COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN COUNCIL (ARTICLE 50) on the state of progress of the negotiations with the United Kingdom under Article 50 of the Treaty on European Union
Date: 2017-12-08
Institutions: European Commission, Secretariat-General
Subjects: EU national, European Union membership, Northern Ireland, United Kingdom, fundamental rights

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 8.12.2017 COM(2017) 784 final  COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN COUNCIL (ARTICLE 50) on the state of progress of the negotiations with the United Kingdom under Article 50 of the Treaty on European Union    
 
 
COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN COUNCIL 
(ARTICLE 50) 

on the state of progress of the negotiations with the United Kingdom under Article 50 of 
the Treaty on European Union 

1.  

Introduction 

The purpose of the present Communication is  to provide the European Council (Article 50) 
with the European Commission’s assessment of the state of progress of the negotiations with 
the United Kingdom under Article 50 of the Treaty on European Union, in view of its meeting 
on 15 December 2017.  

The negotiations have been conducted between the Commission, nominated by the Council as 
the Union negotiator, and the United Kingdom. The Heads of State or Government invited the 
Council to nominate the Commission as Union negotiator in their Statement of 15 December 
2016.1 The Commission's nomination of Michel Barnier as Chief Negotiator was welcomed 
by  Heads  of  State  or  Government.  On  29  April  2017,  the  European  Council  (Article  50) 
adopted  Guidelines  following  the  United  Kingdom's  notification  under  Article  50  TEU  (the 
Guidelines) which confirmed the role of the Commission as the Union negotiator.2   

The  European  Council  (Article  50)  on  15  December  2017  is  scheduled  to  discuss  and 
determine whether sufficient progress has been made in the first phase of the negotiations on 
the  orderly  withdrawal  of  the  United  Kingdom  from  the  European  Union,  allowing  the 
negotiations to proceed to their second phase.  

The Commission’s assessment, as set out below, is based on the Joint Report agreed by the 
negotiators  of  the  Commission  and  of  the  United  Kingdom  Government.  The  Joint  Report 
was  published  on  8  December  2017:  https://ec.europa.eu/commission/files/joint-report-
negotiators-european-union-and-united-kingdom-government-progress-during-phase-1-
negotiations-under-article-50-teu-united-kingdoms-orderly-withdrawal-european-union_en 

Throughout  the  negotiations,  the  Commission  has  ensured  an  inclusive  process  with  close 
contacts  and  regular  meetings  with  the  EU27.  The  Commission  has  also  been  in  close  and 
regular contact with the European Parliament to ensure that its views and positions are duly 
taken  into  account.  On  4  December  2017,  President  Juncker  met  with  the  European 
Parliament’s  Brexit  Steering  Group  to  take  stock  of  progress  on  three  withdrawal  issues, 
including with regard to the important issue of citizens’ rights. 

The negotiations have been carried out with unprecedented transparency. Each of the essential 
principles  papers  defining  the  Commission’s  negotiating  position,  the  agenda  of  every 
negotiating  round,  as  well  as  the  Commission’s  recommendation  to  open  negotiations  have 
been published.3   

The  Joint  Report  is  not  the  Withdrawal  Agreement.  Should  the  European  Council  consider 
that sufficient progress has been made in the negotiations, the Withdrawal Agreement based 
on Article 50 of the Treaty on European Union will need to be drafted on the basis of the Joint 
Report  and  the  outcome  of  the  negotiations  on  other  withdrawal  issues.  The  Withdrawal 

1 http://www.consilium.europa.eu/media/24173/15-euco-statement.pdf 
2 The role of the Commission was confirmed by Council Decision of 22 May 2017 nominating the Commission 
as the Union negotiator, see http://data.consilium.europa.eu/doc/document/XT-21016-2017-INIT/en/pdf. 
3 https://ec.europa.eu/commission/brexit-negotiations/negotiating-documents-article-50-negotiations-united-
kingdom_en?field_core_tags_tid_i18n=351  

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Agreement will be concluded by the Council upon a proposal from the Commission, and after 
obtaining  consent  of  the  European  Parliament,  and  is  subject  to  approval  by  the  United 
Kingdom in accordance with its own procedures. 

2. 

Background 

On  29  March  2017,  the  United  Kingdom  notified  the  European  Council  of  its  intention  to 
withdraw from the European Union in  accordance with  Article 50 TEU. On 29 April 2017, 
the European Council (Article 50) adopted its Guidelines (hereafter the ‘Guidelines’)4, and on 
22  May  2017,  the  General  Affairs  Council  (Article  50)  authorised  the  Commission  to  open 
negotiations  with  the  United  Kingdom  and  adopted  directives  for  the  negotiation  (hereafter 
the ‘negotiating directives’)5. 

According to point 4 of the Guidelines, ‘the first phase of the negotiations will aim to: 

-  provide  as  much  clarity  and  legal  certainty  as  possible  to  citizens,  businesses, 
stakeholders  and  international  partners  on  the  immediate  effects  of  the  United 
Kingdom’s withdrawal from the Union;  
settle  the  disentanglement  of  the  United  Kingdom  from  the  Union  and  from  all  the 
rights and obligations the United Kingdom derives from commitments undertaken as 
Member State. 

- 

The European Council will monitor progress closely and determine when sufficient progress 
has been achieved to allow negotiations to proceed to the next phase.’6 

Point  5  of  the  Guidelines  indicates  that  ‘[w]e  stand  ready  to  engage  in  preliminary  and 
preparatory  discussions  to  this  end  in  the  context  of  negotiations  under  Article  50  TEU,  as 
soon  as  the  European  Council  decides  that  sufficient  progress  has  been  made  in  the  first 
phase  towards  reaching  a  satisfactory  agreement  on  the  arrangements  for  an  orderly 
withdrawal.’7 

The  negotiating  directives  indicate  in  point  3  that  the  main  objective  of  the  Withdrawal 
Agreement  is  ‘to  ensure  an  orderly  withdrawal  of  the  United  Kingdom  from  the  European 
Union and from the European Atomic Energy Community.’ 

