new EU27-UK trading relationship”.

We will issue updates and relevant briefings as developments occur.

In the meantime, if you have any questions on Brexit, please get in touch with your usual Arthur Cox contact or any member of our Brexit team.

Our previous Brexit briefings provide further background on Brexit-related developments: