A very fluid political environment remains following the UK Cabinet meeting last night with the Prime Minster responding to questions and accusations regarding the draft Brexit deal between the UK and the EU.
The deal which is expected to be put before the House in early December, includes the amount of money to be paid to the EU, a 21–month transition period after Brexit day next March and commitments on the rights of EU citizens in the UK and UK citizens living in the EU.
Importantly the draft deal seeks to address the insurance policy of the backstop around the Irish border, should there be no deal between the UK and EU. There are particular areas to note within supply chain movements North South and East West but this is only in the context that the backstop will be triggered. The situation continues to evolve with four Ministers having resigned most notably Dominic Rabb, Brexit Secretary &
Esther McVey, Secretary for Work and Pensions.
The Withdrawal Agreement covers the following areas:
- Common provisions
- Citizens’ rights
- Separation issues
- A transition period
- The financial settlement
overall governance structure
terms of a legally operational backstop to ensure
that there will be no hard border between Ireland and Northern
protocol on Ireland/Northern Ireland also contains UK commitments not to
diminish rights set out in the Good Friday (Belfast) Agreement 1998, and
to protect North–South cooperation.
provides for the possibility to continue the Common Travel Area
arrangements between Ireland and the UK, and preserves the Single
Electricity Market on the island of Ireland.
What it means for Northern Ireland & the backstop?
backstop will involve, in the absence of a future deal, the whole of the
UK staying aligned with the EU customs union. See Appendix 1 for
further detail on goods placed on market as a result of withdrawal deal.
- Under the
backstop, the EU’s custom code will continue to apply to Northern Ireland,
meaning that it can continue to export and sell products within the EU.
- The draft
agreement says, under the backstop, the EU’s custom code will continue to
apply to Northern Ireland, meaning that it can continue to export and sell
products within the EU.
- This will
ensure Northern Irish businesses will face no restrictions on their
products when selling into the EU single market.
- The UK has
also agreed, under the terms of this new backstop, that Northern Ireland
will remain aligned with a limited set of rules relating to the EU’s
single market, specifically legislation covering goods, sanitary rules for
veterinary controls, rules on agricultural products, Vat, excise on goods
and state aid rules.
- All this
would ensure that there would be no new border checks on the island of
- If, after
the transition period, either the EU or UK believes the backstop, in whole
or part, is no longer necessary, they will notify the other side. The
joint committee will consider the request and may seek the opinion of
institutions created under the Good Friday Agreement.
- If the EU and UK fail to agree a deal on their future relationship by
December 31st, 2020 – the current scheduled end of the standstill
transition period when no rules change – the backstop will apply until a
subsequent agreement is in place. Alternatively, the UK can, before July
1st, 2020, request an extension to the transition period. See
appendix 2 for further detail
- The role of the
European Court of Justice, which will still have jurisdiction in the UK on
customs and single market rules could cause problems.
What about a border in the Irish Sea?
- The draft
agreement says there is nothing that shall prevent the UK from “ensuring
unfettered market access for goods moving from Northern Ireland to the
rest of the UK’s internal market”.
- The deal
aims to make goods moving to Northern Ireland from the rest of the UK as
frictionless as possible and to minimise checks.
- A joint
committee made up of EU and UK representatives will keep this “under
constant review” and adopt appropriate recommendations to avoid “to the
extent possible” controls at the ports and airports of Northern Ireland
concerning any goods coming in from the UK.
- The backstop safety net is to
ensure there is no hard border whatever the outcome of future trade talks
between the UK and the EU.
- The alignment to some EU rules on
things like food products and goods standards will prevent the needs for checks on goods at the
Irish border, but would require some products being brought to Northern
Ireland from the rest of the UK to be subject to new checks and controls.
- The backstop would also involve
a temporary single custom territory, effectively keeping the whole of the
UK in the EU customs union.
- This is a key issue for
Brexiteers with the Dup vehemently opposed to any additional checks in the
Irish Sea which they see as a threat to the integrity of Northern Ireland
within the Union..
- The role of the European Court
of Justice – which will still have jurisdiction in the UK on customs and
single market rules – could also spark protests.
