Richard North, 22/09/2017  

We fully expected the EU to respond to Mrs May's Florence speech in good time, but they seem to have taken this a stage further by getting their retaliation in first with a well-judged pre-emptive strike.

This comes in the form of a speech by Michel Barnier in front of the Committees of Foreign Affairs and the Committees of European Affairs of the Italian Parliament, and even in his venue he seems to have upstaged Mrs May. While the Prime Minister delivers her speech in Florence, Barnier has gone to the eternal city – Rome.

To start his speech, Barnier knocks on the door of reality, stating: "At midnight on 29 March 2019, the United Kingdom will leave the European Union and will become a third country". And it is the last phrase which needs repeating again and again: the UK "will become a third country". It should be repeated continuously until the UK government finally understands what it means.

For the rest, it is almost as if he is addressing Mrs May personally, with him declaring that the best outcome for the EU in the Brexit negotiations is an agreement. But, he says, time is of the essence. Deducting the six months already expended and six for ratification, we have only a year left.

In that year, the parties must swiftly reach an agreement on the UK's orderly withdrawal and provide certainty where Brexit has created uncertainty: for citizens, for beneficiaries of EU programmes, for the new borders, particularly in Ireland.

They must subsequently define the length and precise conditions of a short transition period, if the British government requests one. And then they must begin scoping the future relationship, in parallel to the finalisation of the withdrawal agreement.

The use of the word "scoping" is an interesting one. I'm not sure I've heard it before from Barnier in the context of Brexit. It is a technical term which effectively covers the process defining the scope of a future agreement and the work which needs to be done in order to conclude it.

By talking only of scoping, Barnier is confirming that there will be no trade agreement concluded at the end of the withdrawal process, and nor will we be able to sign one immediately afterwards. Previously, he has been telling his audiences that a trade accord "will take years to complete".

On that basis, there really can't be any doubt about the UK government wanting a transition period. But, back in Rome, Barnier reminds us that there can be no discussion on this and other matters until we make real "sufficient progress" on the conditions of the UK's withdrawal.

This, he said, was the approach set out unanimously by the European Council on 29 April in its guidelines. Above all, he added, "this approach is an essential condition for the success of these negotiations".

If Mrs May thinks she will get anything different after her speech in Florence, all she needs to do is refer to this speech. The man from the Commission, he say no! "We will listen attentively and constructively to Theresa May's important speech tomorrow in Florence", he says, but then the Commission will go right back to demanding a resolution of citizens' rights, the financial settlement and the Irish border question.

Once we have clarity on these points, Barnier then says, we should also define the "precise conditions" for a possible transition period. This would begin on 30 March 2019, when the UK is no longer a member of the European institutions, and therefore no longer takes part in the decision-making process.

He then makes what he calls "an important point". This short transition period, he says, "will be part of the Article 50 withdrawal agreement" and, "without a withdrawal agreement, there is no transition. This is a point of law".

But I'm not sure he's right there. Once the withdrawal agreement takes effect, the EU treaties cease to apply to the UK, which relieves us of any obligations to obey their provisions. Crucially, though, it also relieves the Member States and the EU institutions of any obligations towards the UK.

The transition period, according to Barnier, is an extension of the EU acquis for a limited period – which means re-applying provisions of the treaties, thereby creating new obligations between the parties. If that is the case, the Article 50 settlement cannot be the vehicle, as new obligations require the unanimous agreement of all parties. That means a new treaty – a secession treaty.

But there is also another twist: "If we are to extend the acquis of the EU, with all its benefits", says Barnier, then logically "this would require existing Union regulatory, budgetary, supervisory, judiciary and enforcement instruments and structures to apply".

For the UK, this would be the worst of all possible worlds. This really is the "pay no say" scenario, whereby we are effectively still in the EU, bound by all its provisions, but without taking part in the decision-making processes. By contrast, in the EEA, we would have the two-pillar consultation structure to rely on, and we would only be obeying about 20 percent of the laws.

This notwithstanding, Barnier repeats that, even for this to happen, an agreement on orderly withdrawal is a precondition. And if we ever get past this, to discussing trade relationships, any new deal "will be less about building convergence, and more about controlling future divergence".

"Naturally", says Barnier, "if the United Kingdom wanted to go further than the type of free trade agreement we have just signed with Canada, there are other models on the table. But one thing is sure, he adds: "it is not – and will not – be possible for a third country to have the same benefits as the Norwegian model but the limited obligations of the Canadian model".

And then, this new relationship will go well beyond a trade relationship and will also involve an external, security and defence dimension. We want to invest together, to do research together and to develop our common capabilities, with particular thanks to the European Defence Fund, as proposed by the European Commission, he says.

The UK will also become a third country in these areas. But because this is about the stability and security of our continent, the EU and the UK should be ready to cooperate in due course. There should be an unconditional commitment to the security and stability of our continent.

But even then, he isn't finished. Speaking directly to his audience in the Italian Parliament, he told them that the dialogue they were having – as in all national parliaments – was essential because our future partnership with the United Kingdom, and its legal text in the form of a treaty, "will have to be ratified by you, when the time comes".

That at least positions any free trade agreement as a mixed agreement, requiring the unanimous ratification by all the Parliaments in the 27 Member States, and in the UK.

For the time being though, that is in the distant future – at the very earliest by the end of March 2021 – although likely much later. In the meantime, we have the withdrawal agreement and the transitional arrangements to settle, with much uncertainty in the latter area. 

The people who objected to the EEA as a transitional arrangement are absolutely going to hate what Barnier has in mind. Come what may, though, Barnier and the Member States are simply not going to budge on their stated requirements. We will see later today what Mrs May has to say but, if she expects any deviation from Barnier's current position, she is wasting her time.

Throwing €20 billion into the pot – or whatever "open and generous offer" Mrs May eventually makes– is not going to resolve the current impasse, and neither is anything short of settling the three issues set out in Phase One.

And nor will any attempt to appeal above the heads of the Commission, to the Member States, have any chance of working. The "colleagues" are rock solid on this and will not entertain British "divide and conquer" tactics. Even to try that one will be treated as an insult.

Furthermore, with this pre-emptive strike, Mrs May cannot say she did not know. In the face of the EU's unequivocal position, re-stated many times and right up to the ever of the Florence speech, she simply cannot claim that it is at all realistic (or reasonable) to expect the EU to change its agenda. She simply lays herself wide open to the charge of wishful thinking.

When the formal answer comes from the EU – most likely in the next round of negotiations which starts in 25 September - to no one's surprise it will be exactly the same as before. And, as Mr Barnier is prone to say, that clock just keeps on ticking.

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