News in Brief

• European Commission President Jean-Claude Juncker and UK Prime Minister Theresa May, met in Brussels early this morning (Friday, 8^th December) to sign off a 15-page report (read it here: https://goo.gl/7yYfCy) which recognises that an agreement has been reached in principle on the three “exit” issues. This paves the way for talks to begin on the future EU-UK trading relations, in the new year.
• Compromise wording relating to the Northern Irish-Irish border led to the breakthrough in discussions. The text says the relationship between Northern Ireland and the Republic of Ireland should be governed by the future EU-UK trading partnership. In the event there is no agreement, the UK will “maintain full alignment” with single market and customs union rules which are relevant to north-south co-operation in Ireland and the Good Friday Agreement.
• The text will be incorporated into the conclusions of next week’s European Council Summit (14/15 December), and is to be officially signed off by the EU27 Leaders then, along with preparations for trade negotiations.
• Sterling Volatility: Following a sharp decrease on Monday with the initial failure to strike a deal, sterling has gained strongly today against the euro, up 0.34 per cent to €1.1482.
• Speaking to EU Chief Negotiator Michel Barnier, Copa Cogeca Brexit Chair, Alo Duffy emphasised that transitional arrangements, which maintain the status quo, must also be agreed as soon as possible in order to remove the uncertainty facing farmers and cooperatives. He also called for an agreement to be reached which preserves the investments that have been made by the farming community on both sides of the Irish border.

Details of the Deal

Northern Ireland: Talks broke down on Monday, despite Theresa May travelling to Brussels to finalise a deal, when the DUP, who are supporting May’s Government in the Commons, objected to the proposal to maintain “regulatory alignment” between Northern Ireland and the Republic of Ireland after Brexit. They argued that this would prevent Northern Ireland from leaving the EU “on the same terms” as the rest of the UK. DUP leader Arlene Foster stated this morning that the current deal has “substantive changes” from the text on Monday, saying “We have the very clear confirmation that the entirety of the UK is leaving the European Union, leaving the single market and leaving the customs union.” However, Foster indicated there were still aspects of the agreement she was not entirely happy with.

The text says the relationship between Northern Ireland and the Republic of Ireland should be governed by the future EU-UK trading partnership. However it also outlines a fall-back plan, stating that in the event that no agreement is reached “the UK will propose specific solutions to address the unique circumstances of the island of Ireland” and the UK will “maintain full alignment” with single market and customs union rules which are relevant to north-south co-operation in Ireland and the Good Friday Agreement. It is stressed that in “all circumstances, the United Kingdom will continue to ensure the same unfettered access for Northern Ireland’s businesses to the whole of the United Kingdom internal market”, while also “protecting North-South co-operation” and it “guarantee” to avoid a hard border” on the Island of Ireland.

This agreement is certainly a welcome development for Irish businesses. Establishing a default position in which the entire UK will maintain full alignment with the single market and customs union will go a long way towards easing fears on the possibility of a cliff-edge scenario (of a hard border and WTO rules) should the discussions breakdown. The agreement also details that Irish issues will be addressed within a specific strand of the trade negotiations, including the transit of goods through the UK on their way to mainland Europe. This is a key concern for many Irish cooperative, who rely on the UK as a time-saving land-bridge for the delivery of perishable product.

Citizens’ Rights: EU citizens living in the UK will be able to claim permanent residency status, which will leave their rights essentially unchanged. However there will be stricter limits on the possibility for their families to join them within the UK. These rights will be enshrined in UK law, and while the European Court of Justice will not have ultimate judicial oversight, its case law will be used to interpret the deal and UK courts will be able to refer cases to the ECJ for a period of eight years after the deal comes into force.

Financial Contribution: In late November, May told the EU that the UK would honour its share of all the financial commitments that has been identified, with an estimated net charge of €40bn-€60bn. This is reflected in the text of the deal, which although containing no exact number, states the UK’s commitment to paying into the EU budget up to 2020 and “contribute its share of the financing” for any EU liabilities over the decades to come. This will be paid, not in a lump sum, but on a phased basis, meeting the payments as they come up.

What Happens Next?: EU27 leaders will take a formal decision to open the next phase of Brexit talks on transitional arrangements and the future trading relationship at the European Council summit in Brussels next week (December 14-15). The EU has already begun its internal preparations for the transitional arrangements, and will need to agree to new negotiation guidelines to instruct Michel Barnier on how to proceed. These will be adopted at the EU summit at the end of March at the latest. ICOS supports calls for the UK to remain fully under the EU’s legal and customs regime during this period- this stability will be vital for businesses. With such little time left before the exit date of the 29 March 2019, we hope that these arrangements can be agreed as soon as possible in order to provide certainty to businesses and enable them to plan for the future. This exit deal, together with the transitional  arrangements will make up the UK’s withdrawal agreement, which must altogether be approval by both member states and the European Parliament.

For any questions, comments or to be added to the mailing list for future Brexit Briefings, please find 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