Progress during Phase 1 Negotiations with the EU

A Joint Report, consisting of 15 pages covering 96 points, has been released by the teams involved in the negotiations between the UK and EU regarding the UK’s withdrawal from the EU. The EU has demanded that discussions are held in 2 phases with no progression to the 2nd phase of negotiations (primarily the future relationship between the UK and the EU) until topics defined under their Phase 1 agenda have been concluded.

Both parties have reached agreement in principle in the areas under consideration in the first phase of negotiations, with the UK having conceded to all the demands from the EU.

  • Protecting the rights of UK citizens in the EU and EU citizens in the UK
  • A framework for addressing the unique circumstances in Northern Ireland
  • The financial settlement

Citizens Rights

The role of the CJEU in maintaing Citizens Rights remains unclear. Does the following indicate that the UK will have to refer to CJEU rulings for 8 years after the UK leaves the EU?

Page 6, Paragraph 38

In the context of the application or interpretation of those rights, UK courts shall therefore have due regard to relevant decisions of the CJEU after the specified date. The Agreement should also establish a mechanism enabling UK courts or tribunals to decide, having had due regard to whether relevant case-law exists, to ask the CJEU questions of interpretation of those rights where they consider that a CJEU ruling on the question is necessary for the UK court or tribunal to be able to give judgment in a case before it.

As regards the European Health Insurance Card (EHIC) scheme, it looks as though this will only apply to UK citizens who are in an EU country (and vice-versa) on the “specified date of leaving” and will not be carried forward in the future when UK citizens are travelling abroad.

Page 5, Paragraph 29,

Rules for healthcare, including the European Health Insurance Card (EHIC) scheme, will follow Regulation (EC) No 883/2004. Persons whose competent state is the UK and are in the EU27 on the specified date (and vice versa) – whether on a temporary stay or resident – continue to be eligible for healthcare reimbursement, including under the EHIC scheme, as long as that stay, residence or treatment continues.

Ireland and Northern Ireland

The UK confirms the committment that NI will remain an integral part of the UK.

Page 7, Paragraph 44

The United Kingdom continues to respect and support fully Northern Ireland’s position as an integral part of the United Kingdom, consistent with the principle of consent.

The UK hope to ensure that there is no hard border created between Northern Ireland (NI) and Ireland following discussions between the UK and the EU in the next Phase of negotiations. The wording in this Joint report has been carefully constructed to ensure acceptance by representatives of NI and the Irish Government. “full alignment with those rules of the Internal Market and the Customs Union” would appear to come into effect if there is no agreement reached during Phase 2 negotiations.

Page 8, Paragraphs 49,50

49. The United Kingdom remains committed to protecting North-South cooperation and to its guarantee of avoiding a hard border. Any future arrangements must be compatible with these overarching requirements. The United Kingdom’s intention is to achieve these objectives through the overall EU-UK relationship. Should this not be possible, the United Kingdom will propose specific solutions to address the unique circumstances of the island of Ireland. In the absence of agreed solutions, the United Kingdom will maintain 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 1998 Agreement.

50. In the absence of agreed solutions, as set out in the previous paragraph, the United Kingdom will ensure that no new regulatory barriers develop between Northern Ireland and the rest of the United Kingdom, unless, consistent with the 1998 Agreement, the Northern Ireland Executive and Assembly agree that distinct arrangements are appropriate for Northern Ireland. In all circumstances, the United Kingdom will continue to ensure the same unfettered access for Northern Ireland’s businesses to the whole of the United Kingdom internal market.

Financial Settlement

The UK and EU have agreed a methodology to determine the financial settlement demanded by the EU.

  • The UK will contribute to, and participate in, the implementation of the Union annual budgets for the years 2019 and 2020 as if it had remained in the EU
  • Outstanding commitments at the end of 2020, Reste à liquider (RAL) 1. The UK will contribute its share of the financing of the budgetary commitments outstanding at 31 December 2020 (RAL).
  • Liabilities, contingent liabilities and corresponding assets. The UK will contribute its share of the financing of the Union’s liabilities incurred before 31 December 2020 except for liabilities with corresponding assets and any assets and liabilities which are related to the operation of the budget and the Own Resources Decision

Many questions remain unanswered with no specific figure mentioned or when payment(s) will be demanded.

Will the UK will still receive the rebate from its “GNI based Own Resources” gross contributions?

It is interesting to note that the EU have already specified their own repayment program of 12 YEARS! regarding repayment of funds (paid-in capital) due to the UK from the European Investment Bank. Perhaps the UK should suggest a long repayment period of small amounts each year over a similar time period.

European Investment Bank.
The UK will provide a guarantee for an amount equal to its callable capital on the day of withdrawal. The EU will take 12 years to return the UK’s share of the paid-in capital (3.5 billion euro) at a rate of 300,000,000 euro for the first 11 years and a final payment of 195,903,950 euro in year 12, 2019 – 2030.

There is no mention of a share of the accumulated profits of the EIB which are worth a total of around 44.5 billion euro (cfr. ) and would provide a share to the UK worth around 7.0 billion euro. In fact, the report specifically excludes any further remuneration.

Page 13, Paragraph 77

77. Apart from these reimbursements, the EIB will not make any other payment, return or remuneration on account of the withdrawal of the UK from the EIB or on account of the provision by the UK of a guarantee.

There is also mention about paying towards the relocation of the EU Agencies currently based in London. (Typical of the EU attempting to screw as much money as possible from the UK)

Page 14, Paragraph 86

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

At least the final item does mention that the report is dependent on an overall agreement on the UK’s Withdrawal and a framework for the future relationship between the UK and the EU.

Page 15, Paragraph 96

This report is put forward with a view to the meeting of the European Council (Article 50) of 14 and 15 December 2017. It is also agreed by the UK on the condition of an overall agreement under Article 50 on the UK’s withdrawal, taking into account the framework for the future relationship, including an agreement as early as possible in 2018 on transitional arrangements.

The document can be found in it’s entirety at

Joint report on progress during phase 1 of negotiations under Article 50 TEU on the UK’s orderly withdrawal from the EU

With a copy that can be downloaded from HERE (pdf)

What’s next?

This report summarises the key points which can be used in a formal Withdrawal Agreement when the UK leaves the EU.

It appears highly likely, that following publication of this report, there is a strong possibility of the negotiations being allowed (by the EU) to progress to the next Phase (2) of negotiations where the future relationship between the UK and the EU will be decided (by the EU) discussed. One of the important discussions during the next Phase will, of course, be a Future Trade relationship between the UK and the EU.


In order to understand some of the details mentioned in the section of the Financial Settlement there is an interesting post

The UK’s Brexit bill: what are the possible liabilities?

which was written in March 2017 and contains a description of some of the terms used in the Report.

Bruegel is a European think tank that specialises in economics.


  1. What is the “reste à liquider” (RAL)?
    The RAL is the sum of outstanding commitments, commitments agreed to but that have not yet translated into payments. Long term budgetary commitments lead to the existence of amounts of commitments remaining to be paid out (RAL). The phenomenon is similar to when a contract is signed, e.g. to build a house, the commitment is being made, but the construction company will only be paid according to the progress of the work.