Brexit Jargon Buster

Article 49

Is the formal mechanism that a country must follow to apply to join the European Union. Now that the UK has triggered Article 50 and is leaving the EU then should the British people decided to rejoin the EU then the UK would have to apply for membership via Article 49. Membership is not automatic and is subject to a unanimous vote in the European Council and then a majority vote in the European Parliament.
Current understanding is that this would result in the UK agreeing to adopt the Euro as its currency, there would be no rebate on the contributions the UK makes to the EU budget (as negotiated by Margaret Thatcher in 1984) and the UK would not be able to opt out of any EU regulations or directives (as it currently can and does).

Article 50

Is the formal mechanism that allows a country to exit from the European Union (EU) as defined in Article 50 of the Lisbon Treaty. . This rather vague document sets out the procedure that allows a member state “to withdraw from the union in accordance with its own constitutional requirements”. Theresa May triggered the Article 50 process on 29 March 2017 and Article 50 allows a default period of two years for the EU and the UK to negotiate the terms of exit from the EU. This period can be extended but only with the agreement of the UK and the EU

Authorised Economic Operator (AEO)

AEO status is an internationally recognised quality mark indicating that your role in the international supply chain is secure, and that your customs controls and procedures are efficient and compliant. The benefits of AEO status can provide quicker access to certain simplified customs procedures and in some cases the right to ‘fast-track’ your shipments through some customs and safety and security procedures.

Backstop plan

An option agreed by the Cabinet and EU, to avoid a hard Irish border and will only apply in ‘very limited circumstances’ for ‘a limited time’. Alternative plans are untested smart technology or the UK accepting tariffs on behalf of the EU, both of which have been rejected by Brussels.

Brexit

Brexit was first coined by EURACTIV in a blog by Peter Wilding. The term has become synonymous with the exit of the UK from the European Union. The Oxford English Dictionary defines Brexit as “the (proposed) withdrawal of the United Kingdom from the European Union, and the political process associated with it”.
On 23 June 2016, the British people voted to leave the EU following a referendum.

Budget

EU budgeting operates through a combination of a seven-year budget plan (the Multiannual Financial Framework or MFF) and annual budgets. These budgets list the EU’s various planned expenditures. However, both the seven-year and the annual budgets include two indicators for each expenditure: a commitment, or confirmation that the budget allocation is approved, and a payment, or disbursement of money. The two do not need to fall in the same year. Indeed, only a part of the commitments made in a particular year is actually paid in that year. The payment of the rest is deferred for payment from subsequent annual budgets.

The UK Divorce Bill is made up primarily of unfulfilled commitments the UK has made to the EU Budget and the payments that the UK have yet to make to the EU in fulfillment of those commitments. However the Divorce Bill also includes sums payable to the EU whose purpose the UK government have, so far, not disclosed to the British people.

Canada Plus Plus Plus

A term coined by David Davis, The Exiting the European Union secretary, that proposes a trade deal between the UK and EU that emulates the EU-Canada Comprehensive Economic and Trade Agreement (CETA) “plus the best of Japan, the best of South Korea and that bit that is missing, which is services”.

Certificate of origin

document which identifies the origin of goods being exported and is issued by a Chamber of Commerce.  It is required by customs in the buyer’s country to determine tariff rates and determine the origin of the goods in a particular shipment have been wholly obtained, produced, manufactured or processed in a particular country. 

CETA

The Comprehensive Economic and Trade Agreement (CETA) is a trade agreement negotiated between EU and Canada, which took seven years to finalise. It removes customs duties, ends limitations in access to public contracts, opens up services markets, and helps prevent illegal copying of EU innovations and traditional products. CETA came into force in September 2017.

Citizens’ Rights

The rights and protections offered to all EU citizens under EU law, including free movement and residence, equal treatment and a wide range of other rights related to work, education, social security and health and is defined in Article 3 of the Lisbon Treaty.

