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Brexit Negotiations between the European Union and the United Kingdom have been re-launched: What will be their Influence on Georgia?

2017 / 07 / 20

Author: Amb. Valeri Chechelashvili, the Senior Fellow of the Rondeli Foundation

 

The decision of the population of the United Kingdom to leave the European Union has significantly changed the political configuration of Europe. The negotiations between the delegations of the United Kingdom and the European Union were re-launched on 17 July 2017 in order to determine the conditions of the UK’s exit from the European Union.

As the stated positions of the parties suggest, the negotiations will be both long and difficult. The parties will have to reach agreement about highly painful issues. As it has been suggested, the negotiations ought to be over by March 2019. Hence, Europe will be facing a new reality by spring 2019. What this reality will be like, we do not know. In general, we can allow ourselves to make the following assessment:  either both sides will exit the process becoming stronger, or they will both be weaker as a result. The situation, in which only one side will be successful at the expense of the other, is practically impossible. It is more likely that the negotiations will end with near zero results. This is the least likely and the least desirable outcome both for the parties of the negotiations, as well as for Georgia. It is also quite concerning that, the attitude of “no deal is better than bad deal” has been expressed by both delegations in the run-up to the negotiations process.  

The result will depend upon the ability and readiness of the negotiating teams to reach compromise. It must be pointed out that due to objective reasons, the European Union delegation is facing a more difficult task since the results of the negotiations are closely observed and mandated by 27 EU member states. We should also not forget that the results of these negotiations must be subject to a complete consensus among the Union members.

Georgia cannot influence this process. Nevertheless, we are interested in the negotiations resulting in a successful resolution and the consequent strengthening of both the European Union as well as the United Kingdom, as a result of successful compromises. The ability of the European Union to overcome this very severe challenge (the first, and hopefully the last member state leaving the European Union) is of an existential importance to us, given the main foreign policy priority of Georgia of becoming a full member of the European Union.

Principled positions of the United Kingdom are also very important for Georgia, since the UK is our loyal political supporter on the international arena, including as a permanent member of the United Nations Security Council. UK is also an important investment and trade partner for our country.

External Trade between Georgia and the United Kingdom (2012-2017, USD Million)

 

2012

2013

2014

2015

2016

2017 / 6 Months

Exports

20.9

29.7

24.7

21.5

15.2

3.9

Imports

115.3

90.8

94.8

91.4

143.6

36.3

Turnover

136.2

120.5

119.5

111.9

158.8

40.2

 

The United Kingdom is also one of the top investors in Georgia. According to the data of the first quarter of 2017, the UK occupied the third position in terms of investments in Georgia with USD 80 million, following Azerbaijan (USD 97 million) and Turkey (USD 82 million). 

 

 

As for the economic cooperation perspectives between Georgia and the United Kingdom, the best possible option would be for the UK to maintain full integration into the single market of the European Union in a way, that would ensure the unimpeded functioning of the Association Agreement between Georgia and the European Union on the territory of the UK, even after the country had formally left the Union.

All this is possible but certainly not guaranteed. The 27 member states of the European Union will delegate their mandate on free trade negotiations with the United Kingdom only in October 2017. It will depend upon the process of current negotiations about a number of other issues and their results. The examples to this include the rights of the European Union citizens in the United Kingdom, regime on the border between the Republic of Ireland (EU member state) and Northern Ireland (UK), agreement about the coverage of the financial obligations of the United Kingdom towards the European Union and so on.

It should be taken into account that according to the assessment of the European Union, the United Kingdom must pay about EUR 60 billion (USD 70 billion). According to the data of the International Monetary Fund (IMF), the GDP of the United Kingdom amounted to USD 2,629,188 million in 2016. Hence, the sum named by the European Union and to be paid by the UK constitutes a solid 2.67% of the 2016 GDP of the country. It is hence no surprise that, as of today, the United Kingdom does not recognize this kind of debt, at least in the given amount. It is not difficult to understand that reaching agreement about this issue will require a lot of resources from the negotiating parties. The mandate to be given by the 27 member states of the European Union for the free trade negotiations with the United Kingdom is largely dependent on the resolution of the abovementioned issue of payments. As already pointed out, the issue is a financial one and hence especially requires a full consensus between the member states of the Union.

In order for us not to be dependent on the results of these negotiations and avoid any legal ambiguities connected with Georgia’s bilateral relations with the United Kingdom, it is necessary to take action. The situation formed in the process of negotiating Brexit influences Georgian interests directly.

In order to avoid the risk of legal vacuum, consultations about free trade, as well as the legal basis for bilateral agreements with the United Kingdom must start immediately, if they have not begun already.

The easiest path for the both sides to take would be to recognize the succession of the Association Agreement between the European Union and the European Atomic Energy Community and their Member States, on the one part, and Georgia, on the other part. The 23 August 1978 Vienna Convention on Succession of States in Respect of Treaties, includes all necessary international law mechanisms for this to be undertaken. The fact that neither the UK nor Georgia are the participants of this Convention will be of no hindrance in the case of the existence of political will, whilst the agreement itself can be put into power very easily – by exchanging the diplomatic notes. 

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