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Brexit: A Friendly Users Guide

by Kenneth Wallace-Mueller, Member of the MEF Board

Fifty days ago, on 23 June 2016, the people of the United Kingdom went to the polls to vote on whether the UK should withdraw from the European Union (the so-called “Brexit”). In the months running up to the referendum, the result was anyone’s guess. In hindsight, it seemed that few really did believe that Brexit would happen.

The news that the UK – with the notable general exceptions of Scotland, Northern Ireland, Greater London and Gibraltar – had voted for Brexit came as an international shock. The unthinkable had happened. Fifty days later – what is going to happen?

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The generally accepted approach to Brexit is the now-famous Article 50 of the Treaty of the European Union (“TEU”). Whilst this Article has been the subject of much media discussion, the key is in paragraph 2:

“A Member State which decides to withdraw shall notify the European Council of its intention. In the light of the guidelines provided by the European Council, the Union shall negotiate and conclude an agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union. That agreement shall be negotiated in accordance with Article 218(3) of the Treaty on the Functioning of the European Union. It shall be concluded on behalf of the Union by the Council, acting by a qualified majority, after obtaining the consent of the European Parliament.”

As Article 50 has never been used before, its interpretation is essential. The generally accepted interpretation is that firstly the UK Prime Minister will give notice to the European Council – the college of Heads of State of the EU Member States. Of note is that this can be done at a time selected by the UK, and it cannot be pressurised into doing so. The new UK government led by Prime Minister Teresa May has suggested that it may be invoked in early 2017.

This will trigger a 2-year negotiation period in which the UK and the EU will negotiate the withdrawal of the UK. It is generally believed that in these negotiations the EU will be represented by the European Commission, however only once given the authority by the European Council and Parliament. During this period, the UK will remain a full member of the EU, continuing to be subject to EU law and jurisprudence, however it cannot take part in discussions which concern its withdrawal as a Member State.

The law does not specify what form the “framework” between the UK and EU should take. In the worst case, there will be no agreement within the negotiation period will expire, and no extension will be agreed upon. More likely however will be a withdrawal agreement or – in the best case – a full UK-EU cooperation agreement.

In any case, there is great speculation what form the relationship will take. This is both a legal and a political issue, driven by the possibilities offered under a wide range of legal sources, as well as political pressure from the British people, EU heads of government, third countries, and other international players. The topics of discussion may range across the 35 chapters of the EU acquis communautaire. In short – the negotiation will be complex, highly technical and without precedent.

An important factor to the UK is the tariff-free access to the EU Internal Market, i.e. free movement of goods, services and capital without customs or other import/export taxes, whilst having control over the movement of EU citizens and people of third countries into the UK. Such a model does not currently exist, as it would normally constitute a violation of the EU fundamental freedom of the movement of people.

As negotiations have not started, in principle anything is possible depending on the priorities of the UK and EU, as well as the signal the EU would want to send to third countries and any other Member States who might consider leaving in the future.

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The main cooperation models currently discussed are the Norwegian model, the Swiss model, the Turkish model, and the WTO model:

Norway: The European Free Trade Association (“EFTA”) is an organisation with four members: Norway, Iceland, Liechtenstein and Switzerland. EFTA is a free trade organisation whose member states historically were either unable or did not want to join the EU. With the exception of Switzerland, the three EFTA states as well as the EU Member States are parties to the European Economic Area (“EEA”) agreement, which created the European Internal Market – the basis for free movement between EEA member states. Post-Brexit, subject to consent of the four EFTA members, the UK could consider membership of EFTA, which has obligatory membership of the EEA. This would allow continuation of tariff-free trade with EU Member states, however – normally – it would prevent the UK from limiting free movement of EU citizens into the UK.