Cliff Edge Brexit

A cliff-edge scenario would mean that as of the 29 March 2019, the UK would not only cease to be a member of the EU, but would also leave the Single Market and Customs Union. In this case, the UK and the EU would have to trade on WTO terms.

Common Market

The name used for the European Economic Community (EEC), established by the Treaty of Rome in 1957.

Customs Arrangement

(see max-fac)

Customs partnership

The cabinet’s proposal would enable trade in goods between the UK and EU, removing the need for a UK-EU customs border.  

A Customs Union

A customs union is a type of trade bloc which is composed of a free trade area with a common external tariff. There are several customs unions in the world today including Central American Common Market (CACM) and Eurasian Customs Union (EACU) and the European Union Customs Union (EUCU).

The Customs Union

The name more commonly used to refer to the European Union customs Union (EUCU). Member states of the EUCU trade freely without customs duties, taxes or tariffs between themselves. For EU members selling to a customer in Athens is no different to selling to a customer in Yorkshire (with the exception of the currency transaction).
European Union Customs Union members cannot negotiate their own trade deals with non-EU countries and must abide by all regulations and directives of the European Union.

Department for Exiting the European Union (DExEU)

A Government department established on 14th July 2016, responsible for overseeing negotiations to leave the EU and establishing the future relationship between the UK and EU. 

Directive

An EU directive is a form of legislation directed at one, several, or all member states. How directives are implemented is a decision for individual member states, providing the objectives of the directive are achieved. Member states must then pass the relevant domestic legislation to give effect to the terms of the directive within a time frame set in the directive, usually two years. An example of a directive is The Working Time Regulations 1998 (SI 1998/1833) which is the United Kingdom statutory instrument which implements the EU Working Time Directive 93/104/EC.

Divorce Bill

When Britain became a member of the 28-nation bloc, it agreed to a whole range of rules including the EU’s long-term budget and contributing to huge infrastructure projects that have a long time frame for completion, including projects in the UK. The EU budgets are not calculated year by year. The EU budget is a “legal act” and covers a seven year period. The last EU budget covers 2014-2020. So, when Britain leaves the EU it will still be liable to pay its share for the remaining budget period.

Economic Free Trade Association (EFTA)

The Economic Free Trade Association (EFTA) is a group of states that, despite being within the EU single market, are not member states of the EU. These states – Iceland, Liechtenstein and Norway – agree to the rules imposed by the single market, but do have exceptions. Norway complies with free movement of people but is exempt from EU rules on fisheries, justice, home affairs and agriculture. Many consider this ‘Norway Model’ would suit the UK. The EFTA countries are not in the Customs Union, and can negotiate trade deals with the rest of the world, such as China.

EU27

From 2016, the 27 European Union member states involved in Brexit negotiations – in other words, all EU member states except for the UK.

Euro

The single currency launched in cash form on 1 January 2002. On this date, 11 EU member states adopted the Euro and abandoned their national currencies. That number now totals 19.

European Economic Area (EEA)

The European Economic Area (EEA) provides for the free movement of persons, goods, services and capital in the EU’s Single Market. It is made up of 31 countries: the EU’s 28 Member States and three of the four EFTA countries (Iceland, Liechtenstein and Norway). It is governed by a common set of rules.

European Council

The European Council is the institution of the EU that comprises the heads of state or government of the member states, along with the President of the European Council and the President of the European Commission. The European Council was formalised as an institution in 2009 upon the entry into force of the Treaty of Lisbon. The European Council is the EU’s main decision-making body and agrees EU laws, usually together with the European Parliament

European Council President

The President of the European Council is a principal representative of the European Union (EU) on the world stage, and the person presiding over and driving forward the work of the European Council. Since the 2007 Treaty of Lisbon, article 15 of Treaty on European Union states that the European Council appoints a full-time president for a two-and-a-half-year term, with the possibility of renewal once. Appointments, as well as the removal of incumbents, require a double majority support in the European Council.

