Brexit negotiations

In its election manifesto for the United Kingdom general election in May 2015, the Conservative Party promised to call an EU referendum by the end of 2017.[17][18]

The referendum, held on 23 June 2016, resulted in a 51.9% majority vote for leaving the European Union.[19]

The Department for Exiting the European Union was originally responsible for overseeing the negotiations to leave the EU and for establishing the future relationship between the UK and EU. This role was later taken over by Olly Robbins, and later Lord David Frost, who reported to the Prime Minister and Cabinet Office.

• Theresa May, Prime Minister of the United Kingdom
• Oliver Robbins, Europe Advisor to the Prime Minister and chief negotiator
• David Davis, Secretary of State for Exiting the European Union until 8 July 2018.
• Dominic Raab, Secretary of State for Exiting the European Union from 9 July 2018 until 15 November 2018.
• Stephen Barclay, Secretary of State for Exiting the European Union from 16 November 2018.
• Sir Tim Barrow, UK Permanent Representative to the EU

• Boris Johnson, Prime Minister of the United Kingdom
• Lord David Frost, Europe Advisor to the Prime Minister and chief negotiator
• Stephen Barclay, Secretary of State for Exiting the European Union.
• Sir Tim Barrow, UK Permanent Representative to the EU

The United Kingdom's proposed principles were set out in the Article 50 notification:

• Constructive discussions
• Citizens first
• Comprehensive agreement
• Minimise disruption
• Ireland/Northern Ireland position
• Technical talks on detailed policy
• Work together on European values[21]

The Prime Minister's formal letter of notification was delivered in Brussels on 29 March 2017.[22] It included withdrawal from the European Atomic Energy Community. The letter recognised that consequences for the UK of leaving the EU included loss of influence over rules that affect the European economy, and UK companies trading within the EU aligning with rules agreed by institutions of which the UK would no longer be part. It proposed agreeing to seven principles for the conduct of the withdrawal negotiation. These are for:

1. engaging with one another constructively and respectfully, in a spirit of sincere cooperation.
2. aiming to strike an early agreement about the rights of the many EU citizens living in the United Kingdom, and British citizens living elsewhere in the European Union.
3. working towards securing a comprehensive agreement, taking in both economic and security cooperation, and agreeing the terms of our future partnership alongside those of our withdrawal from the EU.
4. working together to minimise disruption and giving as much certainty as possible, letting people and businesses in the UK and the EU benefit from implementation periods to adjust in an orderly way to new arrangements.
5. in particular, paying attention to the UK's unique relationship with the Republic of Ireland and the importance of the peace process in Northern Ireland.
6. beginning technical talks on detailed policy areas as soon as possible, including a Free Trade Agreement covering sectors crucial to our linked economies such as financial services and network industries.
7. continuing to work together to advance and protect our shared liberal, democratic values of Europe, to ensure that Europe remains able to lead in the world, projecting its values and defending itself from security threats.

The constitutional lawyer and retired German Supreme Court judge Udo Di Fabio has stated his opinion that separate negotiations with the EU institutions by Scotland or Northern Ireland would constitute a violation of the Lisbon Treaty, according to which the integrity of a member country is explicitly put under protection.[23]

The start of negotiations was delayed until after the United Kingdom general election, which took place on 8 June 2017.[24] Antonio Tajani, speaking on 20 April, said the early election should bring stability to the UK, which would have been good for negotiations.[25] In the event, the election led to a hung parliament which has reduced the Prime Minister's room for manoeuvre; in particular in respect of the Irish border question due to her dependency on a confidence and supply agreement with Northern Ireland's Democratic Unionist Party.

• Michel Barnier, Chief Negotiator
• Guy Verhofstadt, Brexit Coordinator for the European Parliament and Chair of the Brexit Steering Group[26]
• Donald Tusk, President of the European Council
• Jean-Claude Juncker, President of the European Commission
• Leo Varadkar, Taoiseach (October 2019 renegotiation)

Following the United Kingdom's notification under Article 50, draft guidelines for the negotiations were sent to EU delegations of the 27 other member states (the EU27). The draft, prepared by the President of the European Council, states that the guidelines define the framework for negotiations under Article 50 and set out the overall positions and principles the Union will pursue throughout the negotiation. It states that in the negotiations the Union's overall objective will be to preserve its interests, those of its member states, its citizens and its businesses, and that, in the best interest of both sides, the Union will be constructive throughout and strive to find an agreement. The draft sets out two core principles:

1. The European Council will continue to base itself on the principles set out in the statement of Heads of State or Government and of the Presidents of the European Council and the European Commission on 29 June 2016. It reiterates its wish to have the United Kingdom as a close partner in the future. It further reiterates that any agreement with the United Kingdom will have to be based on a balance of rights and obligations, and ensure a level-playing field. Preserving the integrity of the European Single Market excludes participation based on a sector-by-sector approach. A non-member of the Union that does not live up to the same obligations as the members cannot have the same rights and enjoy the same benefits. In this context, the European Council welcomes the recognition by the British Government that the four freedoms of the Single Market are indivisible and there can be no "cherry picking".
2. Negotiations under Article 50 TEU (Treaty on European Union) will be conducted as a single package. In accordance with the principle that nothing is agreed until everything is agreed, individual items cannot be settled separately. The Union will approach the negotiations with unified positions, and will engage with the United Kingdom exclusively through the channels set out in these guidelines and in the negotiating directives. So as not to undercut the position of the Union, there will be no separate negotiations between individual member states and the United Kingdom on matters pertaining to the withdrawal of the United Kingdom from the Union."[27]

According to the European Parliament, the withdrawal agreement and any possible transitional arrangement(s) should enter into force "well before the elections to the European Parliament of May 2019", and the negotiations should focus on:[28]

• The legal status of European Union citizens living or having lived in the United Kingdom and of United Kingdom citizens living or having lived in other member states, as well as other provisions concerning their rights;
• The settlement of financial obligations between the United Kingdom and the European Union;
• The European Union's external border;
• The clarification of the status of the United Kingdom's international commitments taken as a Member of the European Union, given that the European Union of 27 member states will be the legal successor of the European Union of 28 member states;
• Legal certainty for legal entities, including companies;
• The designation of the Court of Justice of the European Union as the competent authority for the interpretation and enforcement of the withdrawal agreement.

On 18 April 2017, a spokesman for Donald Tusk said "We expect to have the Brexit guidelines adopted by the European Council on 29 April and, following that, the Brexit negotiating directives ready on 22 May".[29] On 29 April, the EU27 unanimously endorsed the draft guidelines with no debate.[30]

In a speech to a plenary session of the European Committee of the Regions in Brussels on 22 March 2017, Barnier, as EU Chief Negotiator for the Preparation and Conduct of the Negotiations, said the EU wanted to succeed by reaching a deal with the British, not against them.[31]

On 22 May the European Council, following the approval of the negotiating directives that the EU27 had adopted by strong qualified majority voting,[lower-alpha 1] authorised the Commission to open Article 50 discussions with UK, with Michel Barnier appointed as the negotiator. It further confirmed that all agendas, EU position papers, Non-papers and EU text proposals would be released to the public and published on line.[32]

Intergovernmental organisations also involved in Brexit uncertainty considerations include the World Trade Organization (WTO) and the International Air Transport Association (IATA). IATA expects an agreement to avoid disruption.[33]

EU27 guidelines include:

• Agreement on the so-called "divorce bill";
• Agreement on rights of EU citizens living in the UK;
• Agreement on the border between Northern Ireland and the Republic within the withdrawal phase.[30]

The second phase, covering the post-Brexit relationship between the EU27 and the UK, was to begin "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".[34] The earliest opportunity for this decision was 19 October 2017, at a summit of EU leaders.[35] although at that meeting it was agreed to start negotiations during the December meeting.[36]