Furthermore,  the  negotiating  directives  state  in  point  10  that  ‘these  negotiating  directives 
prioritise  some  matters which,  at  this  stage,  have  been  identified  as  necessary to  ensure  an 
orderly withdrawal of the United Kingdom from the Union. Other matters not covered by this 
set of negotiating directives, such as services, will be part of subsequent sets of negotiating 
directives.’ 

In  its  conclusions  of  its  meetings  on  20  October  20178,  the  European  Council  (Article  50) 
stated  that  ‘[i]n  the  light  of  the  first  five  rounds  of  negotiations,  taking  into  account  the 
assessment presented by the Union negotiator and reaffirming its guidelines of 29 April 2017, 
the European Council:  

4 EUCO XT 20004/17, available at http://www.consilium.europa.eu/media/21763/29-euco-art50-
guidelinesen.pdf. 
5 XT 21016/17, available at https://www.consilium.europa.eu/media/21766/directives-for-the-negotiation-
xt21016-ad01re02en17.pdf 
6 Bold added. 
7 Idem. 
8 EUCO XT 20014/17, available at http://www.consilium.europa.eu/media/23512/20-euco-conclusions-
art50.pdf. 

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• welcomes the progress made regarding citizens’ rights and invites the negotiator to build on 
the convergence achieved so as to provide the necessary legal certainty and guarantees to all 
concerned citizens and their family members who shall be able to exercise directly their rights 
derived  from  EU  law  and  protected  by  the  [W]ithdrawal  [A]greement,  including  through 
smooth  and  simple  administrative  procedures  and  the  role  of  the  Court  of  [J]ustice  of  the 
European Union;  

•  acknowledges  that,  as  regards  Ireland,  there  has  been  some  progress  on  convergence  on 
principles  and  objectives  regarding  protection  of  the  Good  Friday  Agreement  and 
maintenance of the Common Travel Area, and invites the Union negotiator to pursue further 
refinement  of  these  principles,  taking  into  account  the  major  challenge  that  the  UK’s 
withdrawal  represents,  including  as  regards  avoidance  of  a  hard  border,  and  therefore 
expecting the UK to present and commit to flexible and imaginative solutions called for by the 
unique situation of Ireland;  

• notes that, while the UK has stated that it will honour its financial obligations taken during 
its membership, this has not yet been translated into a firm and concrete commitment from the 
UK to settle all of these obligations’ (point 1). 

The European Council (Article 50) furthermore stated that ‘[a]t its next session in December, 
the  European  Council  will  reassess  the  state  of  progress  in  the  negotiations  with  a  view  to 
determining whether sufficient progress has been achieved on each of the three above issues. 
If  so,  it  will  adopt  additional  guidelines  in  relation  to  the  framework  for  the  future 
relationship and on possible transitional arrangements which are in the interest of the Union 
and comply with the conditions and core principles of the guidelines of 29 April 2017. Against 
this background, the European Council invites the Council (Art. 50) together with the Union 
negotiator to start internal preparatory discussions’ (point 3). 

3. 

 The first phase of the negotiations 

The negotiating directives have provided for a clear structure and a united EU approach to the 
negotiations. Throughout the negotiations, the EU has maintained its unity and acted as one. 

The Commission’s Chief Negotiator, Michel Barnier, has made clear from the outset that the 
Commission  was  available  to  negotiate  at  any  time.  In  practice,  there  have  been  six 
negotiation rounds with the United Kingdom: 

 
 
 
 
 
 

the first round on 19 June 2017; 
the second round from 17 to 20 July 2017; 
the third from 28 to 31 August 2017; 
the fourth from 25 to 28 September 2017; 
the fifth from 9 to 12 October 2017; and 
the sixth on 9 and 10 November 2017. 

Subsequently,  the  Commission  and  United  Kingdom  negotiators  have  had  constant  direct 
contacts. 

While progress has been made on a number of elements relating to the orderly withdrawal, in 
line  with  the  Guidelines  and  the  negotiating  directives,  the  first  phase  of  negotiations  has 
given priority to three issues which have been identified as particularly important for ensuring 
an orderly withdrawal:  

a)  the rights of citizens; 

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b)  the dialogue on Ireland/Northern Ireland; and  
c)  the financial settlement. 

In  addition,  the  negotiations  covered  other  separation  issues,  on  which  negotiators  made 
limited progress: 

  Euratom-related (nuclear specific) issues; 
  ensuring continuity in the availability of goods placed on the market under Union law 

before withdrawal; 
judicial cooperation in civil and commercial matters; 

 
  police and judicial cooperation in criminal matters; 
  ongoing Union judicial procedures; 
  ongoing Union administrative proceedings; and 
 

issues relating to the functioning of the Union institutions, agencies and bodies. 

There were also discussions of general governance of the Withdrawal Agreement aspects not 
related to citizens’ rights.  

There  were  no  discussions  yet  on  the  following  issues  for  which  the  EU  had  presented 
essential principles papers on 21 September 2017: 

intellectual property rights (including geographical indications);  

 
  ongoing public procurement procedures;  
  customs-related matters needed for an orderly withdrawal from the Union; and  
  use of data and protection of information obtained or processed before the withdrawal 

date. 

The  following  section  addresses  each  of  these  issues  which  have  been  discussed  during 
the  negotiations  in  detail,  based  on  the  Joint  Report,  referred  to  above.  Where  the 
position of the United Kingdom negotiator is reflected, this is also done on the basis of 
the Joint Report.   

4. 

The positions of the negotiators of the Commission and of the United Kingdom 

a)  Citizens’ rights 

The  Guidelines  state:  ‘The  right  for  every  EU  citizen,  and  of  his  or  her  family  members,  to 
live,  to  work  or  to  study  in  any  EU  Member  State  is  a  fundamental  aspect  of  the European 
Union. Along with other rights provided under EU law, it has shaped the lives and choices of 
millions of people. Agreeing reciprocal guarantees to safeguard the status and rights derived 
from EU law at the date of withdrawal of EU and UK citizens, and their families, affected by 
the  United  Kingdom’s  withdrawal  from  the  Union  will  be  the  first  priority  for  the 
negotiations.  Such  guarantees  must  be  effective,  enforceable,  non-discriminatory  and 
comprehensive, including the right to acquire permanent residence after a continuous period 
of  five  years  of  legal  residence.  Citizens  should  be  able  to  exercise  their  rights  through 
smooth and simple administrative procedures’ (point 8). 

