23 Mar 2018
ICOS Brexit Briefing
- EU 27 leaders today (Friday, 23rd March) agreed to transitional arrangements, which will extend UK membership of the single market and customs union until the end of 2020, and approved negotiation guidelines to allow discussions on the framework of the future EU-UK relationship to begin. Full details on the terms of both documents are below.
- Speaking to European Commission officials on these terms last Friday, Copa Cogeca Brexit Chair, Alo Duffy, emphasised that the future EU-UK trading relationship must include an agreement on a simplified customs procedure, such as a single EU-UK import/export clearing office, as well as an agreement on full harmonisation of food safety, production and marketing standards in order to maintain the value of current supply lines.
- Today’s deal offers some certainty in terms of avoiding a post-Brexit cliff edge scenario, however as a legal agreement has yet to be signed nothing is guaranteed. The European Commission Secretary General has therefore established a “Brexit Preparedness” Unit, which has begun to publish notices to stakeholders explaining what will happen should the negotiations end without a signed agreement: https://goo.gl/hScKBn
EU leaders today signed off on a 21-month “status quo” transition period, whereby the UK will be bound by all EU rules and in turn will maintain all their rights of EU membership, except they will no longer have a say in the decision-making process.
The transition period will run from 29th March 2019 until 31st December 2020, in line with the EU’s current multiannual budget, which the UK has agreed to continue to make its committed contributions to.
Key aspects of the arrangements:
- EU nationals will be entitled to move to the UK during the transition period and retain the same residency rights post-Brexit (and visa-versa for UK nationals in the EU).
- The UK conceded to remaining within the Common Fisheries Policy during the transition period. However it has been agreed that the share of the UK’s catch will not change within the 2020 allocations.
- The UK, as it will no longer be an EU member state after the 29th March 2019, will lose its benefits and ability to trade under the 750 trade and market access arrangements the EU has with 168 countries worldwide. The agreement states that the EU will tell its trading partners to treat the UK as part of the EU, however it cannot guarantee that its trading partners will accept the arrangements.
- The UK can negotiate trade deals during the transition period, as long as they do not take effect until afterwards.
- There is no provision for extending the transition period should it be necessary and once the UK is outside the EU, it may not be legally possible to do so. Concerns remain over the length of this transition and whether either the EU or UK will be ready to implement new trading terms by the end of 2020, especially should new border infrastructure need to be built.
These arrangements have been included within a “Draft Withdrawal Agreement”, which also contains a legal interpretation of the political agreement on the UK’s financial contributions, citizen’s rights and Northern Ireland that was agreed in December 2017. This draft document also includes an agreement on the rules which will apply to goods placed on the market or under contractual arrangements before 1 January 2020. These are very relevant, for example to live animals in transit. If a product is on the market (i.e. under a contract or in circulation) it will falls under the old single market rules. However if the product is in storage and has no contract, it falls under the new rules.
Many chapters of the text are now considered agreed fully or in principle, however the issue of the Irish border remains unresolved. The UK has agreed that the EU’s “backstop” option- whereby Northern Ireland would remain in the EU’s customs territory for VAT and excise duty purposes and within a common regulatory area in order to ensure north-south alignment- should remain in the draft text, until they can bring forward alternative solutions for avoiding a hard border. The next phase of the negotiations will therefore be heavily focused on Ireland with a schedule of meetings planned for the coming weeks.
Schedule of Meetings on issues relating to Northern Ireland/Ireland
|26 March||Customs/good regulation/SPS|
|27 March||Transit/practical arrangements|
|6 April||Rights of Individuals|
|9 April||Review of meetings’ at coordinators’ level|
|11 April||North-South Co-operation|
|18 April||Review of meetings at Co-ordinators’ level|
Negotiations are now ready to enter their third and final phase, with EU leaders approving today negotiation guidelines for discussions on the framework of the future EU-UK relationship, which will be reflected in a political declaration accompanying the withdrawal agreement and referred to in it. These discussions will remain board, as full negotiation of terms will not begin until the transition period when the UK is officially a third country.
The EU guidelines call for a free trade agreement, stating that UK red lines leave little other options. It states that the agreement should include tariff free trade of goods and unrestricted quantitative access to each other markets. It also outlines the possibility of “appropriate customs cooperation” and “voluntary regulatory cooperation”. ICOS however is calling for these guidelines to seek a much more ambitious relationship than this and include for example, a specialised, simplified customs procedure, the creation of a single EU-UK export/import clearing office and an agreement on full harmonisation of animal and plant health, food safety regulation and production and marketing standards (e.g. product definitions, labelling, etc).
At a meeting between the European Commission and Copa Cogeca Brexit Chair, Alo Duffy, the Commission recognised these concerns around regulatory divergence in future creating a barrier to trade. They stated that they are in specific discussions with the UK on reaching an agreement to maintain a “level playing field” in order to avoid this.