On 28 June 2016, five days after the referendum, Chancellor of Germany Angela Merkel advised the German parliament of the agreed EU negotiation position: the UK could remain in the European Single Market (ESM) only if the UK accepted the ESM's four conditions (free movement of goods, capital, services and labour). While she expected the UK to remain an important NATO partner, the EU's priority was unity and self-preservation. She warned the UK not to delude itself.[40] The next day, Tusk confirmed that the UK would not be allowed access to the ESM unless they accepted its four freedoms.[41]

In contrast, at her October 2016 party conference, Prime Minister Theresa May emphasised that ending the jurisdiction of EU law and free movement from Europe were priorities. She wished "to give British companies the maximum freedom to trade with and operate in the Single Market – and let European businesses do the same here", but not at the expense of losing sovereignty.[42][43]

The European Commission said it would not start any negotiation before the UK formally invoked Article 50.[44]

In November 2016, May proposed that Britain and the other EU countries mutually guarantee the residency rights of the 3.3 million EU citizens in Britain and those of the 1.2 million British citizens living on the Continent,[lower-alpha 2] in order to exclude their fates being bargained during Brexit negotiations.[45] Despite initial approval from a majority of EU states, May's proposal was blocked by European Council President Tusk and German Chancellor Merkel.[46]

In January 2017, the Prime Minister presented twelve negotiating objectives and confirmed that the British government would not seek permanent single market membership.[47] She also called for an end to ECJ jurisdiction, a new customs agreement excluding the common external tariff and the EU's common commercial policy, an end to free movement of people, co-operation in crime and terrorism, collaboration in areas of science and technology, engagement with devolved administrations, maintaining the Common Travel Area with Ireland, and preserving existing workers' rights. She also confirmed, "that the Government will put the final deal that is agreed between the UK and the EU to a meaningful vote in both Houses of Parliament, before it comes into force."[48] The European Parliament's lead negotiator Guy Verhofstadt responded that there could be no "cherry picking" by the UK in the talks.[49]

The statutory period for negotiation began on 29 March 2017, when the letter notifying withdrawal, authorised by the European Union (Notification of Withdrawal) Act 2017 and signed by the British Prime Minister, was handed to the President of the European Council. The letter called for a "deep and special relationship" between the UK and the EU, and warned that failure to reach an agreement would result in EU-UK trade under World Trade Organization terms, and a weakening of the UK's cooperation in the fight against crime and terrorism. The letter suggested prioritising an early deal on the rights of EU citizens in the UK and vice versa. In the letter, the Prime Minister reasoned that, as the EU leaders did not wish "cherry picking" of the ESM, the UK would not seek to remain within the ESM. Instead, the UK would seek a free trade agreement with the EU.[50] In response, Merkel insisted that the EU would not discuss future cooperation without first settling the terms of the divorce, Verhofstadt referred to the letter as "blackmail" with regard to the point on security and terrorism, and EU Commission president Jean-Claude Juncker warned that the UK's decision to quit the block was a "choice they will regret one day".[51]

A meeting at 10 Downing Street took place on 6 April 2017 between Theresa May and Donald Tusk to discuss "the way ahead on Brexit".[52] Another meeting took place in London on 20 April 2017, this time between Theresa May and Antonio Tajani to discuss the rights of EU citizens.[53] After the 20 April meeting, Antonio Tajani said the UK and EU27 timetables fitted well together, with a two-year exit deal negotiation followed by a three-year transition phase.[25] A 10 Downing Street meeting between Theresa May, Michel Barnier and Jean-Claude Juncker took place on 26 April to discuss the withdrawal process. May reiterated the UK's aim for a "deep and special partnership" after Brexit.[54]

On 29 April 2017, immediately after the first round of French presidential elections, the EU27 heads of state unanimously accepted, without further discussion,[55] negotiating guidelines prepared by the President of the European Council.[56] The guidelines take the view that Article 50 permits a two-phased negotiation, whereby the UK first needs to agree to a financial commitment and to lifelong benefits for EU citizens in Britain, before the EU27 will entertain negotiations on a future relationship.[57]

