Despite the Prime Minister’s assurances that an agreement with the EU is ‘achievable’, the Brexit negotiations have hit a major bump in the road. Intense divisions at home and an inability to find a common ground with the EU negotiators over the so-called Northern Ireland backstop are threatening to push both sides to a ‘no-deal’ Brexit.
A ‘no-deal’ Brexit means that the UK’s departure from the EU on 29 March 2019 may be a chaotic process with parties acting unilaterally rather than on the basis of agreed principles and rules.
The opposite scenario – and very much Theresa May’s preferred outcome –is a Brexit based on the Withdrawal Agreement (WA) under Article 50, ensuring that the departure can be handled in an orderly fashion.
What is the Withdrawal Agreement?
The WA is an agreement between the UK and the EU which governs the process of terminating the UK’s membership of the European Union. It covers matters such as the rights of EU citizens living in the UK and UK citizens living in the EU, the financial settlement, and a transition period.
It is important to distinguish the WA, which deals with the process of ‘exiting’ the EU including past liabilities, from an agreement on the future relationship between the EU and the UK, which can take a number of forms, such as an association agreement, or a free trade agreement.
For example, while the WA would address rights of EU citizens already living in the UK, an agreement on a future relationship would govern how and under what circumstances EU citizens can enter and reside in the UK after Brexit (and vice versa).
The Withdrawal Agreement and Article 50
The Withdrawal Agreement is the culmination of the Article 50 process, which was introduced into the EU Treaties for the first time by the Lisbon Treaty in 2009, and which lays down the mechanism by which a member state can leave the EU.
The process can be divided into three stages. First, a country makes a decision to withdraw from the EU: the UK’s decision was based on the result of the 2016 referendum.
Second, a country notifies the EU of its decision to withdraw. The timing of notification is up to the departing member state, and in the case of the UK, the Prime Minister sent a notification of withdrawal to the President of the European Council on 29 March 2017, following the adoption by Westminster of the EU (Notification of Withdrawal) Act 2017. The moment of notification is important because it triggers the two-year deadline for a country to exit from the EU.
Third, the parties engage in negotiations for withdrawal arrangements. The first phase of those negotiations concluded with the adoption of a Joint Report in December 2017 – a political document that the EU then turned into a legal text as the draft Withdrawal Agreement.
On 19 March 2018 the UK and the EU published an updated Draft Withdrawal Agreement (DWA), with parts on which both parties had already agreed coloured green.
A joint statement from the negotiators of the EU and the UK published on 19 June 2018 committed both parties to reach an agreement as quickly as possible. This has, in fact, proved easier said than done.
Conclusion of the WA is complex and involves a number of actors. A WA, together with a Political Declaration (PD) outlining the contours of the contours of a future deal, has to be approved by the UK Parliament (via what has become known as the ‘meaningful vote’).
It will then have to be implemented into UK law through an Act of Parliament, currently referred to as the Withdrawal and Implementation Bill (WAIB).
It is by no means clear whether the government will get agreement on either or both of these votes, given the internal divisions among various political groups.
On the EU’s side, the Council (the body of the EU comprising the heads of state or government, or senior ministers, of each member state) will have to conclude the agreement with a ‘super qualified majority’ vote – that is at least 72 per cent of the members of the Council, representing at least 65 per cent of the population of the EU member states (excluding the UK). Consent from the European Parliament will also have to be secured. The European Court of Justice could be asked to determine whether the WA is compatible with EU law.
What is in the Draft Withdrawal Agreement?
The Draft Withdrawal Agreement covers the following matters:
- The rights of EU citizens resident in the UK and UK citizens resident in the EU at the end of the transition period (Part Two));
- ‘Separation provisions’ concerning, for example, goods placed on the market before the end of the transition period, the continued protection of intellectual property rights, ongoing police and judicial cooperation in criminal and civil matters, data protection, ongoing public procurement, issues with regard to the European Atomic Energy Treaty, cases which are ongoing at the Court of Justice, and the position of UK nationals who have worked for the EU institutions (Part Three)
- The provision for a transition period and the rules which apply during that period (Part Four)
- The settlement of financial liabilities (Part Five)
- The institutions which govern the agreement, such as the establishment of a new political body called the Joint Committee (Part Six)
- Protocols on Northern Ireland, dealing with the question of how to ensure a frictionless border between Northern Ireland and the Republic of Ireland, and the Sovereign Base areas in Cyprus.
