Jump to content

LATEST NEWS

Brexit Briefing

EU Chief Negotiator, Michel Barnier addressed the Copa Cogeca Praesidia last Thursday, answering questions posed by ICOS President, Michael Spellman and other EU farming and co-operative organisations.

EU Chief Negotiator, Michel Barnier addressed the Copa Cogeca Praesidia last Thursday, answering questions posed by ICOS President, Michael Spellman and other EU farming and co-operative organisations. You will find below a Q&A on the Brexit deal which include his responses as well as other FAQs from our members.

 News in Brief:

  • Since an agreement was reached by EU Leaders in Brussels on 25th November on the EU-UK Withdrawal Agreement and Political Declaration on our Future Relationship, the focus has moved back to the UK, where the House of Commons (Parliament) is preparing to vote on the deal next Tuesday, 11th December.
  • The British Parliament and public are heavily critical and hugely divided on the deal and it is not predicted to be approved (it needs a simple majority of 319 MPS). “Brexiters” protest that the deal would lock the UK into a customs union with the EU indefinitely without right to unilaterally withdraw. “Remainers” say that the deal would leave them worse off than if they stayed in EU and that the political declaration on the future relationship is too vague to map the path forward.
  • MPs have until the end of the day today (6th December) to table suggested amendments to the Withdrawal Agreement. Six of these amendments will be chosen on 11th December to be subject to a vote (decided based on how many MPs are supportive of them). One amendment which has already gained a large amount of support from opposition parties is to reject the deal and to give the Parliament a greater say on the next steps.
  •  The consequences of the UK Parliament rejecting the deal are not entirely clear, with multiple possible outcomes:
    • It could result in a vote of no confidence in the UK government (if the deal if rejected by a large majority). Should the government lose this vote, a general election would be called, with the labour party hoping to take over and promising to renegotiate the Withdrawal Agreement (although they are not clear on what outcome they would seek and the EU have said they will not renegotiate the deal).
    • Alternatively, a second referendum could be called, either for or against the Brexit deal or again on UK membership of the EU (an option ruled out by the current Conservative government). There is still the possibility for the UK to end the Brexit process, according to the European Court of Justice, which this week ruled that the UK could still unilaterally withdraw their notification to leave the EU.
    • If the current Conservative government maintain their position (losing by just a few votes), they will have 21 days to decide on the next steps (deadline: 1 January), likely in this case they would go to a second vote in the House of Commons on the deal.
    • If a majority in the UK Parliament cannot be found in favour of this deal, the UK would leave the EU with no deal.
  • ICOS emphasises to its members, that until the UK Parliament agree on a course of action uncertainty remains, and businesses should continue to mitigate against potential impacts.

FAQs on the Withdrawal Agreement and Political Declaration on the Future Relationship

What are the key terms of the Withdrawal Agreement?

  • It establishes a “transition period” from the day the UK leaves the EU on 29 March 2019 until 31 December 2020, during which time all EU rules and programmes will continue to apply to and within the UK.
  • This transition period can be extended up until 31 December 2022 if necessary.
  • If no deal on the future EU-UK relationship can be found by the end of the transition period a “backstop” will apply in order to ensure the free movement of goods and people on the island of Ireland. This essentially places the UK, in its entirety, within a “single customs territory with the EU”, where it will apply the EU’s common external tariff, while Northern Ireland would additionally remain aligned with EU single market regulations. This will allow goods to travel freely between both territories without tariffs or checks on rules of origin, however regulatory checks would be applied on goods travelling from Great Britain to both Northern Ireland and the EU. Checks would take place at the point of entry or in the market place. These arrangements will remain in place until an agreement on the future relationship can be enforced.
  • The rights of EU citizens in the UK and UK citizens in the EU are guarantees, although freedom of movement for people ends following the transition period.
  • Britain will honour all its financial commitments to Brussels under the current EU multiannual budget (ending in 2020) and any outstanding EU liabilities following this.

What are the key points of the Political Declaration on the Future Relationship?