Nevertheless, a 4 March 2017 report of the European Union Committee of the House of Lords stated that, if there is no post-Brexit deal at the end of the two-year negotiating period, the UK could withdraw without payment.[58] Similarly, the Prime Minister insisted to EU Commission President Juncker that talks about the future UK-EU relationship should start early and that Britain did not owe any money to the EU under the current treaties.[59]

At 29 April summit, a meeting took place between Michel Barnier and both houses of the Irish parliament on 11 May, where Barnier assured members of Dáil Éireann and Seanad Éireann that Europe would "work with you to avoid a hard border".[60] Barnier went on to say that "the Irish border issue would be one of his three priorities in the negotiations", and that "there is always an answer".[61]

In May 2017, unflattering details of a four-way meeting between Prime Minister Theresa May, Brexit Minister David Davis, EU Commission President Juncker and his chief-of-staff Martin Selmayr were leaked to the German newspaper Frankfurter Allgemeine Sonntagszeitung, presumably by Martin Selmayr.[62] According to the leaked description, Juncker claimed that Theresa May was "living in another galaxy" when suggesting that British and EU migrant rights could be rapidly negotiated and agreed in the course of June 2017. German Chancellor Angela Merkel concurred the next day, saying there were "illusions" on the British side.[59] A few days later, Juncker disclaimed responsibility and called the leak a mistake, Der Spiegel magazine reported that Angela Merkel was annoyed with Juncker for the leak, while European Council President Tusk admonished participants to use discretion during the negotiations.[63] The background for German nervousness allegedly is the possibility that Britain may veto EU budget increases, which for example in the immediate term amount to four billion euros. A continued British veto would have far-reaching consequences and "will hurt us" according to German MEP Jens Geier.[64]

On 22 May 2017, the Council of the EU authorised its negotiators to start the Brexit talks and it adopted its negotiating directives.[65] The first day of talks took place on 19 June, where Davis and Barnier agreed to prioritise the question of residency rights, while Davis conceded that a discussion of the Northern Irish border would have to await future trade agreements.[66]

The British and European negotiators agreed that initial negotiations, relating especially to residency rights, would commence in June 2017 (immediately after the French presidential and parliamentary elections), and full negotiations, relating especially to trading agreements, could commence in October 2017 (immediately after the 2017 German federal election).[67][68][69]

EU negotiators have stated that an agreement must be reached between Britain and the EU by October 2018 in order to leave time for national parliaments to endorse Brexit.[70]

The United Kingdom served the withdrawal notice under Article 50 of the Treaty on European Union on 29 March 2017. This started a two-year negotiation period but negotiations did not formally begin until 19 June 2017

The British Government published several proposals during 2018, including the Chequers plan in July which sought to serve as the basis of the UK-EU trade deal, and a draft Withdrawal Agreement which the British Government and EU agreed in November 2018. The Chequers plan led to the resignation in July of David Davis as the UK's Secretary of State for Exiting the European Union and his replacement, Dominic Raab, resigned in November after the publication of the draft Withdrawal Agreement. He was replaced by Stephen Barclay. Negotiations over the Irish border question and the Irish backstop were frequently central to the debate around the Withdrawal Agreement.

Approaching the end of the two-year negotiation period in March 2019, Theresa May and European leaders agreed a delay for the Parliament of the United Kingdom to approve the proposed Withdrawal Agreement. As it was rejected for the third time, a further extension (to 31 October 2019) was agreed in April 2019, with an option to terminate British membership earlier should the Withdrawal Agreement be passed by the British Parliament before then (which it did not). The consequence of this extension was that the UK (being still a member) had to take part in the 2019 European Parliament election in May 2019. In early October the British parliament approved delay until 31 January 2020.

On 17 October, Boris Johnson and Jean-Claude Juncker announced that they had finally reached agreement (subject to ratification) on a new Brexit withdrawal agreement on terms which both parties considered acceptable.[71] On 30 October 2019, the day named as "exit day" in British legislation was changed to 31 January 2020 at 11.00 p.m.[72] The Parliament of the UK and the European Parliament approved the agreement in January 2020 and Brexit finally happened at that time.