Switzerland: Compared to Norway, where certain bodies of EU legislation (includes those which enforce free movement) are adopted into the EEA agreement, Switzerland’s relationship to the EU and its membership of the Internal Market is regulated by a large number of bilateral agreements. This may be more attractive to the UK, as in principle it may allow it to select which EU laws it wants to apply. In doing so, the EU presents Switzerland with finalised EU legislation, however in practice it is not a conventional negotiation as the EU is not fully prepared to make any significant amendments to the text. In a referendum in 2014, the Swiss people voted to impose quotas limiting the movement of EU citizens into Switzerland, constituting a violation of the free movement of people, a mandatory agreement between the EU and Switzerland. Combined with the slow negotiation process, EU-Swiss relations have since then remained frosty, and the EU will unlikely consider this option for the UK.

Turkey: The EU and Turkey agreed upon a customs union in 1995, which means there are no customs tariffs or quotas between the two parties, i.e. free trade in goods, but not agricultural goods or services. Similar agreements exist with the microstates of Andorra and San Marino. For the UK, this model would have the advantage of not having to implement the principle of free movement of people. As with Turkey however, the UK would have to apply the EU common tariff to all third countries without the ability to control it. As with Switzerland, EU would not apply unless agreed bilaterally, and the Turkey model does not include provisions on banking and financial sectors, another important factor for the UK.

WTO: Whilst heralded as a model in itself, the World Trade Organisation (“WTO”) model is more a default approach should the UK and EU not agree upon a form of cooperation. As both the EU and all 28 Member States are signatories in their own rights, any trade between the UK and EU will be subject to WTO rules. Such trade is governed by five central principles, whereby the most important relating the UK and EU is arguably that of non-discrimination, specifically the “most favoured nation” rule. This stipulates that any WTO member state should offer the same tariffs for trade with all other WTO member states. In effect, this brings neither advantage nor disadvantage for the UK, yet is a back-up plan of sorts.

Brexit will likely be one of the most extensive and significant negotiations seen in human history, with repercussions across the world. No precedent exists, and anything can happen. It is far too early to determine what the outcome will be, but understanding the interest of both parties is crucial. The UK will want tariff-free access to the EU Internal Market whilst being able to set immigration quotas, and the EU will want to ensure the integrity of its principles and laws, whilst discouraging other Member States from leaving – a recent phenomenon in light of dissatisfaction with EU politics. On the other hand, one cannot forget that [despite the policital pressure from different sources and intricacies of constitutional and international law] this will be a negotiation like any other, with the UK and the EU on opposite sides of the table trying to find a mutually acceptable solution.

Whatever happens, as written on the cover of Douglas Adams’s famous book “The Hitchhiker’s Guide to the Galaxy” –  don’t panic.

Please note that the views expressed are those of the author and do not necessarily represent or reflect the views of Munich European Forum e.V.

Sea of Tears: the EU Migration Crisis

by Mathilde Duhaâ, MEF Association Member

Sea of tears, sea of misery” for the UN Secretary General Ban Ki-moon. “Cemetery of Europe” according to Pope Francis. “A tragedy of epic proportion” for the UNHCR spokesperson. From 2013 onwards, the Mediterranean has become the world’s most dangerous sea route for refugees and migrants.

Since the beginning of 2015, refugees and migrants are attempting in greater numbers to cross the Mediterranean Sea. According the International Organization for Migration, more than 150,000 have reached Europe by sea since January and upward of 1,900 have died so far this year in the European waters (twice more than during the same period in 2014). The vast majority landed in Italy and Greece, where the number of arrivals have exploded. Figures are expected to increase even further this year as smugglers intensify their activity during summer months.

Immigration is dependent on the international context. Most of the refugees come from the Middle East and Sub-Saharan Africa (mainly Syria, Afghanistan, Eritrea and Somalia), fleeing conflict, persecution, human rights violations or poverty. Due to the progressive closing of the EU borders in recent years, migrants have no other choice than paying several thousand euros to smugglers to reach Europe. They often sail on unsafe and crowded vessels, resulting in frequent drownings and incidents at sea.

