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There will be some fudge in the order of negotiations
Whether the UK and the EU negotiate a future trading deal alongside the details of the divorce deal is a political question, not a legal one, said Steffen Kampeter, the director general of the German Employers Association and a former German MP. “Therefore my recommendation is to start and see whether this political question is actually a real one.”
Jonathan Powell, a former Downing Street chief of staff to Tony Blair when he was prime minister, agreed it was a political rather than legal, and noted that the EU's chief negotiator Michel Barnier had said substantial progress would be needed on the exit deal before trade talks, not that they needed to be completed. “If you think about it logically, David Davis has a point, how could you possibly agree on what is going to happen on the border between Northern Ireland and the Republic unless you know what you are transitioning to. So in the end I think that issue will be fudged.”
Exiting the EU without a deal would be 'catastrophic'...
The former head of the Government Legal Department Sir Paul Jenkins said three key things would need to be negotiated in the two-year Article 50 period – the details of the exit deal from the EU, a framework for a future trade deal to inform detailed talks to follow beyond the 2019 exit date, and a transitional package to get there.
Leaving without a deal would be what he called the “cliff edge Brexit’, with all EU provisions ceasing to apply in one day. This would be a “catastrophic outcome” for the UK, he said, while no transitional deal to bridge the gap between exit and the new trade deal would be “almost as catastrophic in the short to medium term as no deal at all”.
… but a transitional deal will need to cover everything
Jenkins highlighted that a transitional deal would need some sense of the future relationship, and the framework for the future agreement would be be more complicated than the exit deal.
“The framework will need to cover much more than citizens and the Irish land border,” he said. “All the sectors in this room will need to be covered by it, and it will need to set out high level agreement on things like state aid and dispute resolution. Every deal like this has a dispute resolution.”
As a result, any transition deal between the exit terms and the new trading deal “will need to cover everything”, he told delegates. “It has to be a comprehensive a bridge that covers everything from the moment we leave until the moment we move to the long-term deal.” The easiest way is to take the status quo and make that the transition arrangements, but Jenkins said this won’t happen as it will be politicaly unacceptable in the UK. Instead he suggested something short of the status quo will be the starting point.
Expect to hear much more from industry
Jenkins highlighted that Whitehall is currently crawling over “absolutely everything” in order to compile lists of what industries are affected by the exit process. There was no way that the civil service would know everything, he said, but they want to know the impact of EU legislation on particular industries.
Rob Murray, a partner at the law firm Mishcon De Reya said that he would advise firms who have regulatory concerns to go to Whitehall with answers as part of the discussions. “What you need to do is find the policy person. What we really need is to say to someone that this is the problem, but also give the civil servant the solution.
“The risk is that people will make mistakes. The onus is on business to know what they must have and to give the people they must speak to solutions.”
One delegate said they had been told that the way to guarantee any regulatory issues were on the radar of government was to speak to the Department for Exiting the European Union, the Department for Business, Energy and Industrial Strategy as well as any subject departments, so that when lists for action are compiled across Whitehall, such concerns stand out.
More political direction is needed on the deal
There remains a question over the capacity for Whitehall to prepare for all the possible outcomes of the Article 50 talks and negotiations for a future trade deal, and Jenkins indicated the civil service needed ministers to set out a greater sense of direction.
The months since last June's referendum has been used to “prepare and prepare and prepare”, he said, but there now needs to be progress on setting out priorities “quite quickly”.
“They have done all the basic research, and they have had this time to do it, but they have to be told what to do. They need to have a sense of direction and they haven’t got it at the moment,” he said.
The “worst nightmare in Whitehall was the need for twin-track planning”, he said, but the problem is particularly acute as there are not just two options, but “quite a wide variety of potential deals" that would come out of the conclusion of talks in March 2019. The civil service might not know until the last minute what the details will be, he added.
“That is why you need quite draconian powers to change the law [proposed in the so-called Great Repeal Bill] with very little parliamentary approval, because you’ve got to do so overnight in some cases.”
And the negotiations will be stressful
Jenkins, who first joined the Government Legal Service in 1979 told CSW that the civil service will require resilience “more than anything else” during Brexit.
“We need to focus in on resilience and wellbeing because actually this is a very, very long tough haul,” he added, and civil service chiefs will therefore need to “recognise the strains” that will be caused by the negotiations, he said.
“I think there is a big leadership issue for the leaders of the civil service, recognising that the strains and the stresses that they will be under but also their teams will be under,” said Jenkins, who was also a civil service diversity champion in his time as head of the legal department from 2006 to 2014.
The Brexit Exchange project is a forum to help UK and European businesses tackle the complex Brexit negotiations that is sponsored by CSW’s parent company, Dods.