Content of citizens’ rights 

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The Commission set out its position in the ‘Essential principles on citizens’ rights’ published 
on 12 June 2017. On 26 June 2017, the United Kingdom published the document ‘The United 
Kingdom’s exit from the European Union - Safeguarding the Position of EU Citizens Living 
in the UK and UK Nationals Living in the EU’. 

The  principles  underlying  the  Union’s  position  are  that  the  Withdrawal  Agreement  should 
protect the rights of Union citizens, United Kingdom nationals and their family members who, 
at the date of withdrawal, have enjoyed rights relating to free movement under Union law, as 
well  as  rights  which  are  in  the  process  of  being  obtained  and  the  rights  the  enjoyment  of 
which will intervene at a later date.  

The  negotiators  have  reached  a  fair  and  equitable  common  understanding,  based  on  Union 
law concepts as interpreted by the Court of Justice of the European Union, on the protection 
of  citizens  who  have  built  their  lives  on  the  basis  of  rights  flowing  from  United  Kingdom 
membership of the European Union.  

The core principles of the common understanding between negotiators, which is built entirely 
on the negotiating directives given by the Council and reflects the priorities established by the 
European  Parliament  in  its  resolutions  of  5  April  and  3  October  2017,  enable  both  Union 
citizens  and  United  Kingdom  nationals,  as  well  as  their  respective  family  members,  for  the 
rest of their lives, to continue to exercise their rights derived from Union law in each other’s 
territories, where those rights are based on life choices made before the date which the Joint 
Report calls the ‘specified date’. 

This ‘specified date’ should be the date of the United Kingdom’s withdrawal from the Union, 
without  prejudice  to  discussions,  in  the  second  phase  of  the  negotiations,  on  a  possible 
transitional  period  and  on  appropriate  adaptations  flowing  from  it  as  regards  the  "specified 
date".  In  the  Commission’s  view,  in  case  of  any  transitional  period  implying  the  continued 
application of the Union's acquis on the fundamental freedoms, it is clear that citizens would 
need  to  be  fully  entitled  to  their  rights  to  free  movement  as  before  the  United  Kingdom’s 
withdrawal, and that, therefore, the provisions of the Withdrawal Agreement on the content of 
citizens’ rights and on governance as regards those rights can only become applicable at the 
end of such transitional period. In other words, in such case, the ‘specified date’ should, in the 
Commission's view, be  defined not as  the date of the United Kingdom’s withdrawal,  but  as 
that of the end of the transitional period. 

The common understanding reflected in the Joint Report means that both Union citizens and 
United Kingdom nationals, as well as their respective family members can  continue to live, 
work or study as they currently do under the same conditions as under Union law, benefiting 
from  the  full  application  of  the  prohibition  of  any  discrimination  on  grounds  of  nationality. 
The only restrictions which apply are those derived from Union law. 

Those who have not yet acquired permanent residence rights – if they have not lived in the 
host State for at least five years – will be fully protected by the Withdrawal Agreement, and 
be able to acquire permanent residence rights also after the United Kingdom’s withdrawal.  

It  has  also  been  agreed  that  the  Withdrawal  Agreement  will  protect  the  current  rights  of 
spouses,  registered  partners,  parents,  grandparents,  children,  grandchildren  and  a 
person in a durable relationship, who do not yet live in the same State as the Union citizen 
or the United Kingdom national, to join them in the future.  

5 

 
 
 
In  the  Commissions  view,  the  reunification  right  referred  to  in  the  previous  paragraph  shall 
also cover future partners or spouses of Union citizens and United Kingdom nationals, who 
are not yet partners or spouses at the ‘specified date’, as defined above. This important matter 
should be dealt with in the second phase of the negotiations and will inevitably be linked to 
the level of ambition of the future partnership between the EU and the United Kingdom.  

According  to  the  understanding,  all  children  will  be  protected  by  the  Withdrawal 
Agreement,  wherever  they  are  born  before  or  after  the  United  Kingdom’s  withdrawal,  or 
whether they are born inside or outside the State where the responsible Union citizen or the 
United  Kingdom  national  resides.  The  only  exception  foreseen  concerns  children  born  after 
the  United  Kingdom’s  withdrawal  and  for  which  the  parent  not  covered  by  the  Withdrawal 
Agreement has sole custody under the applicable family law.  

Applicable procedures  

In  addition  to  the  important  substantial  rights  for  citizens  referred  to  above,  the  European 
Parliament and the Commission both attach particular importance to the existence of smooth 
and simple administrative procedures for citizens to exercise their rights. This aspect of the 
negotiation was discussed in detail between President Juncker and the European Parliament’s 
Brexit  Steering  Group  on  4  December  2017.9  According  to  the  Joint  Report,  only  what  is 
strictly  necessary  and  proportionate  to  determine  whether  the  criteria  for  lawful  residence 
have been met, can be required, and any unnecessary administrative burdens will be avoided. 
This is all the more important as the ”special status” that the United Kingdom will set up will 
be  the  sole  procedure  for  EU  citizens  to  avail  themselves  of  the  rights  provided  for  in  the 
Withdrawal Agreement. The negotiators have agreed that the procedures will be transparent, 
smooth and streamlined. Costs must not exceed that imposed on nationals for issuing similar 
documents. Those already holding a permanent residence document will be able to exchange 
it for the 'special status', free of charge.  

