Britain’s vote to exit the European Union is causing headaches for corporate decision-makers worldwide. Without knowing what the future might look like, investments are on hold. In some cases, companies have already made decisions to take parts of their business elsewhere. Companies are seeking clarity, and the negotiations seem to be stuck on several key issues.
United Kingdom Prime Minister Theresa May’s speech in Florence was intended to give new momentum to the negotiations. She acknowledged the need for a transition period of “around 2 years,” during which time the UK will continue to abide by EU rules and regulations. She also affirmed Britain’s commitments to fulfill its financial obligations and outlined a forward-looking agenda for close future cooperation with the EU on both the commercial and security fronts. Her constructive rhetoric was welcomed by Brussels, though lead EU negotiator Michel Barnier said still more detail is needed.
Today, the two sides returned to the negotiating table in Brussels. Both sides must agree on a fair and equitable system to protect citizens’ rights to work and migrate after Brexit occurs. They should calculate a fair financial settlement, and the critical issue of the border between Ireland and Northern Ireland must be resolved to minimize friction in commerce and travel across the island of Ireland.
None of these issues are easy to resolve, but they are critical to finalizing an orderly British withdrawal.
Once sufficient progress has been made on these issues, attention should turn quickly to the contours of the future UK-EU economic partnership. Agreeing quickly on the details of this arrangement will be essential to minimize uncertainty for workers, employers, consumers, and citizens alike. While the bilateral relationship will, of course, be different than the current state, Brussels and London must secure a high-standard trade and investment agreement that allows for the free flow of goods, services, people, and investment across the Channel. The accord must include a robust mechanism to promote regulatory cooperation.
Moreover, a robust UK-EU economic partnership agreement can also serve as a useful baseline for future discussions toward new, strong U.S. agreements with both the UK and the EU.
As talks continue, European and British negotiators must engage meaningfully with key stakeholders across the spectrum. A recent report by our U.S-UK Business Council addresses a number of key policy areas that the EU and UK must jointly resolve in order to safeguard prosperity and boost economic growth on both sides of the Channel.
Prime Minister May’s remarks in Florence—and the EU’s constructive response—are helpful. The two negotiating teams must build on this modest momentum and make tangible progress.