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Credit: FreeImages.com/Yago Bruna

In October 2013, after the Lampedusa shipwreck, the Italian Navy launched “Mare Nostrum”, a search and rescue operation aiming at helping boats in distress at sea. It proved itself efficient in rescuing over 166,000 people in 2014. A year later however, after pressure from member states arguing that Mare Nostrum was in fact encouraging migrants, the operation was phased out and replaced by “Triton”, a border protection operation run by the EU agency Frontex. Its mandate was far more restricted, with fewer vessels, a smaller area of operation and a budget three times lower than that of Mare Nostrum.

In response, several organisations warned the EU that such a cut back would contribute to a dramatic increase in the number of deaths and stressed the need to step up the EUs capacity to save lives in the Mediterranean Sea.

This call went unheeded until the tragic series of shipwrecks last April: 400 migrants drowned on April 12 and 800 on April 19, the largest loss of life in a single crossing. Over a thousand deaths in several days stirred up emotion among the international community, and European leaders were asked to open their eyes on this tragedy.

After an attempt to get UN Security Council approval to the use of force against smugglers boats operating out of Libya, which failed due to Libyas opposition, European leaders decided to increase Tritons resources and operational area to match that of Mare Nostrum. Germany, Ireland, Italy and the UK additionally deployed extra ships and aircrafts to boost the EU rescue capacity.

The Commission simultaneously presented a plan to relocate 40,000 refugees from Italy and Greece to other EU member States. Furthermore, 20,000 resettlement places were to be offered for UN refugees from outside the EU. This quota system was rejected by several governments – Hungary, Austria, Baltic States and Spain amongst others – judging they do not have to accept a set number of migrants. Last week, on July 20, EU leaders finally agreed to redistribute the 40,000 asylum seekers, but only a voluntary basis.

The attitude of the European political leaders towards the quota system is symptomatic of a deeper problem: the reluctance of some States to address the issue of refugees at the European level. Although the Commission requested all countries to work together to find a common response, for now national interests have prevailed. Due to their dire economic situations, Italy and Greece are currently unable to face the arrival of migrants by themselves. Solidarity must remain central and only an EU-wide collective response will be effective. Whilst the world faces the worst refugee crisis since the end of World War 2, the EU has the responsibility to contribute to international burden-sharing.

Although positive actions have been effected in recent weeks, resulting in only 99 victims since the end of April, the recent a minima agreement shows that dealing with immigration policies remains extremely contentious. In the context of economic crisis and the rise of extremist political movements throughout Europe, it is clearly challenging to find the right answer.  For now, the management of this crisis has been characterized by the clear lack of political will. It has prevented the EU from preventing the human tragedy taking place along its coasts. If Brussels wants to avoid more deaths, migration across the Mediterranean Sea must be put higher on the EU agenda.

Addressing the refugee crisis strictly through a security approach would be a mistake. It certainly questions the efficiency of the EU external security mechanisms, but it must be considered first and foremost as a humanitarian issue, where peoples lives are more important than protecting borders.
The fundamental causes have to be addressed: tackling only the symptoms would not be enough and maybe even unproductive. If dismantling smugglers networks is the objective, simply destroying traffickers ships is not an adequate solution. Thousands of migrants would be trapped in Libya, in the grip of violent conflict and political instability, where human-trafficking has become a very lucrative activity.

Building walls will not solve the problem either: border crossing will move to other areas, people will find unsafe alternative routes and take even greater risks to reach Europe. As the UN High Commissioner for Refugees António Guterres said: “We can’t deter people fleeing for their lives. They will come. The choice we have is how well we manage their arrival, and how humanely”.

Finally and maybe most importantly, failing to address this situation as a humanitarian crisis would impact the European ideal. The EU has core values it believes in and stands for:  “the respect for human dignity, freedom, democracy, equality, the rule of law and respect for human rights, including the rights of persons belonging to minorities.”  By remaining silent on immigration issues and unable to have a concrete common vision for its foreign policy, Europe would seriously undermine its founding principles and image around the world.

In the words of Matteo Renzi, Italian Prime Minister, “we risk losing Europe’s noble idea if we fail Mediterranean migrants”.

Please note that the views expressed are those of the author and do not necessarily represent or reflect the views of Munich European Forum e.V.