The  administrative  procedures  for  applications  for  the  'special  status'  under  the  Withdrawal 
Agreement will be clearly specified therein: the Agreement will contain provisions that reflect 
the current Union law requirements concerning the evidence citizens shall provide to obtain 
the 'special status', and it will specify that the host State cannot require anything more than is 
strictly  necessary  and  proportionate  to  determine  whether  the  criteria  for  lawful  residence 
have  been  met.  Errors,  involuntary  omissions  or  non-respect  of  the  deadline  to  submit  the 
application  will  be  dealt  with  under  a  proportionate  approach.  The  overall  objective  is  to 
ensure  that  the  process  is  as  clear,  simple  and  non-bureaucratic  as  possible  for  the  affected 
citizens. The Commission will pay particular attention to this aspect of the negotiation when 
drafting  the  Withdrawal  Agreement  and  will  seek  to  take  into  account  the  European 
Parliament’s concerns.  

In this context, it is particularly important to make sure that no citizen will be deprived of his 
or  her  rights  under  the  Withdrawal  Agreement  until  a  final  decision  by  the  competent 
authorities, or a final judgment, on an application made for the 'special status' has been taken. 
This has been agreed by the negotiators. The Withdrawal Agreement will ensure that the same 
safeguards against any restriction of rights as those provided by Union law will apply. 

9 It was also mentioned in a letter by Guy Verhofstadt, the Chair of the Brexit Steering Group to Michel Barnier 
on 29 November 2017, see http://www.europarl.europa.eu/news/en/press-room/20171129IPR89108/brexit-
progress-but-not-enough.   

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Citizens will maintain their right to healthcare, pensions and other social security benefits, 
and if they are entitled to a cash benefit from one state, they may generally receive it even if 
they  decide  to  live  in  another  state.  When  citizens  claim  a  benefit,  also  after  the  United 
Kingdom's  withdrawal,  previous  periods  of  insurance,  work  or  residence  in  the  Union  or  in 
the United Kingdom will be taken into account. 

Governance of the Withdrawal Agreement as regards citizens’ rights 

The Commission published its ‘Position paper on Governance’ on 13 July 2017. The United 
Kingdom  has  not  published  any  position  paper  on  this  topic.  The  principles  underlying  the 
Union’s  position  as  regards  governance  in  relation  to  citizens  rights’  are  that  the  citizens’ 
rights set out in the Withdrawal Agreement should be granted as directly enforceable rights in 
both the United Kingdom and in the Union and that the competence of the Court of Justice of 
the  European  Union  should  be  preserved  with  regard  to  the  consistent  interpretation  and 
application  of  the  citizens'  rights  set  out  in  the  Withdrawal  Agreement.  To  this  end,  the 
common  understanding  reached  by  the  negotiators  provides that  the  Withdrawal  Agreement 
will  contain  an  explicit  provision  that  citizens  will  be  able  to  rely  directly  on  the  rights 
enshrined therein and that inconsistent or incompatible rules will be disapplied.  

The  United  Kingdom  negotiator  has  committed  that  the  United  Kingdom  adopts  primary 
legislation to incorporate fully the citizens’ rights Part of the Withdrawal Agreement into its 
legal  order.  Once  this  primary  legislation  adopted,  unless  Parliament  expressly  repeals  it  in 
future, the provisions of the citizens’ rights Part will prevail over inconsistent or incompatible 
legislation.  

It  is  essential  to  ensure  a  consistent  interpretation  of  citizens’  rights  enshrined  in  the 
Withdrawal  Agreement,  in  the  Union  as  well  as  in  the  United  Kingdom.  To  this  end,  the 
common understanding reached by the negotiators, which recognises the role of the Court of 
Justice as the ultimate arbiter of the interpretation of Union law, provides that: 

  United Kingdom courts or tribunals shall have due regard to relevant decisions of the 

Court of Justice of the European Union given after the withdrawal date; 

  United  Kingdom  courts  or  tribunals  should  be  enabled  having  had  due  regard  to 
whether relevant  case law exists, to ask  the Court of Justice of the European  Union, 
where  they  consider  necessary,  questions  of  interpretation  of  those  rights.  This 
mechanism should be available for United Kingdom courts or tribunals for litigation 
brought within 8 years from the date of application of the citizens’ rights Part; 

 

  exchange  of  case  law  between  courts,  regular  judicial  dialogue,  as  well  as  the 
possibility for the United Kingdom Government and the Commission to intervene in 
relevant  cases  before  the  Court  of  Justice  of  the  European  Union  and  before  United 
Kingdom courts and tribunals respectively should be foreseen; and 
the  implementation  and  application  of  citizens’  rights  in  the  Union  should  be 
monitored  by  the  Commission  acting  in  conformity  with  the  Union  Treaties.  In  the 
United  Kingdom,  this  role  will  be  fulfilled  by  an  independent  national  authority.  To 
ensure reciprocity and mirror the role of the Commission, the Commission considers 
that  the  independent  national  authority  should  have  the  power  not  just  to  receive  to 
receive complaints by EU citizens resident in the United Kingdom who consider that 
their  rights  under  the  Withdrawal  Agreement  have  been  infringed,  but  also  initiate 
appropriate legal actions before United Kingdom courts on their behalf. This issue will 
be  reflected  in  the  Withdrawal  Agreement  and  the  Commission  will  pay  particular 

7 

 
 
 
attention to it in the second phase of the negotiations when the details of the role of the 
authority will be discussed. 

It has been agreed that the approach described above does not prejudge future discussions on 
the  general  governance  of  the  Withdrawal  Agreement  or  any  possible  transitional 
arrangements.  

b)  The dialogue on Ireland/Northern Ireland 

The  Guidelines  state:  ‘The  Union  has  consistently  supported  the  goal  of  peace  and 
reconciliation  enshrined  in  the  Good  Friday  Agreement  in  all  its  parts,  and  continuing  to 
support  and  protect  the  achievements,  benefits  and  commitments  of  the  Peace  Process  will 
remain  of  paramount  importance.  In  view  of  the  unique  circumstances  on  the  island  of 
Ireland,  flexible  and  imaginative  solutions  will  be  required,  including  with  the  aim  of 
avoiding  a  hard  border,  while  respecting  the  integrity  of  the  Union  legal  order.  In  this 
context,  the  Union  should  also  recognise  existing  bilateral  agreements  and  arrangements 
between the United Kingdom and Ireland which are compatible with EU law’ (point 11).  

