Tusk puts forward guidelines for Phase 2 talks

In Phase 2, when economic interests may diverge substantially, maintaining unity for the EU27 could be much harder.

With a signal of “sufficient progress,” in the first phase of Brexit negotiations Friday, European Council President Donald Tusk quickly put forward draft guidelines for the next round.

The guidelines would aim for a transition period that requires the U.K. to obey all EU rules and regulations for about two years, as if it remained a member of the club, even as Britain would lose all voting rights.

And in a potential disappointment for London, the guidelines take a very narrow approach to discussions on a future trading relationship, stating that yet another set of guidelines will be needed to fully address the “framework for the future relationship.”

The guidelines, obtained by POLITICO, must still be approved by the 27 EU leaders at a summit next Friday, and could change even before the meeting as the capitals debate the terms.

“As regards transition, the European Council notes the proposal put forward by the United Kingdom for a transition period of around two years, and agrees to negotiate a transition period covering the whole of the EU acquis, while the United Kingdom, as a third country, will no longer participate in or nominate or elect members of the EU institutions,” the guidelines state.

On the future trade deal, the guidelines note: “While an agreement on a future relationship can only be finalized and concluded once the United Kingdom has become a third country, the Union will be ready to engage in preliminary and preparatory discussions with the aim of identifying an overall understanding of the framework for the future relationship. Such an understanding, which will require additional European Council guidelines, should be elaborated in a political declaration accompanying the Withdrawal Agreement.”

The guidelines, which run just three pages, call for negotiators to complete the work of Phase 1.

They also note that the U.K. will leave the EU’s customs union and single market, and state pointedly that the Council in crafting a deal with the U.K. will take steps to safeguard the market and trade relations with other countries.

“The European Council will calibrate its approach as regards trade and economic cooperation in the light of this position so as to ensure a balance of rights and obligations, avoid upsetting existing relations with other third countries, and respect all other principles set out in its guidelines of 29 April 2017, in particular the need to preserve the integrity and proper functioning of the single market,” the guidelines state.

The emphasis on the need for additional guidelines reflects the keen desire of the EU 27 leaders to keep tight control over the negotiating process and to not let either the U.K. or the European Commission, as the official negotiator, push too far or too fast without consensus and unanimity among Continental capitals.

While the EU27 maintained remarkable unity during Phase 1, doing so in Phase 2, when economic interests may diverge substantially, could be much harder.

The point was so important the guidelines reiterate it. “The European Council will continue to follow the negotiations closely and will adopt additional guidelines at one of its next meetings, in particular as regards the framework for the future relationship,” according to Tusk’s draft. “It calls on the United Kingdom to provide further clarity on its position on the framework for the future relationship. The European Council invites the Council (Art.50) together with the Union negotiator to continue internal preparatory discussions.”

The guidelines also state that the EU is ready to partner with the U.K. in other areas: “The European Council reconfirms its readiness to establish partnerships in areas unrelated to trade, in particular the fight against terrorism and international crime, as well as security, defence and foreign policy.”

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