European Commission

The European Commission is an institution of the European Union, responsible for proposing legislation, implementing decisions, upholding the EU treaties and managing the day-to-day business of the EU. Commissioners swear an oath at the European Court of Justice in Luxembourg, pledging to respect the treaties and to be completely independent in carrying out their duties during their mandate. There is one member per member state, but members are bound by their oath of office to represent the general interest of the EU as a whole rather than their home state.

The Commission, headed by Luxembourgish politician Jean-Claude Juncker, is responsible for proposing draft legislation, implementing decisions, upholding EU treaties and managing day-to-day business. It is often called the EU’s civil service but is more than that. Its 28 member-appointed commissioners formally initiate EU legislation.

European Commission President

The President of the European Commission is the head of the European Commission, the executive branch of the European Union. The President of the Commission leads a cabinet of Commissioners, referred to as the college, collectively accountable to the European Parliament, which is directly elected by EU citizens. The President is empowered to allocate portfolios amongst, reshuffle or dismiss Commissioners as necessary. The college directs the Commission’s civil service, sets the policy agenda and determines the legislative proposals it produces (the Commission is the only body that can propose EU laws).

European Court of Justice (ECJ)

The European Court of Justice (ECJ), officially just the Court of Justice (French: Cour de Justice), is the highest court in the European Union in matters of European Union law. As a part of the Court of Justice of the European Union it is tasked with interpreting EU law and ensuring its equal application across all EU member states.
The Luxembourg-based ECJ rules on disputes over EU treaties and legislation. It is made up of one judge from each of the EU member states. Cases can be brought by governments, EU institutions, companies or citizens.

European Parliament

Established in 1979, the European Parliament is the democratically elected chamber of the EU, comprising of 751 elected Members of the European Parliament (MEPs) representing every region of each member state. It holds monthly plenary sessions in Strasbourg and has a secretariat in Luxembourg, but MEPs do most of their work in Brussels. Parliament has the power to amend or block proposals from the Commission for new EU legislation or changes to existing legislation.

European Union (EU)

The EU was established in November 1993. It is an economic and political partnership involving 28 European countries – which will become 27 post Brexit. The EU first began life as the European Economic Community (EEC), which was established by the Treaty of Rome in 1957. The UK joined the EEC in 1972.

European Union (Withdrawal) Bill

The EU (Withdrawal) Bill repeals the European Communities Act 1972, and is also known as the ‘Repeal Bill’. The bill will provide certainty for individuals and businesses, bringing all EU law into domestic UK law to provide fairness and rights without sudden change. British parliament will then decide which laws it wants to adapt, retain or remove. This will be an onerous task with over 50,000 EU laws, Directives, and regulations to review.

Eurozone

The group of countries using the Euro as their currency.

Facilitated Customs Arrangements (FCA)

An arrangement that would allow goods destined for the EU being charged an EU tariff and goods coming into the UK charged at the potentially lower UK tariff. This plan would require technology to identify the final destination of goods and anticipates avoidance of customs checks in mainland Ireland. 

Four Freedoms

In order to be a member of the European single market, a member state must comply with the fundamental pillars of the EU’s single market: free movement of goods, capital, services and people.

Free Trade Agreement (FTA)

A free trade agreement (FTA) is an agreement between countries to reduce barriers such as import quotas and tariffs, to increase trade between them. Canada negotiated an FTA with the EU which took seven years to finalise. It is anticipated the UK-EU deal will be more complex to negotiate.

Future economic partnership (FEP)

The government term used to describe the long term post Brexit trading relationship between the UK and the EU. 

Globalisation

This term describes the way countries, regions, economies and people of the world integrate through a network of economics, making international trade, immigration and transportation easier. 

Hard Brexit

A hard Brexit, also known as a clean Brexit, would take Britain out of the EU’s single market and customs union and end its obligations to respect the four freedoms, any future EU budget contributions and no longer subject to EU law. It could involve the UK leaving the EU without a trade deal in place, potentially leading to the return of trade tariffs.

Harmonisation

The introduction of common standards and laws between the EU (and its member states) and a non-EU country..