The  United  Kingdom  published  its  position  paper  ‘Northern  Ireland  and  Ireland’  on  16 
August 2017. On 21 September 2017, the Commission published ‘Guiding principles for the 
Dialogue on Ireland/Northern Ireland’.  

Issues  unique  to  Ireland,  as  recognised  in  the  Guidelines  and  the  negotiating  directives, 
include: 

 

 

the  protection  of  the  gains  of  the  peace  process  and  of  the  Good  Friday  (Belfast) 
Agreement in all its parts; 
the  maintenance  of  existing  bilateral  agreements  and  arrangements  between  the 
United Kingdom and Ireland, including the Common Travel Area; and  

  specific issues arising from Ireland’s unique geographic situation, including the aim 
of avoiding a hard border between Ireland and Northern Ireland, while preserving the 
integrity of the Single Market. 

Agreement  between  the  negotiators  was  reached  at  an  early  stage  in  the  dialogue  on 
Ireland/Northern  Ireland  on  the  overarching  common  objectives  which  reflect  those  in  the 
Guidelines and the negotiating directives. Negotiators also agreed that the commitments and 
principles in relation to Ireland/Northern Ireland will not pre-determine the outcome of wider 
discussions on the future EU-UK relationship, and must be upheld in all circumstances. 

Within the common understanding, the United Kingdom negotiator committed that the United 
Kingdom  would  protect  the  operation  and  institutions  of  the  Good  Friday  (Belfast) 
Agreement, and avoid a hard border, including physical infrastructure or related checks and 
controls.  The  United  Kingdom  also  explicitly  committed  to  the  United  Kingdom  respecting 
Ireland's ongoing EU membership and all of the corresponding rights and obligations. 

The United Kingdom negotiator also provided further the necessary assurance that the United 
Kingdom  would  in  the  future  operate  the  Common  Travel  Area  –  a  bilateral  arrangement 
between the United Kingdom and Ireland predating common EU membership – in full respect 
of  Ireland's  obligations  as  an  EU  Member  State,  in  particular  without  affecting  the  right  to 
free movement of EU citizens to and from Ireland.  

8 

 
 
The negotiators recalled the roles, functions and safeguards of the Northern Ireland Executive, 
the Northern Ireland Assembly and the North-South Ministerial Council (including its cross-
community provisions), as set out in the Good Friday (Belfast) Agreement. 

The negotiators carried out  an extensive mapping  exercise of North-South  cooperation, as a 
central  part  of  the  Good  Friday  (Belfast)  Agreement.  The  exercise  showed  that  this 
cooperation relies, to a significant extent, on the common EU legal and policy framework. It 
also  identified  regulatory  divergence  between  Northern  Ireland  and  Ireland  as  the  biggest 
single risk to its continuation and future development. 

Whilst the United Kingdom remains committed to protecting and supporting continued North-
South  cooperation  across  the  full  range  of  contexts  and  frameworks,  including  after 
withdrawal,  the  common  understanding  provides  that  the  United  Kingdom  aims  to  achieve 
this  protection  and  the  avoidance  of  a  hard  border  through the  overall EU-United  Kingdom 
relationship.  This 
the  United  Kingdom’s 
communicated decision to leave the internal market and the Customs Union.  

intention  seems  hard 

to  reconcile  with 

Should  these  objectives  not  be  met  through  the  future  relationship,  the  United  Kingdom 
committed to proposing a specific solution to address the unique circumstances of the island 
of Ireland for agreement with the EU. The EU will need to ensure that any such solution does 
not affect Ireland’s place in the internal market, and consequently the integrity of the internal 
market. 

In  the  absence  of  agreed  solutions,  the  United  Kingdom  committed  to  maintaining  full 
alignment with those rules of the internal market and the Customs Union which, now or in the 
future,  support  North-South  cooperation,  the  all-island  economy,  and  the  protection  of  the 
Good Friday (Belfast) Agreement. In this context, implementation and oversight mechanisms 
for the specific arrangements to be found will be established to safeguard the integrity of the 
internal market. 

The Joint Report also contains a number of unilateral commitments by the United Kingdom.  

As regards other elements of the Good Friday (Belfast) Agreement which are recalled in the 
EU’s  guiding  principles  for  the  dialogue  on  Ireland/Northern  Ireland,  the  negotiators  have 
agreed  to  examine  possible  arrangements  for  ensuring  that  EU  citizenship  rights  of  Irish 
citizens residing in Northern Ireland can continue to be enjoyed fully in the Union. In relation 
to fundamental rights and safeguards under the Good Friday (Belfast) Agreement, the United 
Kingdom committed to ensuring that no diminution of rights is caused by its departure from 
the EU. 

These commitments will need to be translated into workable, practical solutions in the second 
phase  of  the  negotiations.  Against  this  backdrop,  it  is  important  that  there  is  agreement 
between the negotiators to  continue work on Ireland/Northern Ireland  in a  distinct strand of 
negotiations  in  the  second  phase.  The  Commission  considers  this  issue  to  be  of  utmost 
importance. 

Cross-border  programmes  benefitting  North/South  cooperation  are  of  great  value.  In  this 
context, the Commission is of the opinion that the PEACE and INTERREG programmes, to 
which  the  United  Kingdom  is  a  partner,  should  continue  beyond  the  current  programming 
period. To this end, the Commission intends to propose the continuation of these programmes, 
based  on  their  existing  management  structures,  in  its  proposal  for  the  next  Multi-annual 
Financial Framework, foreseen for May 2018.  

9 

 
 
c)  The financial settlement 

The  Guidelines  state:  ‘A  single  financial  settlement  -  including  issues  resulting  from  the 
[Multi-annual  Financial  Framework]  as  well  as  those  related  to  the  European  Investment 
Bank (EIB), the European Development Fund (EDF) and the European Central Bank (ECB) - 
should ensure that the Union and the United Kingdom both respect the obligations resulting 
from  the  whole  period  of  the  United  Kingdom  membership  in  the  Union.  The  settlement 
should cover all commitments as well as liabilities, including contingent liabilities’ (point 10).  

