On December 8, 2017, the UK and the EU issued a Joint Report on the first phase of negotiations covering Brexit. This document included three significant provisions:

• A guarantee that there would be no hard border between the Republic of Ireland and Northern Ireland.
• EU citizens living in the UK and UK citizens living in the EU at the time of Brexit will not be forced to return to their country of citizenship, as the rights of those people, as well as their families, to live, work, and study will be protected.
• The framework for final settlement bill to cover all commitments as well as liabilities, including contingent liabilities. The final settlement total is inclusive of budget contributions to be made by the UK during a two year transition period following Brexit in March 2019.

Several separation issues were postponed to the next phase of negotiations, however, including those relating to competition law, state aid, and the application of Euratom treaty in the UK, which sets uniform safety standards for nuclear energy. In addition, while there was a general agreement regarding the Irish border, issues specific to the transit of goods to and from Ireland via the UK will be negotiated during the next phase.

As a result of progress in negotiations reflected in the Joint Report, the EU officially authorized the start of the next phase of negotiations on December 15, 2017. This next phase will include deliberations on transitional arrangements and the future EU-UK relationship after Brexit takes place in 2019 as well as conversion of the content of the Joint Report into legal text.

The process of conversion into legal text will raise a number of difficult issues such as the detail for avoiding a border between the Republic of Ireland and Northern Ireland. The Joint Report states that in the absence of an agreement between the EU and the UK on solutions to avoid imposition of a hard border, the UK will “maintain full alignment” with relevant rules of the EU Single Market and Customs Union to avoid the need for a border. Some commentators have suggested that this means the UK is committed to a fallback of staying in the Single Market and Customs Union in the absence of agreement on the Irish border issues, but this is likely to be a very contentious issue in the course of conversion of the Joint Report content into legal text.

Although an agreement on the future relationship, including any trade deal, can only be finalized once the UK has left the EU and become a third country, the UK and EU will engage in preliminary and preparatory discussions to identify an overarching framework for the future relationship.

Regarding the transitional agreement, the EU and UK are working on a proposal that would maintain UK obligations under the entirety of the EU acquis (the body of EU law) for a period of two years. As such, the UK would be required to comply with EU trade policy, to apply EU customs tariffs and duties, and to perform all required border checks regarding non-EU countries during the transition period. In addition, any and all changes made to EU laws would be applicable in the UK during the transition period, despite the fact that the UK will not participate in the EU institutions or the decision making procedures of the EU government bodies, offices, and agencies, during that time.