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Brexit - the process

In the first part of our detailed guide on Brexit and how it will work, we explain the process and timetable of withdrawal and the Treaty Article which governs it all.

Article 50 of the Treaty on European Union

This Article is sometimes (incorrectly) referred to as Article 50 of the Treaty of Lisbon. In fact, the Lisbon Treaty amended the Treaty on European Union (the Maastricht Treaty) and one of the amendments it made was to insert this new Article 50 into it. Article 50(1) of the Treaty on European Union says:
1. Any Member State may decide to withdraw from the Union in
accordance with its own constitutional requirements.
The next paragraphs go on to explain the mechanics and timetable of the withdrawal process:
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.

3. The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.
This dispels some myths about the exit process. Any Member State has a clear and unqualified legal right to withdraw from the EU if it chooses to do so. Article 50 lays down a procedure  for the negotiation of transitional arrangements and also envisages an agreement governing the future relationship between the EU and the departing Member State.

The timetable under Article 50

This procedure does not guarantee that the terms offered will necessarily be acceptable although it will be surprising at the end of the day if the remaining EU states wish to damage their own industries and jobs in their own countries for reasons of political spite.  But the bottom line is that even if an agreement can not be reached, the UK will cease to be subject to the EU treaties and will become a free and independent State at the end of the 2 year period from the day when the UK gave its notice under Article 50(2). That day will be 30 March 2019.

It is possible under Article 50(3) (quoted above) for the 2-year period to be extended, although only by the mutual consent of both the UK itself and the remaining EU.   We cannot see that it would be sensible for the UK either to ask for or agree to any such extension, once having given notice and started the timetable.  International negotiations are often only concluded just before a deadline and because of the pressure of that deadline.  By contemplating any extension of the deadline, the UK would put itself in a position where it could be filibustered by dragged-out negotiations. During the extended time it would have to carry on paying into the EU budget and be subject to the restrictions on its freedom of action imposed by EU laws. The whole point of Brexit is to escape those restraints.

The deadline would serve to focus minds on reaching an agreement. According to the latest figures (2015, ONS “Pink Book”) the UK exported 134.3bn worth of goods to the remaining EU but imported 223.0bn, i.e. 88.7 billion more.  This indicates that the imposition of tariffs on bilateral trade between the UK and the remaining EU after Brexit would be very substantially more painful for EU exporters in remaining EU states than for UK exporters, were it allowed to occur. 

Given the strong incentive this will provide to the remaining EU to reach an agreement which avoids the imposition of tariffs on the export of goods to its largest single export market (which is the UK),  we cannot see that there will be difficulty in reaching acceptable terms on a mutually beneficial trade deal within the 2-year timetable, whatever huffing and puffing EU politicians may get up to in an attempt to influence the referendum campaign.  We shall explain what the UK should ask for, and the likely terms of such a deal, at the end of our series of posts on the different strands of activity which the UK would undertake in preparation for exit.

Our next post on this topic is Brexit and International Trade Treaties.