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Mar 29, 2017

Countdown to Brexit: What Is Article 50?. Investopedia - March 29, 2017:

David Floyd

On Wednesday, March 29, British Prime Minister Theresa May invoked Article 50 of the European Union's (EU) Lisbon Treaty, formally setting off the two-year process of negotiating a new relation with the bloc. At the end of that period, Britain will no longer be a member of the EU.
On Tuesday, May signed the letter that was hand delivered to EU European Council President Donald Tusk in Brussels by Sir Tim Barrow, the British ambassador to the EU. In a statement she said, “We are one great union of people and nations with a proud history and a bright future. And, now that the decision has been made to leave the EU, it is time to come together.”
The Guardian has acquired a leaked copy of a European parliament resolution that says there will be no free trade deal between Britain and the EU in the next two years, and a transition arrangement after Britain's exit in 2019 can last a maximum of three years.
British voters opted for Brexit on June 23, 2016, but the referendum itself did not take Britain out of the EU. Far from being "post-Brexit," the UK remains every bit as subject to the EU's trade and immigration rules as it was on June 22, 2016. A lot has changed: the pound fell 16.8% against the dollar from the date of the vote to the end of February 2017, and relationships between London and the EU's 27 other capitals are notably frostier. But actual Brexit comes later, if it comes at all.

Pulling the Trigger: Article 50

The first step toward Brexit, which May took on Wednesday, is to trigger Article 50 of the 2009 Lisbon Treaty. The article, which lays out the procedure for exiting the EU, was drafted by a British diplomat who figured it would probably never be used: "If you stopped paying the bills and you stopped turning up at the meetings, in due course your friends would notice that you seemed to have left," Lord Kerr of Kinlochard told the BBC in November. (See also, Britain Could Face €63B Payment When It Leaves EU.)
The text of Article 50 is available here.
The provision says that the departing state must notify the European Council, the executive wing of the EU, of its intention to leave. This notification is commonly referred to as "triggering" Article 50, and it opens a two-year window in which the state must negotiate a new relationship with the bloc. If no agreement is reached in that time, the EU's remaining members must vote unanimously to extend the deadline – a daunting prospect – or the departing state is on its own.
What exactly a deal (or lack of one) would look like is the subject of heated debate on both sides of the English Channel. Prior to formal Article 50 notification, however, debate on the contours of a deal has not technically been allowed. U.K. Prime Minister Theresa May told the BBC in October she hoped Britain and the bloc could do some "preparatory work" in the interim, but a spokesman for the European Commission's president quickly rebuked her: "no negotiations without notification." The following month, German Chancellor Angela Merkel said, "first Article 50, then common guidelines from the European Council, and then negotiations." It is possible, however, that talks have been happening behind the scenes.
In any case, Perfidious Albion was distracted with domestic squabbles. Britain's unwritten constitution provides little guidance for unprecedented undertakings like leaving the EU. Nor did the referendum elaborate: the option that won 51.9% of the vote read simply, "Leave the European Union."
May's government read that result as authorizing it to invoke Article 50 without Parliament's approval, using a legal route known as the royal prerogative. On November 3, however, the British Supreme Court ruled that Parliament had to give the go-ahead; it also ruled that the devolved assemblies of Scotland, Northern Ireland and Wales did not have a veto over Brexit. The unabashedly pro-EU Scottish Nationalist Party, having long hinted at the possibility of a second independence referendum (the first was in 2014), on Tuesday received the backing of the devolved Scottish Parliament to hold one. Meanwhile the prospect of a hard border between Ireland, an EU member, and Northern Ireland threatens a key provision of the Good Friday peace accords. (See also, Scottish Independence Talk Regains Momentum.)
The government responded to the court's ruling by rushing a bill through the House of Commons on February 1. Despite a resounding victory in the lower chamber – 498 votes to 114 – the House of Lords voted on March 1 to add an amendment guaranteeing the rights of Britain's 3.2 million resident EU nationals to stay in the country. The bill returned to the Commons on March 13, where the Tory majority overrode that amendment and another calling for a Parliamentary vote on the final Brexit deal (see below). The Lords deferred to the elected MPs and passed the unamended bill the same day. It received royal assent and became law on March 16.