The  Commission  published  its  ‘Essential  Principles  on  Financial  Settlement’  on  12  June 
2017. The United Kingdom has not published a position paper on the financial settlement. 

The United Kingdom agreed to honour its share of financing of all the obligations undertaken 
while it was a member of the Union, in relation to the EU budget (and in particular the Multi-
annual  Financial  Framework  2014-2020),  the  European  Investment  Bank,  the  European 
Central Bank, the Facility for Refugees in Turkey, EU Trust Funds, Council agencies and also 
the European Development Fund.  

Against this backdrop, the Commission and the United Kingdom negotiators have agreed on a 
fair  methodology  to  be  followed  to  calculate  the  obligations  to  be  honoured  by  the  United 
Kingdom in the context of its withdrawal.  

The principles underlying the agreed methodology are that: 

  no Member State should pay more or receive less because of the United Kingdom's 

 

 

withdrawal from the Union; 
the  United  Kingdom  should  pay  its  share  of  the  commitments  taken  during  its 
membership; and 
the  United  Kingdom  should  neither  pay  more  nor  earlier  than  if  it  had  remained  a 
Member State. This implies in particular that the United Kingdom should pay based 
on the actual outcome of the budget, i.e. adjusted to implementation.  

As regards the Union budget component of this financial settlement, the United Kingdom will 
contribute to, and participate in, the implementation of the EU annual budgets for the years 
2019  and  2020  as  if  it  had  remained  in  the  Union.  It  will  also  contribute  its  share  of  the 
financing  of  the  budgetary  commitments  outstanding  on  31  December  2020  (i.e.  Reste  à 
liquider)  as  well  as  its  share  of  the  financing  of  the  Union’s  liabilities  incurred  before  31 
December  2020  except  for  liabilities  with  corresponding  assets.  In  addition,  the  United 
Kingdom will remain liable for its share of the EU’s contingent liabilities as established at the 
date of withdrawal10. 

The implementation of the agreed methodology and the schedule of payments will be based 
on the following principles: 

 

the  United  Kingdom  will  not  finance  any  commitments  that  do  not  require  funding 
from  Member  States,  and  will  receive  its  share  of  any  financial  benefits  that  would 
have fallen to it had it remained a Member State; 

10  For  contingent  liabilities  related  to  legal  cases  as  a  result  of  participation  in  the  budget,  programmes  and 
policies, the cut-off date will be 31 December 2020. 

10 

 
 
 
                                                            
  United  Kingdom  payments  relating  to  United  Kingdom  participation  in  EU  annual 
budgets in 2019 and 2020 will be based on a United Kingdom share calculated as if 
the  United  Kingdom  had  remained  a  Member  State.  Beyond  2020,  the  United 
Kingdom  share  in  relation  to  the  EU  budget  will  be  a  percentage  calculated  as  the 
average of United Kingdom contributions to the budget over 2014-2020; 

  United Kingdom payments arising from the financial settlement will become due as if 

 
 

the United Kingdom had remained a Member State; 
the financial settlement will be drawn up and paid in euro; and 
the  second  phase  of  negotiations  will  address 
implementing the agreed methodology and the schedule of payments. 

the  practical  modalities  for 

Following withdrawal from the Union, the United Kingdom will continue to participate in the 
Union  programmes  financed  by  the  Multi-annual  Financial  Framework  for  2014-2020  until 
their  closure,  except  for  the  programmes  in  which  the  United  Kingdom  did  not  participate 
before and those which can give rise to contingent liabilities the United Kingdom will not be 
liable  for  after  withdrawal.  Participation  in  Union  programmes  will  require  the  United 
Kingdom and United Kingdom beneficiaries to respect all relevant Union legal provisions. 

As regards the European Investment Bank, the negotiators have agreed on principles ensuring 
continuation  of  the  operational  functioning  of  the  European  Investment  Bank.  The  United 
Kingdom  will  provide  a  guarantee  for  an  amount  equal  to  its  callable  capital  on  the  day  of 
withdrawal  for  guaranteeing  the  stock  of  operations  at  this  time.  This  guarantee  will  be 
maintained for a certain period and then decreased in line with the amortisation of this stock. 
The United Kingdom will also be reimbursed in instalments its paid-in capital, starting end of 
2019 but will provide an additional guarantee replacing the reimbursed paid-in capital. Apart 
from these reimbursements, the European Investment Bank will not make any other payment, 
return or remuneration on account of the withdrawal of the UK from the European Investment 
Bank or on account of the provision by the UK of a guarantee. The United Kingdom will also 
maintain the European Investment Bank’s privileges and immunities under Protocols 5 and 7 
annexed to the Treaties throughout the amortisation of the European Investment Bank’s stock 
of operations at the date of withdrawal.  

Concerning the European Central Bank, the negotiators have agreed that the paid-in capital of 
the United Kingdom in the European Central Bank will be reimbursed to the Bank of England 
after the date of withdrawal. 

The  United  Kingdom  will  honour  the  commitments  it  made  before  withdrawal  for 
participating  in  the  Facility  for  Refugees  in  Turkey  and  the  EU  Emergency  Trust  Fund  for 
stability  and  addressing  root  causes  of  irregular  migration  and  displaced  persons  in  Africa, 
according to existing arrangements. 

Finally, the United Kingdom will honour the total commitments it made before withdrawal in 
relation to the European Development Fund according to existing arrangements, including for 
payments related to its share of the outstanding commitments made under previous European 
Development Funds. 

The Commission welcomes  the United Kingdom Government’s offer to discuss  with  Union 
Agencies  located  in  London  how  the  United  Kingdom  might  facilitate  their  relocation,  in 
particular as regards reducing the withdrawal costs.  

