Brexit A-Z | Letter F


Facilitated Customs Arrangement

On 12 July 2018, the UK Government published a White Paper on the Future Relationship between the UK and the EU, in which it proposed that a new Facilitated Customs Arrangement (FCA) be established between the EU and the UK for when the UK leaves the EU.  Under the proposed arrangement, the UK would adopt the EU’s customs rules at its external border for goods intended for the EU, which the White Paper claims would “remove the need for customs processes between the UK and the EU”.  The proposal references a dual tariff scheme, whereby firms would pay either the EU or the UK tariff at the border (the UK would collect the tariffs on behalf of the EU), depending on which market their goods are destined for.  EU Chief Brexit Negotiator, Michel Barnier, has rejected this idea, stating “the EU cannot – and will not – delegate the application of its customs policy and rules, VAT and excise duty collection to a non-member, who would not be subject to the EU’s governance structures.”

Financial Settlement

The financial settlement is one of the priorities for an ‘orderly withdrawal’ of the UK, outlined in the European Council guidelines for the Brexit negotiations in April 2017.  It refers to the financial commitments which the UK has signed up to as part of the EU budget to the end of 2020, as well “as those related to the European Investment Bank (EIB), the European Development Fund (EDF) and the European Central Bank (ECB)”.  The Joint Report, agreed by EU and UK negotiators in December 2017, states that “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 Union”.

Florence Speech

On 22 September 2017, UK Prime Minister Theresa May delivered a speech in Florence, Italy at what she referred to as “a critical time in the evolution of the relationship between the United Kingdom and the European Union”.  In the Renaissance church of Santa Maria Novella, she called for an ‘implementation period’ between the ratification of the final Withdrawal Agreement and a future relationship deal between the EU and UK.  During the speech, Prime Minister May also said that “the UK will honour commitments it has made during the period of our membership”, and proposed to write legal protections for EU citizens living in the UK into national law.

Four Freedoms

The four freedoms, established in the Treaty of Rome (1957), are the pillars of EU law and represent the key principles of the EU, underpinning the EU’s Single Market.  They are the freedom of movement of goods, people, services and capital across borders within the EU.  In relation to Brexit, the European Council President, Donald Tusk, has said that “access to the Single Market requires acceptance of all four freedoms, including the freedom of movement”.

Free Trade Agreement

In her letter invoking Article 50, UK Prime Minister Theresa May stated that the UK government “wants to agree a deep and special partnership between the UK and the EU”.  According to EU law, before the EU and UK can agree a future free trade agreement, they must first complete the negotiation of a withdrawal agreement.  Negotiations under Article 50 may take into account the framework for the future relationship, but the Article states that an agreement on the future relationship itself must be negotiated in accordance with Article 218(3) of the Treaty on the Functioning of the European Union (TFEU) which outlines the process for reaching agreements with third countries, those countries outside the EU.

Future Relationship

The term ‘future relationship’ is used to refer to the relationship between the EU and UK post-Brexit.  Numerous options, or models, for this relationship have been proposed based on existing agreements the EU has with other non-EU countries, such as the ‘Canada option’ or the ‘Norway model’.  These models vary in terms of their sectoral scope and in the depth of a potential future relationship.  On 12 July 2018, the UK published a White Paper on the Future Relationship between the UK and the EU, covering areas such as the future EU-UK economic relationship, a future EU-UK security partnership and the governance of future EU-UK arrangements.  Under Article 50, the EU and UK must first resolve the issues arising from the UK’s withdrawal from the EU before they can reach a deal on their future relationship.  However, a political declaration setting out the broad parameters of what the future EU-UK relationship is expected to look like will accompany any agreement on a withdrawal deal.   



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