- Mrs May says she does not want
to have to use the backstop at all – and the withdrawal agreement says the
UK and the EU will resolve to ensure it is not necessary by coming up with
- They could also extend the
transition if there is no long–term solution in place by July 2020 – but
What have Northern Ireland businesses said?
- There has been a cautious welcome from the sector with
some business representative groups stating that the potential for
Northern Ireland to benefit from UK trade deals and EU trade being a
significant opportunity. The potential for this, is perceived as
giving Northern Ireland a competitive advantage over regions such as
Seamus Leheny, Freight Transport Association:
“Our first reaction is relief – we feel that the government have actually listened to us.”
“We set out proposals two years ago about what we needed to keep the UK and Northern Ireland goods flowing freely and this, although it’s not perfect, ticks a lot of boxes.
Stephen Kelly, Chief Executive Manufacturing NI
The EU has made important concessions which would help NI businesses if the backstop is ever implemented.
“The fears and risks flagged by business seem, so far, to have been addressed.
“The issues of VAT remains a HMRC responsibility and there will be no quotas, origin rules nor tariffs between Britain and Northern Ireland.”
Aodhan Connolly, Director, Northern Ireland Retail Consortium
“The deal provides solutions to customs, tariffs and an innovative solution on VAT.
“However, there is some work to be done by both the Westminster government and the EU on the checks and administration for goods coming into Northern Ireland from GB.
“This will need to be light touch and be mitigated in further agreements, hopefully to an absolute bare minimum.
“We have always said the backstop is better than no deal.”
Political Response in Northern Ireland
What happens next?
- An emergency EU summit will be held on 25
November, where EU leaders are expected to sign off on the withdrawal
agreement and future relationship declaration.
- The fight to win the vote in the Commons will
be hard fought which is expected to take place around 7th
December. The impact that the flurry of resignations within her
Cabinet, most notably Dominic Rabb, will have on this remains to be seen.
- Conservative MPs, Labour MP, the SNPs and the
DUP will vote against the deal. Many commentators do not believe
this deal can be carried.
- Downing Street is pinning its hope on this
deal being the only choice presented to MPs with the alternative being
Can Teresa May survive?
- If she loses the Commons vote, it is uncharted
territory. She may seek to renegotiate with the EU but most expect her
time in No 10 to end. There could be a general election and/or a new prime
- There is also the potential for the Tory
Party’s 1922 committee to trigger a leadership challenge if there if there
are 48 letters (15% of MPs) requesting that the Chair of the Committee Sir
Graham Brady implements this. This will not, however, be a trigger
for a general election, only a Tory party leadership challenge. Were
she to lose this she would have to stand aside and the deal would
effectively be redundant.
Key points for business
Goods placed on the market
The Withdrawal Agreement provides that goods lawfully placed on the market in the EU or the UK before the end of the transition period may continue to freely circulate in and between these two markets, until they reach their end–users, without any need for product modifications or re–labelling.
This means that goods that will still be in the distribution chain at the end of the transition period can reach their end–users in the EU or the UK without having to comply with any additional product requirements.
Ongoing movements of goods from a customs perspective
For customs, VAT and excise purposes, the Withdrawal Agreement ensures that movements of goods which commence before the UK’s withdrawal from the EU Customs Union should be allowed to complete their movement under the Union rules which were in place at the start of the movement. After the end of the transition period, the EU rules will continue to apply for cross–border transactions that started before the transaction period in terms of VAT rights and obligations for taxable persons,
such as reporting obligations, payment and refund of VAT.
The Withdrawal Agreement provides for a transition period until the end of 2020. The continued application of EU law during this period will give time to national administrations and businesses to prepare for the new relationship. It will also provide the EU and the UK with time to negotiate the future relationship.
The transition period is set to end on 31 December 2020, taking into account the initial request from the UK for a transition period of around two years, and making it coincide with the end of the current long–term EU budget (the Multiannual Financial Framework 2014–2020).
During this period, the entire Union acquis will continue to apply to and in the UK as if it were a Member State. This means that the UK will continue to participate in the EU Customs Union and the Single Market (with all four freedoms) and all Union policies.