Implementation Phase

The implementation phase is the period of time in which the UK is implementing the changes required after we have left the European Union and are thus no longer part of any of the EU institutions or subject to the jurisdiction of the European court of Justice.

Internal market

See single market.

Maximum Facilitation (Max-fac)

An option permitting a complete break from EU customs regime, undertaking declaration and clearance procedures ahead of the border,  relying upon technology to reduce border checks. 

Meaningful vote

Parliament will have a vote on the final agreement which will cover everything from citizens’ rights to the financial settlement we make with the EU but, crucially, not trade deals. The meaningful vote is on the contents of the deal only.  It could not, under any circumstances, undo or do away with Brexit. 

Member State

A member of the European Union. Each member state is a party to the EU and subject to the privileges and obligations of EU membership in exchange for representation within the common legislative and judicial institutions. Member states must agree unanimously for the EU to adopt policies concerning defence and foreign policy. Since July 2013, there have been 28 member states in the European Union: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Italy, Ireland, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Spain, Slovakia, Slovenia, Sweden and the United Kingdom. After Brexit, when the United Kingdom leaves, this will reduce to 27.

MEP

A Member of European Parliament. As with MPs, MEPs are there to represent the interests of their constituents on EU matters. MEPs are elected every five years. MEPs can ask the Commission to bring forward proposals for new legislation (although MEPs cannot propose new legislation), are keen to secure a role on an influential committee such as the Environment of Foreign Affairs Committee, and play a role in scrutinising legislation.

Most Favoured Nation (MFN)

Under WTO rules, a country cannot discriminate between trading partners that are members of the WTO. In other words they cannot grant one country preferential treatment over another, such as imposing a lower customs duty rate for one of their products. Some exceptions are allowed. For example, countries can set up a free trade agreement that applies only to goods traded within the group, discriminating against goods from outside. Or they can give developing countries special access to their markets.

NATO

North Atlantic Treaty Organisation. This commits member countries – which includes most of Western Europe and the US – to mutual defence.

No Deal

Where no formal agreement is reached between the UK and the EU. If the UK leaves the EU with no deal in place, the UK would have no legal obligation to make a payment as part of a financial settlement. UK Prime Minister Teresa May has stated that “no deal is better than a bad deal”, suggesting that negotiating against a tight deadline with a deal settled under pressure may not prove favourable.

Passporting

The EU’s financial services ‘passport’ means banks and financial services firms authorised in the UK can provide their services across the EU without the need for further authorisations.

Political declaration

The Framework for the Future UK-EU relationship will take form of a political declaration accompanying the exit and transition agreement. This is expected to outline future economic relations and a new political relationship. It is anticipated the UK government will endeavour to agree the substance of the future relationship by October 2018.

The Rebate

In 1980 almost 70% of the budget of the entire EU (then called the European Economic Community) was spent on the Common Agricultural Policy (CAP). The EU asked each member state to contribute a fraction of their VAT receipts to the EU to help cover the increasing costs of implementing the CAP. UK agriculture had a different structure to that of the EU and benefited little from the money distributed from the CAP. As a result, the UK soon became a large net contributor to the EU budget despite being the third poorest member at the time.
In June 1984, at Fontainebleau outside Paris, Margaret Thatcher negotiated what is now known as the UK rebate with other EU members. The aim was to correct for the apparent imbalance in the UK contribution at the time. The UK rebate was ratified and then implemented in May 1985.
The UK is the only country to have a permanent rebate on the European Union budget and this has been one of the most controversial issues in UK-EU relations.

Referendum

A referendum involves the electorate voting on an issue rather than for a representative, as in a normal election. In the case of Brexit, the British people voted on whether the UK should remain a member or leave the EU.

Regulation

Regulations have binding legal force throughout every member state and enter into force on a set date in all the member states.

Regulatory alignment

Regulatory alignment means the UK will adapt its post-Brexit trading principles in line with EU rules and standards on some social and economic issues.

Regulatory divergence

Allows rules and regulations to differ between the UK-EU after Brexit.  