What has been agreed so far?
A number of important issues have already been agreed between the EU and the UK, including the mechanism for calculating the UK’s budgetary liabilities.
Importantly for the UK, the parties have agreed on a so-called ‘transition period’ which will start on the day of entry into force of a WA and end on 31 December 2020.
The purpose of the transition period, still referred to by the UK government as an ‘implementation period’, is to allow both parties to adjust to the new status.
It has been agreed that the EU law will apply in the UK during the transition period, as it does at present, but the UK will not be allowed to participate in the EU institutions. The UK will also continue to be bound by the EU’s international agreements.
The effect of this is that, during the transition period the UK will continue to remain in the EU’s single market and customs union. Imports and exports of goods will thus not be subject to taxes and checks.
The UK will, however, be able to negotiate and sign free trade agreements with non-EU countries. UK citizens and EU citizens (i.e. nationals of EU member states) will also move freely between the EU and the UK until the end of the transition period. In other words, it is largely a status quo transition.
In relation to citizen’s rights after the transition period, both parties have agreed that citizens already in the UK will retain their rights (e.g. healthcare, benefits) after Brexit.
Citizens arriving before the end of the transition period will have a right to acquire permanent residence after five years stay in the UK (periods before and after the transition period are included in the calculation).
If acquired, they will be able to leave the UK for five years before they lose permanent residence. All EU citizens residing in the UK and UK nationals residing in the EU will have a right to equal treatment.
And what hasn’t: the Northern Ireland border
One of the EU’s negotiating principles is that nothing is agreed until everything is agreed. This effectively means that unless and until a WA is agreed between the parties in its entirety, there can be no agreement on withdrawal.
The most complicated outstanding issue is how to address the highly sensitive issue of the border between Northern Ireland and the Republic of Ireland. Following the Good Friday Agreement of 1998, which secured peace in Northern Ireland, there has been no physical border between the two, and so trade has been frictionless.
The Joint Report of December 2017 made clear that the EU and the UK had to respect the commitments provided in the Good Friday Agreement.
The UK hoped this could be achieved through the future trade agreement, and that technical solutions could be used to remove the need for border checks. However, the EU wants a cast iron, legally guaranteed ‘backstop’ in the WA ‘unless and until another solution is found’.
This backstop, found in the Northern Ireland Protocol to the DWA, provides for a ‘common regulatory area’ in which the ‘free movement of goods is ensured and North-South cooperation protected.’ This would effectively mean that Northern Ireland would remain, at a minimum, in the EU customs union and single market for goods.
The main point of disagreement between the EU and UK negotiators is the scope of application of a backstop.
The Prime Minister, relying on the language of the paragraph 49 of the Joint Report, calls for a UK-wide backstop, not just a Northern Ireland backstop, whereby ‘the UK will maintain full alignment with those rules of the Internal Market and the Customs Union which, now or in the future, support North-South cooperation, the all-island economy and the protection of the 1998 Agreement’.
The Prime Minister’s aim is therefore to avoid a separate status for Northern Ireland (and also effectively having a border down the Irish sea).
The EU, on the contrary, is insisting that a backstop option is for the Northern Ireland only, thereby placing Northern Ireland in a separate legal regime to the rest of Great Britain. This is unacceptable to many Conservative MPs, as well as the DUP MPs whose votes will be necessary for the WA to pass through the Westminster Parliament.
The clock is ticking to find a solution which satisfies not only the interests of the UK and the EU, but also unites highly divided UK political actors.
Given that there seems to be less and less hope of finding such middle ground, all parties are increasingly preparing for a no-deal Brexit.