The UK gives the Article 50 Notice – What Next?

The UK and the EU will now commence detailed negotiations of the terms of the UK's withdrawal from the EU and, perhaps subsequently, the terms of the UK's future relationship, including trading relationship, with the EU.  It is possible that there will be a comprehensive deal covering the conditions of the UK's withdrawal and its future relationship with the EU, but it is also possible that the EU will insist on settling the terms of the UK's withdrawal, including any outstanding payments due from the UK to the EU budget, before commencing negotiations on the UK's future relationship. It is also possible that transitional trading arrangements will be put in place covering the period between the date of the UK's exit and the finalisation of the new free trade agreement. In its Article 50 notification letter, the Prime Minister has firmly indicated the UK's intention to negotiate both the withdrawal and future relationship agreements in parallel, but it is uncertain whether, or to what extent, the government will be successful in negotiating such an approach. 

The government also plans to negotiate the terms of future trade agreements with other countries whilst holding negotiations with the EU, though the conclusion of any such agreements whilst the UK is still a member state would be contrary to EU law. If the UK is not able to conclude such agreements with effect from the date of the UK exit, then the UK's trade relationships with third countries will then be governed only by the WTO agreements.

The European Parliament has published a proposed resolution on the intended principles of the EU's negotiations with the UK. This resolution will not be binding on the member states, but it is thought likely that it will be influential on the European Commission and the European Council. Moreover, the European Parliament will be required to approve any withdrawal agreement between the EU and the UK. This draft resolution states that a future relationship agreement should only be concluded after the UK's withdrawal from the EU; that any transitional trade agreement taking effect from the UK's withdrawal in 2019 should not exceed three years and should be limited in scope; and that the European Court of Justice should be responsible for settling any legal disputes during this transitional period. The draft resolution also calls for a postponement of discussion on a future EU-UK relationship agreement if the UK negotiates free trade agreements with other countries whilst it is still an EU member state. It remains to be seen how entrenched any such starting positions will be, and to what extent the 27 continuing EU member states will consider it to be in the EU's and their interests to negotiate the future trading relationship sooner rather than later.

The draft European Parliament resolution also states that any future trading agreement should require the UK to adhere to the standards laid down by EU legislation in the single market area, including in the fields of the environment, tax evasion and avoidance, fair competition and trade and social policy. The UK government has already indicated in its Brexit white paper an intention to adopt or preserve, in UK domestic law, all existing directly applicable EU legislation in the single market area when repealing the European Communities Act 1972, through the so-called Great Repeal Bill. This will be a complex process given the huge volume of directly applicable EU legislation and the fact that some elements of EU law are non-legislative in nature, in particular comprising judgments by the European Court of Justice and regulatory rulings. Further, much of the EU legislation in the single market area is based on the principle of reciprocity as between EU member states in the context of the EU free movement rules; these are elements that would in principle not apply, and would need to be separated out, as from the UK's withdrawal from the EU, subject to the content of a future EU trade agreement. The government has published a separate white paper on the planned Great Repeal Bill.