Boris Johnson's Government have negotiated a new 'deal' with the European Union. It is formed of a Political Declaration and a Withdrawal Agreement. This paper focuses on the Withdrawal Agreement and how it compares to the one negotiated by Theresa May's Government in November 2018. The main differences are in the Protocol on Ireland/Northern Ireland or the 'backstop' as it is commonly known. It contains very different arrangements, the UK will no longer be in a single customs territory or union with the EU. The UK will no longer be legally bound to continue with level playing field commitments at the end of the transition period. Northern Ireland will still be in the UK's customs territory and VAT area, however, the region will align with the EU's rules in these areas. Northern Ireland will remain mostly aligned to the EU's regulations for goods. Four years after the end of the transition period Northern Ireland's democratic institutions will vote on whether they wish to continue the arrangements in the Protocol.Jump to full report >>
After a period of intense negotiation, the EU and UK have reached a new settlement formed of an updated Withdrawal Agreement (WA) and Political Declaration (PD). These were published on 17 October 2019.
This paper focuses on the new WA, and in particular what areas of the WA have changed.
Theresa May's Government finished negotiating a Withdrawal Agreement and an accompanying Political Declaration on the framework for the future relationship with the EU in November 2018. However, it was not able to obtain Parliamentary support for this package.
When Boris Johnson became Prime Minister in July 2019, he said that there would be no further delays to Brexit, and that the UK would leave on 31 October. His preference would be to leave with a deal, but only if this was on the basis of a renegotiated WA amending the provisions of the WA Protocol on Ireland/Northern Ireland, also known as the ‘backstop’, which the Prime Minister said had to be abolished.
The Government initially proposed changes that would keep Northern Ireland to be in the UK customs’ territory and out of the EU’s VAT area, and would enable Northern Ireland’s democratic institutions to consent to entering into the Protocol and continuing to adhere to it.
These were rejected by the EU. It reiterated its position that the border between Ireland and Northern Ireland should remain open, without infrastructure. It also expressed concern that the Government’s proposals would risk the integrity of the EU’s Single Market and its legal order.
If the UK is to leave the EU with an agreement on 31 October, the Withdrawal Agreement will need to be ratified by both the UK and the EU. Ratification by the UK requires approval of both the WA and PD by the House of Commons and the passage of legislation implementing the WA in UK law. Ratification by the EU requires approval of the WA in a Consent motion by the European Parliament, and final approval by the Council of the EU by a super-qualified majority.
Only two Articles in the main Withdrawal Agreement have changed from the November 2018 text, and the changes are minor.
This means that the rest of the Agreement remains the same. This covers the following areas:
The most significant over-arching difference between the October 2019 proposals and those set out in the November 2018 WA is that the previous ‘backstop’ maintained a much more complete and encompassing set of relations on trade in goods between the EU and the UK through an envisaged UK-EU customs territory (although this would not have prevented other barriers for economic relations as it did not cover trade in services, movement of people/workers, movement of capital, transport services etc).
The potential relationship under the previous ‘backstop’ also came with much more alignment with EU law and standards, and therefore potentially restricted the UK’s ability to diverge from such standards and pursue an independent trade policy should it wish to.
Under the revised October 2019 Protocol if the UK and EU are unable to conclude a new future relationship agreement by the end of the transition period, an open border will be maintained between Northern Ireland and Ireland.
However, in this scenario there would be a much steeper cliff edge for trade in goods between the rest of the UK and the EU. There would also be new trade barriers for goods moving from Great Britain into Northern Ireland. This because without a trade agreement the UK would revert to ‘WTO’ trading terms with the EU, as this Protocol does not include substantive arrangements for trade in goods between the EU and the UK, other than for Northern Ireland. The previous ‘backstop’ did, and that ‘backstop’ could not be exited without the agreement of both the EU and the UK.
That notwithstanding, the EU and UK are committed to reaching a future trade agreement, and the transition period can be extended for up to a further two years (if it is extended for two years it would end in December 2022).