Red Line

In the context of Brexit, Red Lines are those items of negotiation that either the UK government or the European Union have stated they will not compromise on. For instance, the UK Prime Minister has stated that accepting the free movement of people between the UK and EU is a red line the UK government will not cross.

Repeal Bill

See EU (Withdrawal) Bill.

Reste à liquider

The UK’s outstanding financial commitments, which have been agreed in past EU budget negotiations but not yet translated into payments. They are usually referred to by their French name.

Right to Remain

Indefinite leave to remain (ILR) or permanent residency (PR) is an immigration status granted to a person who does not hold the right of abode in the UK, but who has been admitted to the UK without any time limit on his or her stay and who is free to take up employment or study, without restriction. There will be no change to the rights and status of EU nationals living in the UK, nor UK nationals living in the EU, while the UK remains in the EU.

Rules of Origin

EU rules governing whether goods exported from Norway and other EU partner countries are liable to tariffs, which are dependent on what percentage of the value of those good originated in the partner country.

Schengen area

The Schengen Area refers to the passport free zone that covers most of Europe. Schengen states apply common rules for people entering the EU, including rules on documents checks and visa requirements. This extends to maintaining close police and judicial relations. 22 out of 28 EU member states signed up to the Schengen agreement, together with the 4 EFTA countries. The UK and Ireland were two member states who chose not to enter. 

Second Referendum
Single Market

Established in 1992, the European single market refers to the free movement of goods, capital, people and services within the EU. There are no tariffs, quotas or tax, to make it simple to trade with other Member States. Also known as the ‘internal market’.

Soft Brexit

A soft Brexit would enable the UK to leave the EU but negotiate continued membership of the European Economic Area (EEA) and remain in either the single market or the customs union or both. This would be similar to a Norway Model deal. The UK would have no influence over single market rules.

Sovereignty

Parliamentary sovereignty is a principle of the UK constitution. It makes Parliament the supreme legal authority in the UK, which can create or end any law. Courts cannot overrule its legislation and no Parliament can pass laws that future Parliaments cannot change. Eurosceptics believe sovereignty has been compromised by EU membership, by qualified majority voting to adopt EU law, by the legal requirement to enact EU law and by its supremacy over national law.

Tariff

Tariffs are taxes paid on imported goods. They may be a percentage of the value of the goods or a fixed amount, dependent upon the weight or measure. The EU tariff on cars, for example, is 10%. On beef, the import tariff into the EU is closer to 50%.

Tariff Rate Quota

A ‘TRQ’ is a trade policy tool used to protect a specific product from competitive imports. In a TRQ, quantities inside a quota are charged lower import duty rates than those outside.

Transitional deal

An agreement designed to avoid a ‘cliff edge’ departure when the UK leaves the EU, and the start of final arrangements for a future deal. The plan for a transition period of two years will require Britain to apply EU rules, including new ones. It is also referred to as an ‘implementation period / phase’.

Transition Period

is the period in which the UK is implementing the changes required to leave the European Union while still a member of the EU. We would still be in the single market, the customs union, be liable for EU budget contributions and be fully under the jurisdiction of the European Court of Justice. So a transition period of 2 years would mean we would be full members of the EU until March 2021 but we would not have any influence or vote on any new laws although we would have to adopt all and any new laws of the EU.

White Paper

White papers are policy documents produced by the government that set out their proposals for future legislation.The Government has published it’s white paper which sets out proposals for the future relationship between the UK and the EU. The paper covers the economic relationship, security cooperation, cross-cutting issues and the institutional arrangements that will govern the future relationship.

World Trade Organisation (WTO)

The WTO is an international trade organisation with 164 members, established in 1995, promoting global, multilateral, inter-governmental agreement on trade in goods and certain services. The EU represents its Member States in WTO negotiations.

After Brexit, if no new trading relationship is agreed by the end of the two year Article 50 period with the EU and no extension is granted, the UK would automatically fall back on the WTO rules. Britain could set its own import tariffs although could not exceed the current EU schedule or give beneficial reduced rates to favoured countries.

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