UK trade deal faces potential veto from every EU country

If Spain wants to block a future trade deal with the U.K. over Gibraltar, if Belgium wants to stop a deal over fish or if France wants to veto over financial regulation, they have a legal way to do so.

The concession to EU countries is buried in the legal section of the draft negotiating directives that the EU's chief Brexit negotiator Michel Barnier presented on Monday. This document refers to Article 217 of the Treaty on the Functioning of the European Union as a legal basis for an EU-U.K. agreement because of the "scope of the envisaged partnership and the ambitious and long-term relationship that it seeks to establish."

Under EU law, holding the Brexit talks on the basis of Article 217 means that member countries will need to reach a unanimous decision in Council, giving each of the EU27 countries a chance to weigh in on the talks and forcing Barnier to keep every country's interests in mind during the upcoming negotiations.

According to one EU diplomat, the choice for this legal basis was suggested by EU countries during the Brexit briefings in January, where they expressed concern about the legal architecture of the future deal. Another agreed that Article 217 granted individual veto powers to countries.

EU officials had originally considered using Article 207. This is normally used for negotiating directives for free-trade agreements. Under that scenario, EU member countries would only need a qualified majority to green-light the deal in Council.

It is now clear that the decision will be hostage to even the smaller EU countries.

"The European Commission made a political choice to choose Article 217," said one EU official. "It's just more realistic not to use a qualified majority for this. It's a reality that this deal needs consensus, as was the case with the Withdrawal Agreement. But since member states wanted to be sure, it's now officially in the mandate."

More reassurances on the role of EU countries will follow before the mandate is approved on February 25. In the coming weeks, the Council will scrutinize the mandate Barnier has presented. But according to several EU diplomats, the discussion will be limited to tweaks here and there, as the Commission already took national sensitivities into account.

"If you hear everything [U.K. Prime Minister Boris] Johnson's saying, it's time to focus on the U.K. now, and not waste any more time on intra-European discussions," a diplomat said.

The negotiating directives say it remains open whether the deal will ultimately be classed for final approval as an EU-only deal, or a "mixed agreement."

If it is a mixed agreement, the member states have effective veto power because it will need to be ratified in their 40 or so national and regional parliaments.

If it is an EU-only agreement, it will only need approval by representatives of the 27 member countries as represented by the Council in Brussels. (However, the Article 217 basis means the decision there will require unanimity rather than a qualified majority.)

While it is now clear that the decision will be hostage to even the smaller EU countries whichever format of conclusion is taken, an EU official said the specific question of whether the deal was mixed was still hotly discussed.

"And given the scope of the talks, the deal will probably contain mixed elements," the EU official said. On the other hand, there seems to be a growing consensus among EU diplomats to agree on an EU-only deal, given the time constraints, although they don't seem ready to give away that bargaining chip to the Commission just yet.