Other separation issues 

11 

 
 
 
The Guidelines state: ‘Also, the United Kingdom leaving the Union will impact EU businesses 
trading  with  and  operating  in  the  United  Kingdom  and  UK  businesses  trading  with  and 
operating  in  the  Union.  […]  Negotiations  should  seek  to  prevent  a  legal  vacuum  once  the 
Treaties  cease  to  apply  to  the  United  Kingdom  and,  to  the  extent  possible,  address 
uncertainties’ (point 9); ‘The [W]ithdrawal [A]greement would also need to address potential 
issues  arising  from  the  withdrawal  in  other  areas  of  cooperation,  including  judicial 
cooperation,  law  enforcement  and  security’  (point  14).  The  Guidelines  also  state: 
‘Arrangements  ensuring  legal  certainty  and  equal  treatment  should  be  found  for  all  court 
procedures  pending  before  the  Court  of  Justice  of  the  European  Union  upon  the  date  of 
withdrawal  that  involve  the  United  Kingdom  or  natural  or  legal  persons  in  the  United 
Kingdom. The Court of Justice of the European Union should remain competent to adjudicate 
in these procedures. Similarly, arrangements should be found for administrative procedures 
pending  before  the  European  Commission  and  Union  agencies  upon  the  date  of  the 
withdrawal  that  involve  the  United  Kingdom  or  natural  or  legal  persons  in  the  United 
Kingdom. In  addition,  arrangements should be foreseen for the possibility of  administrative 
or  court  proceedings  to  be  initiated  post-exit  for  facts  that  have  occurred  before  the 
withdrawal date’ (point 16). 

The Union communicated to the United Kingdom ten Essential Principles papers setting out 
its  negotiating  position  on  other  separation  issues,  namely  with  regard  to  Euratom-related 
issues  (nuclear  materials  and  safeguard  equipment);  ongoing  Union 
judicial  and 
administrative  procedures;  issues  relating  to  the  functioning  of  the  Union  institutions, 
agencies  and  bodies;  goods  placed  on  the  market  under  union  law  before  the  withdrawal 
date;  ongoing  police  and  judicial  cooperation  in  criminal  matters;  ongoing  judicial 
cooperation  in  civil  and  commercial  matters;  intellectual  property  rights  (including 
geographical  indications);  ongoing  public  procurement  procedures,  and  customs-related 
matters needed for an orderly withdrawal from the Union.  

Agreement  has  been  found  on  a  number  of  issues  but  there  remain  areas  where  further 
discussion is required.  

On  Euratom-related  (nuclear  specific)  issues,  the  Commission  and  United  Kingdom 
negotiators  have  agreed  principles  for  addressing  the  key  separation  issues  relating  to  the 
United Kingdom’s withdrawal from Euratom. This includes: 

  agreement  that  the  United  Kingdom  will  be  responsible  for  international  nuclear 
safeguards in the United Kingdom and is committed to a future regime that provides 
coverage and effectiveness equivalent to existing Euratom arrangements; 

  agreed  principles  on  ownership  of  special  fissile  material  (save  for  material  held  in 

the United Kingdom by EU27 entities); and 

  agreed principles on responsibility for spent fuel and radioactive waste. 

Regarding  Special  Fissile  Material  held  in  the  United  Kingdom  by  EU27  undertakings,  the 
United  Kingdom  has  not  yet  accepted  that  Euratom  rights  should  continue  (e.g.  right  to 
approve future sale or transfer of these materials). Both sides agree that ultimate responsibility 
for spent fuel and radioactive waste remains with the State where it was produced, in line with 
international  conventions  and  European  Atomic  Energy  Community  legislation.  Agreement 
appears to be in sight but must be finalised in regard to the transfer to the United Kingdom of 
the  equipment  currently  used  by  Euratom  for  the  purpose  of  implementing  safeguards. 
Finally,  disagreement  persists  regarding  the  validity  of  the  approvals  of  exports  from  the 
Union to the United Kingdom after withdrawal. 

12 

 
 
 
 
On  ensuring  continuity  in  the  availability  of  goods  placed  on  the  market  under  Union 
law before withdrawal it has been agreed between the negotiators that: 

 

the  goods  placed  on  the  market  under  Union  law  before  withdrawal  may  freely 
circulate on the markets of the United Kingdom and the Union; 
there should be no need for product modifications or re-labelling;  

 
  goods may be put into service where provided in Union law; and 
  goods concerned should be subject to continued oversight. 

Substantial work is still necessary to agree on the key notion of ‘placing on the market’. More 
fundamental disagreement persists on the EU’s intention to apply EU rules on importation to 
all  animal-derived  products  as  from  the  withdrawal  date,  irrespective  of  when  they  were 
placed on the market, as well as on the competence for performing EU compliance activities 
under  Union  law  after  withdrawal.  On  this  last  point,  the  Commission  negotiator  insists  on 
any compliance activity post-withdrawal to be performed by competent authorities or bodies 
under  current  EU  law,  whilst  the  United  Kingdom  negotiator  wants  the  United  Kingdom  to 
retain temporary (but potentially open ended) competence for such activities. 

On  cooperation  in  civil  and  commercial  matters  there  is  general  consensus  between  the 
negotiators that: 

  Union  rules  on  conflict  of  laws  should  continue  to  apply  to  contracts  before 
withdrawal  date  and  non-contractual  obligations  where  an  event  causing  damage 
occurred before the withdrawal date; 

  EU law on jurisdiction should continue to apply to legal proceedings instituted before 

the withdrawal date; 

  as  regards  recognition  and  enforcement  of  judgments,  relevant  EU  law  should 
continue to apply with regard to judgments handed down before withdrawal; and 
relevant pending judicial cooperation should be finalised. 

 

Work  is  still  needed  on  whether  EU  law  should  continue  to  govern  the  recognition  and 
enforcement  of  judgments  handed  down  after  withdrawal,  but  in  proceedings  that  were 
ongoing on the withdrawal date. Finally, there is disagreement as to whether a choice of court 
clause concluded before withdrawal should trigger the application of EU law on recognition 
and enforcement of judgments in litigation after withdrawal. 

On police and judicial cooperation in criminal matters there is broad agreement that: 

  all structured and formalised cooperation procedures ongoing on the withdrawal date 
that have passed a certain threshold (to be defined) should be completed under Union 
law. 