A March 2017 House of Lords report acknowledges that the EU may claim for (1) part of the current budget (which runs from 2014 to 2020) post March 2019, because it was approved by the UK, (2) part of the EU future commitments which amount to €200 billion, and (3) a contribution if the UK is to continue with access to some EU programmes.[77] The report concluded that the UK had no legal obligation to make "exit" payments to the EU if there was no post Brexit deal.[78][58]

Discussing financial and legal complexities involved in negotiating withdrawal, including settlement of outstanding financial liabilities and division of assets, the report mentions (paragraph 15) that the EU budget is funded by revenue drawn from various sources, governed by the EU's Own Resources Decision (ORD), which was made part of British law by the European Union (Finance) Act 2015.[79] The revenue includes contributions from import duties and VAT collected by member states. The report also mentions the EU Multiannual Financial Framework for controlling the annual expenditure.

The EU has considerable assets including buildings, equipment and financial instruments, and there is a potential claim by the UK for a portion of these assets.[76] Boris Johnson, the UK's Foreign Secretary, commenting on the Brexit "divorce bill" in May 2017, said the valuable EU assets the UK has paid for over the years should be properly valued, and that there were good arguments for including them in the negotiations.[80]

The Bank of England (BoE) has invested in the European Central Bank (ECB) amounting to 14.3374%, representing paid up capital of €55.5 million. The BoE does not participate in any profits (or losses) of the ECB.[81] The BoE has also made loans to the ECB. The ECB set up the European Financial Stability Facility in 2010, which has a borrowing facility of €440bn and in addition used a guarantee from the European Commission and the Budget of the European Union as collateral to borrow a further €60bn. The British withdrawal will affect the ECB.

The EU has a pension liability of €64 billion (which includes current and former British MEPs as well as current and former employees of the Institutions).[77]

The UK benefits from a rebate which reduces its contribution to the EU budget. The rebate is paid a year in arrears, accordingly the 2019 rebate would be payable in 2020.[77]

The EU drafted an 11-page position paper setting out the essential principles for a financial settlement and the methodology for calculating the obligation but does not estimate the final obligation.[47]

On 11 December 2017, Theresa May confirmed that the UK and the EU had agreed "the scope of commitments, and methods for valuations and adjustments to those values."[82]

The British Government's estimate of the financial settlement in March 2019 is £37.8 billion (€41.8 billion).[83]

The general rule for losing EU citizenship is that European citizenship is lost if member state nationality is lost,[94] but the automatic loss of EU citizenship as a result of a member state withdrawing from the EU is the subject of debate.[95] The situation of a person acquiring EU citizenship when the UK joined the EU in 1973 compared to a person born in the UK after 1973 and was therefore born into EU citizenship, may differ. It may be necessary for the ECJ to rule on these issues.

The ECJ ruled in a 2017 decision (Chávez-Vílchez and others) that the third-country (non-EEA) national parent of a child with EU nationality may be entitled to a ‘derivative right of residence’, even if the other parent were an EU national and were “able and willing to assume sole responsibility for the primary day-to-day care of the child”.[96][97] The ability of the other (EU-national) parent to care for the child would, nevertheless, be a “relevant factor” in assessing whether the third-country national parent should be granted residence. The Chávez-Vílchez decision built upon the ECJ’s decision in Ruiz Zambrano,[98][99] which gave a ‘derivative right of residence’ to a third-country national primary carer of a child with EU nationality. The Chávez-Vílchez decision may have consequential effects for British residents who have young children and wish to live in the EU27 territory post Brexit, but this remains to be tested.

Until the UK effectively withdraws from the EU in 2019 or at another agreed date, the current system of free movement of labour between the EU27 and the UK remains in place.

The report of the House of Commons Exiting the European Union Committee on The Government's negotiating objectives, published in April 2017,[100] proposed (paragraphs 20 and 123) that the future system for EU migration should meet the needs of different sectors of the British economy, including those employing scientists, bankers, vets, care workers, health service professionals and seasonal agriculture workers.