The Political Declaration is a non-binding statement of intent on what the EU and UK would like to achieve within their future relationship. It outlines that their future partnership will include a comprehensive trade agreement as well as co-operation on law enforcement and foreign policy as well as security and defence. It places the EU-UK “single customs territory”, which forms the central part of the backstop plan, as the starting point for discussions on future trade relations. As well as this, the declaration promises “deep regulatory and customs co-operation” to facilitate the movement of goods and minimise barriers on rules of origin. It notes there is “a spectrum of different outcomes” in terms of checks and controls and the wish “to be as ambitious as possible, while respecting the integrity of their respective markets and legal orders”. This is a nod towards the possibility of using (as of yet undeveloped) technology to reduce the burden of regulatory checks and to the “facilitated customs arrangement” proposed within the UK Government’s Chequers Plan, which envisaged the UK collecting customs tariffs on behalf of the EU.

 Could the Irish border reappear?

In short: No, or at least not unless Ireland (through the EU) agree to it.

Until and unless an agreement is reached by the EU and UK on their future trading relationship, the “backstop” arrangements contained within the Withdrawal Agreement will be applied. Under these terms Northern Ireland will apply the EU’s customs rules and tariffs (as will the entirety of the UK) as well as remaining fully aligned with EU Single Market rules for goods including sanitary rules for veterinary controls, rules on agricultural production and marketing, VAT and excise, and state aid rules. This will ensure that there is no border on the island of Ireland and guarantees the free circulation of goods. There are also provisions within the “Protocols on Ireland” which guarantees the free movement of people on the island of Ireland. This backstop will also form the basis for discussions on the future EU-UK relationship, with hope that these arrangements will be built on and add to rather than undone them and necessity additional trade barriers. The EU can prevent this from happening as it would only be at their agreement and in turn the agreement of Ireland, that the backstop could be superseded by the future relationship.

Will there be new administration requirements for trade between Ireland (the EU) and Great Britain?

In short: Yes, new authorisation and certification requirements will likely be introduced.

In the event the “Backstop” is applied, a newly established EU-UK Joint Committee will be called on to adopt detailed rules on the trade in goods between the EU and UK. However, some details are already laid out; a UK Movement Certificate will be needed for all goods exported and imported between the EU (and Northern Ireland) and Great Britain (i.e. England, Scotland and Wales). These certificates could also be needed for goods being sent to Continental Europe from Ireland via the UK land bridge.

Additionally, the Withdrawal Agreement makes it clear that the EU will no longer recognise registrations, certificates, approvals and authorisations issued by the UK, therefore businesses in Northern Ireland and the rest of the UK will need to apply separately for these authorisations from EU authorities in order to place their goods on the EU market. The UK have not specifically stated that it will continue recognise EU authorisations for businesses exporting to the UK, however this will likely be the case in the short term, as the technical notices issued by the UK government in the event of a no deal Brexit committed to continued recognition and acceptance of EU authorisation. This could change in the long term however.

Will there be checks on goods traded between Ireland (the EU) and Great Britain?

In short: Yes, it is likely that there will be regulatory checks (but not customs).

Under the “Backstop”, Great Britain will be outside the EU Single Market, although inside a “Single Customs Territory”. Therefore, while there would not be customs applied on goods exported to the UK, there would be regulatory checks at the points of exit and entry (i.e. the ports and airports), including for goods travelling between Great Britain and Northern Ireland. A limited number of checks already take place for agricultural products entering the island of Ireland from the UK. These would need to be increased in scale from 10% currently to 100%.

With regard to the Political Declaration on the Future Relationship, it is notable that there is no reference to “frictionless” trade, rather it promises “deep regulatory and customs co-operation”, stressing instead that regulatory checks are essential to the “proper functioning” of separate EU and UK markets and it is not possible to avoid them when outside the EU Single Market. It is also notable that the UK have not made any commitment to nor expressed an interest in remaining a member of the European Food Safety Authority (ESFA), an option open to third countries, which would greatly assist  in their regulatory alignment and minimise trade barriers for the agri-food sector.

Will the UK be able to make their own trade deals?

In short: Yes, but largely limited to agreements on services

During the transition period, the UK will be able to negotiate trade deals with third countries, however they cannot come into force until after the UK has left the EU Customs Union, be that in at the end of 2021, or 2023 (if the transition period is extended).

