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Brexit Watch — a deal that pleases no one?

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Paul Clarke takes us through some of the recent developments in the world of EU withdrawal.

Early in this series of articles on the road to Brexit, in an article entitled Trading All Over the World, we reported on a speech by the Prime Minister in which she said:

  • the UK was determined not to be subject to rule by the EU Court of Justice

  • there would be a stronger union between the four UK nations with each of the devolved administrations contributing to the process of planning Brexit

  • there would be a smooth, orderly Brexit as she refused to allow things to drag on into a form of “political purgatory” with the UK remaining bound by EU rules for an unlimited period

  • broad agreement about the terms of a new partnership with the EU should be in place by the end of the two-year negotiation period.

On the last point, Mrs May has proved to be correct, although it has taken her three Brexit Secretaries to get to the point where a 585-page agreement about the “divorce arrangements” is on the table (available at www.republica.com), together with a 20-page political statement about the terms of a new partnership (which can be found here).

To lose one Brexit Secretary is unfortunate

In the face of ministerial resignations, the Prime Minister told Parliament that “the British people want us to get this done” and urged MPs to back the draft agreement agreed with Brussels. This is aimed at ensuring a smooth break-up in March 2019 and providing a transition period to adjust to the changes. Unfortunately for Mrs May, having seemingly brought her Cabinet on board with the deal, one of the resignations was her Brexit Secretary — Dominic Raab — who had, in theory at least, been in charge of completing the Brexit negotiations. In his resignation letter, Mr Raab described “fatal flaws” in the agreement. “The first is that the terms being offered by the EU threaten the integrity of the UK,” he said, “and the second is that they would lead to an indefinite if not permanent situation where we’re locked into a regime with no say over the rules being applied, with no exit mechanism.”

Business backs the Brexit plan

The Prime Minister generally received the support of UK business groups with most relieved to see something that offered some certainty after months of conflicting promises and contradictory arguments. In a survey of 800 of its members, the Institute of Directors (IoD) found three-quarters saying that it was important that a withdrawal agreement is ratified before the UK leaves the EU, allowing for a transition period after March 2019. EEF, the manufacturers’ organisation, also welcomed the withdrawal agreement believing it safeguards the key outcomes that will enable manufacturers to plan for the future with a greater degree of certainty. CEO Stephen Phipson said: “There is a clear sense of alignment with the EU of standards and regulation which is essential for businesses to continue to operate efficiently and it delivers frictionless trade through a Customs Union.” Peter Ward, CEO of the UK Warehousing Association (UKWA), went further and called on his members to contact their MPs to voice support for the Brexit deal.

As it is, Mr Phipson, Mr Martin and Mr Ward do not have votes in Parliament where the fate of the Prime Minister’s deal will be decided. With the European Research Group (ERG) firmly against the deal, the DUP (on whom Mrs May has been relying for a parliamentary majority) crying betrayal and the Labour Party and SNP also set on voting against her agreement, it is hard to see where the deal goes from here. When the Prime Minister first presented it, she said what was on offer was the choice between her deal, no deal or not leaving the EU at all: it remains to be seen which way Parliament decides to jump.

Business leaders to advise on impact of Brexit

All of this is at least bringing business representatives into the debate with bosses from some of the UK’s major companies having agreed to advise the Prime Minister on how to create the best business environment after Brexit. Five new Business Councils will represent the interests of what are described as core sectors of the economy. The five are:

  1. Telecommunications, Creative, Technology and Media Council

  2. Industrial, Infrastructure and Manufacturing Council

  3. Small Business, Scale ups and Entrepreneurs Council

  4. Services — Financial, Professional and Education Services Council

  5. Consumer, Retail and Life Sciences Council.

It is intended that each will meet twice a year with the Prime Minister and once with a senior Cabinet Minister to provide advice and policy recommendations on the critical issues affecting business. Downing Street has, however, stressed that the Councils will not have decision-making powers.

Commission intensifies its Brexit preparations

As Mrs May began the difficult task of selling the Brexit text to her Cabinet, the European Commission published its contingency action plan in the event of no deal. Available at ec.europa.eu , this outlines a limited number of contingency actions that could be implemented if no agreement is reached. These concern: residency and visa-related issues; financial services; air transport; customs; sanitary/phytosanitary rules; the transfer of personal data and climate policy. “Any contingency measures would only be taken in limited areas where they are necessary to protect the vital interests of the EU and where preparedness measures are not currently possible,” the Commission said. “They would be temporary in nature and limited in scope.” It defines “preparedness measures” as those it must implement to take account of Brexit while “contingency measures” cover the possibility of no deal.

The Commission proposes to grant UK citizens visa-free travel after Brexit. This would mean that UK citizens would not need a visa when travelling to the Schengen Area for stays of up to 90 days in any 180-day period. If the UK leaves the EU without a deal, this would apply as of 30 March 2019. If a deal is reached, however, it would apply from the end of the transition period, as outlined in the withdrawal agreement. This proposal is entirely conditional upon the UK also granting reciprocal and non-discriminatory visa-free travel for all EU Member States. See here for full details.

WTO tariff deal runs into problems

International Trade Secretary Liam Fox has seen his attempt to broker a post-Brexit tariff deal with members of the World Trade Organization (WTO) stopped in its tracks. Failure to reach a deal means that the UK could see itself out of the EU while still trying to negotiate terms with the WTO. Russia is said to be the leading critic among some 20 countries (including the USA, China, Australia and New Zealand) that have expressed concerns about the proposals. In October 2017, a joint letter from the UK and the EU to the WTO confirmed that the two parties had agreed that the quantitative commitments of the post-Brexit UK and remaining 27 EU Member States in the form of tariff-rate quotas should be met by apportioning the existing commitments of the 28-member Union. With opposition to the move now having been officially voiced, the UK faces the challenge of negotiating 20 or more bilateral deals on meat and dairy produce. Commenting on the news for the manufacturers’ organisation, EEF, Stephen Phipson described the Government’s hope — that agreeing a tariff schedule with the WTO would be simple — as naïve.

Majority of businesses have no Brexit plan

Adding to the general air of anxiety, it has been revealed that at least 50% of businesses have not yet made any Brexit plans. That is the finding of a new poll conducted by the Brexit Business Guide, which describes itself as a hub sharing practical tips from specialists to help UK business leaders prepare for Brexit.

And there is no clarity on Brexit in UK ports

British Ports Association (BPA) Chief Executive Richard Ballantyne said that there could be some way to go before ports and freight operators will know exactly what the trading environment will be. “The political situation being such as it is means that there are still several stages that the proposals will need to pass through,” he explained. That means, he added, that hauliers and freight operators using the UK’s network of roll-on, roll-off (ro-ro) ports such as Dover, Holyhead, Immingham and Portsmouth will continue to be unsure what the post-Brexit border processes will look like. In the view of the BPA, the potential for new time-consuming and costly processes remains a daunting prospect.

On we go

So the deal that seemingly has no friends — even Dominic Raab, who was supposedly in charge of it, has said that it would be worse than just staying in the EU — now has to somehow attract a majority in Parliament. Theresa May has said that it is the best deal available: Commission President Jean-Claude Juncker has said that it is the only deal on offer. As a writer in The Guardian recently noted, “by the time you read this, everything could have changed, or it could all still be the same”.

Last reviewed 3 December 2018

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