Additional  work  needs  to  be  done  on  the  list  of  the  instruments  concerned,  and  in  order  to 
agree  on  the  need  to  identify  an  ‘end  point’  ascertaining  completion  of  the  relevant 
procedures.  Further  discussions  are  also  needed  in  order  to  clarify  the  agreement  that  EU 
instruments  providing  for  procedural  rights  would  continue  to  apply,  throughout  such 
procedures after withdrawal.  

On ongoing Union judicial procedures, it has been agreed between the negotiators that: 

13 

 
 
 
 
 
 
  
 
 
 
  
 

 

the  Court  of  Justice  of  the  European  Union  should  remain  competent  for  United 
Kingdom judicial procedures with the United Kingdom as applicant or defendant and 
for preliminary references originating in the United Kingdom, registered at the Court 
of Justice of the European Union on the date of withdrawal; and 
those procedures should continue through to a binding judgment. 

There is however persisting disagreement between the negotiators on several issues including 
the  question  of  the  continued  competence  of  the  Court  of  Justice  of  the  European  Union  in 
relation to facts having arisen before the United Kingdom’s withdrawal, the enforceability of 
the  decisions  of  the  Court  of  Justice  of  the  European  Union  after  withdrawal  and  the 
possibility for the United Kingdom to intervene before the  Court of Justice of the European 
Union in the future.  

On ongoing Union administrative proceedings there is at present no position of the United 
Kingdom  negotiator  on  the  Union  position  that  all  pending  administrative  compliance 
procedures  should  be  completed  with  a  binding  force  and  possibly  result  in  binding 
subsequent judicial procedures. 

On issues relating to  the  functioning  of  the  Union  institutions,  agencies and bodies,  the 
negotiators have agreed that: 

  an arrangement which closely mirrors Union privileges and immunities should remain 
applicable to activities that took place before withdrawal and as regards new activities 
in the United Kingdom foreseen in the Withdrawal Agreement;  

  both  sides  should  continue  to  ensure  compliance  with  obligations  of  professional 

secrecy; and 

  classified information and other documents obtained by both sides whilst the United 
Kingdom  was  a  Member  State  should  retain  the  same  level  of  protection  as  before 
withdrawal. 

There remains disagreement on the role of the  Court of Justice of the European Union with 
regard to the lifting of EU immunities. While the United Kingdom maintains that this question 
has to be examined in the context of the broader discussion on the role of the Court of Justice 
of the European Union, the Union position is that the involvement of the Court of Justice of 
the  European  Union  in  this  case  is  different  from  any  role  for  the  Court  of  Justice  of  the 
European Union as a possible dispute settlement body for the Withdrawal Agreement.  

With regard to the general governance of the Withdrawal Agreement, the Commission is 
of the view that more work is needed.  

The Commission’s ‘Essential Principles paper on Governance’ set out the Union’s proposal 
for  a  complete  and  effective  governance  mechanism.  While  some  discussions  have  taken 
place  on  dispute  resolution  and  the  monitoring  of  the  functioning  of  the  Withdrawal 
Agreement, including the possibility of setting up a joint committee, significant divergences 
remain. More specifically, the United Kingdom has made clear its opposition to according a 
central role to the Court of Justice of the European Union, while the Commission has stressed 
the need to protect the autonomy of the Union and of its legal order, including the role of the 
Court of Justice, as underlined in the European Council guidelines of 29 April 2017. Further 
discussions  are  needed  on  the  institutional  arrangements  to  jointly  manage  and  monitor  the 
functioning of the Withdrawal Agreement (for example via a joint committee), on the crucial 

14 

 
 
 
  
 
  
question of how compliance with the Withdrawal Agreement by both sides can be effectively 
enforced, and on how disputes that may emerge in this regard should be settled. 

5.  

Conclusion 

On  the  basis  of  the  foregoing  and  the  Joint  Report  of  the  negotiators,  as  well  as  the 
confirmation  by  Prime  Minister  May  to  President  Juncker  during  their  meeting  on  8 
December 2017 of the United Kingdom Government’s endorsement of the Joint Report, 
the  Commission  recommends  to  the  European  Council  (Article  50)  to  conclude  that 
sufficient  progress  has  been  made  in  the  first  phase  of  the  negotiations  on  the  orderly 
withdrawal of the United Kingdom from the European Union, allowing the negotiations 
to proceed to their second phase. 

Should  the  European  Council  consider  that  sufficient  progress  has  been  made  in  the 
negotiations,  the  Withdrawal  Agreement  based  on  Article  50  of  the  Treaty  on  European 
Union should be drafted on the basis of the Joint Report and the outcome of the negotiations 
on other separation issues.  

Negotiations  should  be  complete  by  autumn  2018  to  allow  good  time  for  the  Withdrawal 
Agreement  to  be  concluded  by  the  Council  after  obtaining  consent  of  the  European 
Parliament, and to be approved by the United Kingdom in accordance with its own procedures 
before 29 March 2019.  

The  Guidelines  of  29  April  2017  state  that  the  negotiations  may  seek  to  determine 
transitional  arrangements  which  should  be  in  the  interest  of  the  Union.  Such  transitional 
arrangements would be based on Article 50 of the Treaty on European Union and would by 
their very nature be for a limited period of time. During such a potential  transitional period, 
the  entire  acquis  –  the  full  corpus  of  EU  law  –  would  continue  to  apply  in  the  United 
Kingdom.  Any  such  transitional  arrangements  would  require  existing  Union  regulatory, 
budgetary, supervisory, judiciary and enforcement instruments and structures to apply. Should 
the  European  Council  (Article  50)  recognise  that  sufficient  progress  has  been  made,  the 
Commission  stands  ready  to  begin  work  immediately  on  such  transitional  arrangements, 
which could also provide bridges to the future relationship.  

If  the  European  Council  (Article  50)  so  decides,  the  Commission  also  stands  ready  to  start 
exploratory  discussions  on  the  future  relationship  between  the  European  Union  and  the 
United Kingdom.  

15