Theresa May, answering press questions on 5 April 2017, commented that the free movement of labour would not end in March 2019; an implementation period of possibly five years would give business and government time to adjust.

The UK currently charges an annual levy of up to £1,000 for each non-EU citizen employed within the UK.[101] Proposals are under consideration to increase this 'immigration skills charge' to £2,000 p.a. and to implement a similar levy on EU citizens employed in the UK.[102][103]

According to an unconfirmed newspaper report, a leaked Home Office paper has a proposal that the UK will end the free movement of labour of low-skilled workers immediately after Brexit, focusing on highly skilled EU workers instead.[104][105] The proposal would limit lower-skilled EU migrants' residency permits to a maximum of two years, and the implementation of a new immigration system ending the right to settle in Britain for most European migrants while placing tough restrictions on their rights to bring over family members.[104] Those in "high-skilled occupations" could be given permission to work in the UK for a period of three to five years.[104]

Without a trade agreement in place, British trade with the EU would be governed by the World Trade Organization's Bali Package. This would lead to common tariffs and non-tariff barriers being imposed by the EU27 upon the UK's access to the European Single Market, because the Market is also a customs union. However, the UK would then have an opportunity to control immigration as well as develop its own trade regulations.

The UK was not permitted to hold trade talks until after Brexit was concluded,[110] however the UK can do preparatory work with other countries regarding the UK's future trading relationships; this was not to the liking of some EU27 countries.[110] Before Britain leaves the EU, they may put trade agreements in place with non-EU countries.[111]

Only the EU can act in areas where it has exclusive competence, such as the customs union and common commercial policy. In those areas member states may not act independently.[112] The UK can still negotiate its own bilateral investment protection treaties subject to Commission authorisation.[112]

Strategic controls on military goods are primarily a member state competence. As a result, member states themselves negotiate multilateral or bilateral agreements on the strategic aspects of trade in defense goods.[112]

The EU27 wish to exclude the UK from sitting in on trade negotiations held by the EU during the period ending March 2019, seeing the UK as a competitor. Theresa May rejected this idea, saying "While we're members of the European Union we would expect our obligations but also our rights to be honoured in full."[110]

The Geographical indications and traditional specialties in the European Union, known as protected designation of origin (PDO) is applied internationally via bilateral agreements. Without an agreement with the EU27, British producers of products such as the Cornish pasty, Scotch whisky and Jersey Royal potatoes are at risk of being copied.

The EU27 have stated that British fish suppliers could lose tariff-free access to the continent unless EU countries have continued access to British waters after Brexit.[113]

The Irish agricultural sector is heavily dependent on British markets for its exports.

Investment banks may want to have new or expanded offices up and running inside the EU27 bloc before the UK's departure in March 2019, with Frankfurt and Dublin the possible favourites.[114] Ireland's investment arm, IDA Ireland, witnessed an increase in inquiries from London-based financial groups considering to open up on an office in Dublin by the end of 2016, mostly coming from North American companies. In May 2017, JP Morgan became the first major bank to officially choose Dublin to transfer some of its personnel and operations from its London office.[115]

Lloyd's of London has confirmed that it will open a subsidiary in Brussels, hoping to ensure continuation of continental business which currently generates 11% of its premiums.[116]

The situation may be different when it comes to the fund management industry, as British asset owners, notably British pension funds, often constitute an incommensurate share of total turnover for German, French, Dutch and other Continental European asset managers.