The focus for the revised Protocol is much more firmly on gaining the greatest possible freedom for the UK to manage its economic relations, while still maintaining as far as possible an open border on the island of Ireland. It is less concerned with maintaining frictionless trade with the EU for the rest of the UK.
Other than the wider picture of a looser relationship between the UK and the EU post-transition, the most significant changes to the Protocol are in four main areas:
While the previous ‘backstop’ kept the UK in a customs union with the EU, the new WA sees the whole of the UK (including Northern Ireland) leave the EU Customs Union. In legal terms, Northern Ireland remains part of the UK customs territory. Northern Ireland will be included in UK free trade agreements.
In practice, however, Northern Ireland will apply many EU customs rules and there will effectively be a customs and regulatory border between Great Britain and Northern Ireland in the Irish Sea.
The new arrangements are permanent, provided consent is given. They are no longer a ‘backstop’ – i.e. an insurance policy which will only come in effect if other measures fail to keep the Irish border open.
Initially the Government proposed that Northern Ireland would be treated as part of the UK for VAT purposes, entirely outside the scope of EU VAT law. It is now anticipated that EU VAT rules for goods would apply in Northern Ireland to avoid the creation of a hard border, although the UK would continue to collect receipts from both VAT and excise duty. In addition, it is proposed that the VAT base and VAT rates in Northern Ireland could be amended, to be aligned with the VAT system in Ireland. This would maintain a level playing field.
The revised Protocol allows the Northern Ireland Assembly to provide “consent” for certain EU regulations continuing in Northern Ireland. The first vote would take place four years after the end of the transition period, and every four years thereafter if passed by a simple majority. If endorsed on a cross-community basis, then the period would be every eight years. If rejected, then the regulations will cease to apply after two years.
Annex 4 of the previous Protocol has now been removed. It contained references to EU laws and international conventions that would apply to the whole UK in what were called ‘level playing field’ commitments. The EU wanted these in the Protocol in order to limit the UK’s capacity to gain what it would see as an unfair advantage by lowering standards. This was of particular concern due to the UK’s close geographical proximity to the EU, but also because in the previous ‘backstop’ the UK would have been in a Single Customs Territory with the EU, meaning tariff free trade. The EU would therefore not have been able to use tariffs to compensate for any competitive advantage gained by the UK through lowering standards of regulation.
The level playing field provisions were in the areas of taxation, environmental protection, labour standards, state aid and competition. These have now been replaced by less specific and non-binding commitments in the Political Declaration to uphold such principles in any future trade agreement between the EU and the UK.
The ‘backstop’, however, may never have come into force, and the issue of what level playing field provisions, if any, would apply to the UK in the long-term, would also have been dealt with in the negotiations on the future relationship, as they will be now.
Provisions on areas like individual rights, the Common Travel Area, North-South cooperation, the Single Electricity Market, the governance arrangements, and safeguarding measures, remain the same as under the November 2018 Withdrawal Agreement Protocol.
For more information on the November 2018 Withdrawal Agreement see our briefing paper 'The UK's EU Withdrawal Agreement'.
For more information on the new Political Declaration see our briefing paper 'Revisions to the Political Declaration on the framework for future EU-UK relations'.
Commons Briefing papers CBP-8713
Authors: John Curtis; Antony Seely; David Torrance; Dominic Webb; Sarah Coe; Sylvia de Mars; Stefano Fella; Daniel Ferguson; Jonathan Finlay; Suzanna Hinson; Ilze Jozepa; Matthew Keep; Hannah Wilkins; Elena Ares; Graeme Cowie; Joanna Dawson; Sara Priestley; John Woodhouse; Sarah Barber
Topics: Agriculture, Agriculture and environment, Animals, Climate change, Common Agricultural Policy, Devolution, Economic policy, Energy, Environmental protection, EU budget, EU law and treaties, Europe, Farmers, Fisheries, Food, House of Commons, Human rights, Immigration, International law, International trade, Northern Ireland Assembly, Regulation, Standards, Taxation