If the Backstop is applied, the UK will need to align itself with EU tariffs and customs rules and therefore cannot agree to reduced tariffs for third country goods or give preferential access to their market. Therefore, while the UK will be able to enter into trade deal, they would be limited to services (which are left out of the Withdrawal Agreement).

The matter of UK trade independence is ambiguous within the Political Declaration on the Future Relationship. UK Prime Minister is selling the deal on the basis that there is enough flexibility to allow the UK to negotiate third country access to the UK market for goods in future, despite the promise to also base the future relationship the backstop which essentially prevents this.

Will the free movement of people continue?

In short: No

Following the end of the transition period, the free movement of people between the EU and UK will end. EU citizens moving to the UK to study and work would need to apply for a visa under a new migration system which is still under discussion. However, the rights of EU citizens living in the UK before the end of the transition period will be largely maintained, including the ability to claim permanent residence, most family reunion rights and rights to claim child benefits for example.

 Will the UK continue to pay into the EU Budget?

In short: No, or at least only a limited amount

The UK has committed to honouring all its financial commitments under the current EU multiannual budget (ending in 2020) and any outstanding EU liabilities following this, regarding the European Investment Bank, EU development fund etc. While most of the contributions will be made by 2025, some payments could continue until 2064, notably towards the pensions of EU officials. Should the transition period be extended to 2023, then the EU-UK will need to negotiate its related contribution to the EU budget for their continued access to the EU Single Market and Customs Union. However, the UK would not continue within EU programmes and policies such as the CAP and Horizonal 2020 which would reduce their contribution compared to today. Any contributions by the UK to the EU budget after this would be solely based payments related to their participation in certain EU agencies and projects which they chose to be part of (and which are open to third country participation).

Will the deal allow the UK to diverge on competitive aspects?

In short: No

Under the “Backstop”, and therefore according to our starting point for negotiations on the future EU-UK relationship, the UK is committed to maintaining EU rules on business taxes and credit institutions (so a competitive tax regime would not be possible). There is also a number of conditions around maintaining a “level playing field”, including for example obliging the UK to comply with wide-ranging “non-regression clauses” on environmental standards for goods, emissions (i.e. continuing with the carbon pricing scheme), labour and social rules. While the CAP will no longer be applied in the UK from 2022, the Withdrawal Agreement also restricts the level of subsidies that can be provided to UK farmers under their new Farm Policy.

 Timeline of Next Steps:

11 December UK House of Commons vote:  It is unlikely that the deal will be supported. The four most likely outcomes should the deal be rejected, are:

  • A second vote on the deal in the House of Commons
  • A vote of no confidence in the government, with the result possibly leading to a general election
  • A second referendum on UK membership of the EU or on the Exit deal itself
  • The UK leave the EU with no deal
13-14 December EU Leaders Summit: If the UK House of Commons rejects the deal, Brexit will likely be discussed by EU leaders at this meeting
1 January Deadline for the UK Government to notify the UK Parliament of next steps in the event the deal is rejected
21 January The final date for a second vote to take place in the House of Commons (or any supplementary vote that may be necessary): according to the terms of the UK’s EU Withdrawal Bill 2018
11-14 March European Parliament Vote: The European Parliament have announced that their vote of consent for the Withdrawal Agreement will take place in Strasbourg on the week of the 11-14 March, however there is the potential that this could be brought forward if the deal is approved sooner by the UK. The Parliament must approve the Withdrawal Agreement by a simple majority.
29 March UK leave the EU & the “Status Quo” Transition Period Begins: Dependant on the ratification of the Withdrawal Agreement
July 2020 An agreement must be reached by the EU and the UK on what will happen on 1 January 2021, be it:

  1. The full future EU-UK trade and customs relationship comes into force.
  2. The transition period is extended until he beginning of 2023 at the latest
  3. The “backstop solution” be applied

 

Not answered your question? Let me know and together any comments, through my contact details below.

 

Alison Graham

European Affairs Executive

Irish Co-operative Organisation Society Ltd

 

Tel: +32 22 31 06 85

Fax: +32 22 31 06 98

Mobile: +32 487 64 86 80

Email: alison.graham@icos.ie

www.icos.ie | LinkedIn | Twitter