This imbalance could potentially give Britain some negotiating leverage e.g. power of retorsion in case the EU attempts to impose an abrupt cancellation of the mutually-binding obligations and advantages pertaining to the Markets in Financial Instruments Directive 2004 ("fund passporting"). Research conducted by the World Pensions Council (WPC) shows that

"Assets owned by UK pension funds are more than eleven times bigger than those of all German and French pension funds put together [...] If need be, at the first hint of threat to the City of London, Her Majesty's Government should be in a position to respond very forcefully."[117]

The London Stock Exchange issued a warning over a proposal by the EU to allow euro-denominated transactions to be cleared only within the EU eurozone, claiming it would increase business costs by €100bn over five years and isolate the euro capital market.[118]

The letter of 29 March 2017 giving the UK's notice of intention to withdraw from the EU stated "In security terms a failure to reach agreement would mean our cooperation in the fight against crime and terrorism would be weakened."[22] This was seen by some as a threat.[119] On 31 March, Boris Johnson, the British Foreign Secretary, confirmed that the "UK commitment to EU security is unconditional".[120]

The call by the United States to other members of NATO to increase their defence expenditure to the 2% of GDP level coincides in timing with Brexit. The UK is the second largest contributor to NATO defence, one of only five to meet the 2% level and one of only two EU members who have nuclear weapons. The possibility of a new Franco-German partnership to fill the vacuum left by Britain has been raised as a possibility and post Brexit an EU military headquarters, previously vetoed by the UK, may be created.[121] The UK is fully committed to NATO.

The British government's negotiating policy when the negotiating period started on 29 March 2017 included remaining at the vanguard of science and innovation, and seeking continued close collaboration with the UK's European partners.

Robin Walker MP, a junior minister at the Department for Exiting the European Union, is responsible for managing the relationship between the overseas territories and Parliament in their discussion with the EU27.[123]

Brexit raised issues around sovereignty for Gibraltar, the only British Overseas Territory in the EU.[124] Gibraltarians voted to stay in the European Union by 96%.[125] Spain claims sovereignty over Gibraltar; however, in 2002 Gibraltarians voted 99% to keep British sovereignty.

The EU27 draft guidelines allow Spain a veto over any effect the Brexit agreement has as regards Gibraltar. The guidelines state: "After the United Kingdom leaves the Union, no agreement between the EU and the United Kingdom may apply to the territory of Gibraltar without the agreement between the Kingdom of Spain and the United Kingdom."[126]

Spanish Prime Minister Pedro Sánchez has called for joint U.K.-Spanish sovereignty over Gibraltar.[127] He publicly warned that Spain would "veto" Brexit deal over the issue of Gibraltar.[128]

The Crown dependencies are not part of either the UK or the EU. They have a unique constitutional relationship both with the UK and, as encapsulated in Protocol 3 to the UK's Treaty of Accession, with the EU.[129] They have no voting rights in European or British referendums or elections and no international voice, the British government having the responsibility to act for the dependencies on foreign matters. Oliver Heald QC MP is responsible for managing the relationship between the Islands and Parliament in their discussion with the EU27.[130]

Following an unprecedented vote on 4 December 2018, MPs ruled that the British government was in contempt of parliament for refusing to provide to Parliament, the full legal advice it had been given on the effect of its proposed terms for withdrawal.[133] The key point within the advice covered the legal effect of the "backstop" agreement governing Northern Ireland, the Republic of Ireland, and the rest of the UK, in regard to the customs border between the EU and UK, and its implications for the Good Friday agreement which had led to the end of the Troubles in Northern Ireland, and specifically, whether the UK would be certain of being able to leave the EU in a practical sense, under the draft proposals.

The following day, the advice was published. The question asked was, "What is the legal effect of the UK agreeing to the Protocol to the Withdrawal Agreement on Ireland and Northern Ireland in particular its effect in conjunction with Articles 5 and 184 of the main Withdrawal Agreement?" The advice given was that:[133]

The Protocol is binding on the UK and EU [para 3], and anticipates a final future resolution of the border and customs issues being reached [para 5,12,13]. But "the Protocol is intended to subsist even when negotiations have clearly broken down" [para 16] and "In conclusion, the current drafting of the Protocol ... does not provide for a mechanism that is likely to enable the UK lawfully to exit the UK wide customs union without a subsequent agreement. This remains the case even if parties are still negotiating many years later, and even if the parties believe that talks have clearly broken down and there is no prospect of a future relationship agreement." [para 30]