Definition
Article 50 is a clause in the European Union’s Lisbon Treaty that outlines the steps member countries must follow if they decide to leave the EU. It was triggered by the United Kingdom in March 2017 to begin the Brexit process. This made the UK the first member state to invoke Article 50.
Phonetic
ɑːr-tɪ-kəl ˈfɪf-ti
Key Takeaways
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- Article 50 is a plan outlined in the Treaty on European Union that enables any EU member state to withdraw from the union. It maps out the procedure for leaving the EU, emphasizing voluntary departure.
- Article 50 was invoked for the first time by the United Kingdom, following their Brexit referendum in June 2016. The UK officially left the EU finally in 31 January 2020.
- Article 50 establishes a two-year negotiating period between the withdrawing country and the remaining members of EU. If terms can’t be agreed upon, the member state’s EU treaties simply cease to apply unless an extension is agreed upon unanimously.
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Importance
Article 50 is a vital provision in the Lisbon Treaty of the European Union (EU) because it lays out the procedure for any member state that decides to withdraw its membership. In the context of business and finance, it’s important due to the potential economic and regulatory impacts of such a withdrawal. When a country triggers Article 50, it initiates a negotiation period of up to two years for terms of the exit, including trade, legal obligations, and other financial terms. Its significance was spotlighted during Brexit when the UK triggered Article 50, leading to significant negotiations and adjustments in their financial and business transactions with the EU. The outcome of such withdrawals can influence economies and businesses globally, making understanding Article 50 crucial in global finance and commerce.
Explanation
Article 50 is a clause in the European Union’s (EU) Lisbon Treaty that outlines the steps to be taken by a country seeking to leave the EU voluntarily. It was designed to provide an orderly mechanism for the withdrawal of member states, ensuring a smooth transition and minimizing any potential disruption. The purpose is to protect the interests of the remaining member nations while respecting the sovereignty of the one seeking to exit. Engaging Article 50 sets into motion a strict two-year negotiation period, during which the terms of the exit and the future relationship between the departing country and the EU are established.The invocation of Article 50 is not merely a declaration of intent to leave but a legal and formal process which once started, is meant to be irreversible. It is used to facilitate a myriad of complex discussions on matters such as trade relations and border controls. This is critical to clarifying the future economic and political relationship between the departing nation and the EU. It has been utilized just once in history, by the United Kingdom for its Brexit procedure, and served as a procedural backbone for the country’s withdrawal from the union.
Examples
Article 50 refers to a clause in the Lisbon Treaty that outlines the steps that must be taken by a country that decides to leave the European Union (EU). Here are three real-world examples about this term:1. Brexit: The most prominent and recent example of Article 50 is the United Kingdom’s departure from the EU. In 2016, the UK held a referendum where the majority of voters elected to leave the EU. In March 2017, the UK government invoked Article 50, which started a two-year countdown to its formal departure. After much negotiation and several extensions, the UK officially left the EU on January 31, 2020.2. Unutilized Article 50: Other countries have considered leaving the EU but have not officially invoked Article 50. For example, Greece was often speculated to possibly leave the EU during its financial crisis in 2015 (an exit sometimes referred to as “Grexit”). However, Greece ended up remaining in the EU.3. Hypothetical Uses: Article 50 remains a possibility for any country that wishes to leave the EU in the future. It’s a tool within the Lisbon Treaty that exist to formalize and organize the process of separation. Whether or not it will be triggered again by another member country remains hypothetical and uncertain.
Frequently Asked Questions(FAQ)
What is Article 50?
Article 50 is a clause in the Treaty on the European Union (EU) that outlines the steps to be taken by a country seeking to leave the EU voluntarily.
Who can invoke Article 50?
Only the country seeking to leave the EU can invoke Article 50. It cannot be invoked by the EU or other member states.
How is Article 50 triggered?
Article 50 is triggered when a member state officially notifies the European Council of its intention to leave the union.
What happens after Article 50 is triggered?
Once Article 50 is invoked, there is a two-year period in which the terms of the country’s withdrawal are negotiated. This can be extended if all member states agree.
Can Article 50 be reversed?
The possibility of reversing Article 50 is not mentioned in the treaty itself. However, the court ruled that, in principle, it could be reversed if the country decided to remain in the EU before the end of negotiations.
Has Article 50 ever been invoked?
Yes. The UK is the first and currently the only country to have invoked Article 50 on March 29, 2017, to initiate its departure from the EU, commonly known as ‘Brexit.’
What is the role of the European Council in the Article 50 process?
The European Council’s role involves guiding the negotiations process and confirming conclusions by consensus once an agreement has been reached.
What happens if a withdrawal agreement is not reached within the two-year period?
If no agreement is reached and no extension is granted, the withdrawing country automatically leaves the EU without an agreement on a set of future relations, known as a ‘no-deal’ exit.
After invoking Article 50, can a country still participate in EU decisions?
The withdrawing country cannot participate in EU internal discussions or decisions about its own withdrawal. However, they may continue to participate in other discussions and decisions until they officially leave the union.
Can a country rejoin the EU after leaving?
If a country leaves the EU and later decides to rejoin, they must go through the full accession process as any other candidate country would. This process involves meeting certain criteria and gaining approval from all existing member states.
Related Finance Terms
- European Union (EU)
- Brexit
- Lisbon Treaty
- Withdrawal Agreement
- Single Market
Sources for More Information