A Final Say?

Now that the questions around triggering Article 50 are behind the government, there is the matter of negotiating a new relationship with the EU. At this preliminary stage, the debate is mostly framed along a "hard"/"soft" spectrum. Will the UK leave the single market and customs union, sharply curtailing migration from the EU in the process – the "hard" Brexit favored by committed Leavers? Or will it opt for something closer to Norway's or Switzerland's relationship with the bloc, gaining single market access in exchange for some obligation to mirror EU regulation, accept EU migrants and perhaps even pay into EU coffers – "soft" Brexit?
May has pushed for a hard Brexit and ruled out membership in the single market, though she said in January that the government seeks "the greatest possible access to it through a new, comprehensive, bold and ambitious free trade agreement." As the deal takes shape, the questions surrounding it will become messier and more specific than "hard or soft?" The final agreement may be too hard to appease Remainers and too soft to please Leavers, leading to a lack of support on all sides. Another possibility is that no deal can be reached, making Brexit a riskier prospect than most Britons are likely willing to accept. (See also, Britain to Lose Access to EU Single Market.)
These concerns have led to a push for a vote on the final deal, whether in Parliament or through a second referendum. May promised a vote in both houses of Parliament on the final deal in January, but her government did not write the promise into the Article 50 bill.
Later that month, Liberal Democrat leader Tim Farron demanded a second referendum on the hypothetical deal. The Lib Dems control only nine of 650 seats in the House of Commons, so they posed little threat to the government's bill (particularly since two Lib Dem MPs rebelled and voted to pass it). The party's representation in the Lords is better, with 102 of 804 seats, but an amendment demanding a second referendum was defeated there on March 7, despite some Labour support.
That same day the Lords approved a second amendment to the Article 50 bill. It requires both houses to approve any agreement with the EU before it is debated and voted on in the European Parliament, more or less what May has promised. It was defeated by the Tory majority in the lower house, however, in part because of a controversial clause requiring both houses to approve an exit without a deal. Lord Bridges and others have said this provision weakens the UK's negotiating position by making it difficult to walk away, adding to the EU's incentive to offer a bad deal. Since favorable terms could encourage other countries to leave, that incentive is already sizeable.
The Commons batted the amendment down on March 13, as Brexit secretary David Davis, within an hour of the Lords' vote, promised it would. The Lords threw in the towel and passed the unamended bill. It is not clear if May's government – or the one in power in 2019, or whenever the deal is finalized – will follow through with the promise to give Parliament a say. It is possible that the courts will weigh in again, as the Supreme Court did when it gave Parliament the power to authorize negotiations in November.

Un-pulling the Trigger?

The push for a final say on the Brexit deal raises questions about what effect rejecting a deal with the EU would have. In Farron's proposed referendum, "the options would be to take the deal or remain." His view that it is possible to stay in the EU after invoking Article 50 is in line with his earlier statement that notification can be "revoked … if there is political will."
Lord Kerr, the crossbencher (unaligned peer) who wrote Article 50, said in February, "notification is not irrevocable." He added that Article 50 is not "an expulsion procedure," and said, "if, having looked into the abyss, we were to change our minds about withdrawal, we certainly could and no one in Brussels could stop us."
Not everyone shares that interpretation. Justice Secretary Liz Truss told the BBC in February, "my understanding is it's irrevocable, that when we press the button that will go forward." She stressed, however, that "this is the settled will of the British people," calling Article 50 a political matter, rather than a legal one.
For some Leavers, suggestions that Brexit needs to obtain any further approval boil down to undemocratic attempts to cancel the referendum. Former Prime Minister Tony Blair fed that criticism in February when he urged Britons to "rise up," saying "the people voted without knowledge of the true terms of Brexit. As these terms become clear, it is their right to change their mind." The unusually active role the unelected House of Lords has taken in the process has also raised eyebrows (though it did defer to the elected House of Commons without setting off legislative "ping pong"). On the other hand, the Economist wrote in defense of Blair, "Voters may change their views; it is their right to do so; it is up to politicians, if they think the country is making a terrible mistake, to make that case."
Given how eventful the run-up to Article 50 has been, the next two years should be interesting.