The draft Withdrawal Agreement is published
On 14 November 2018, following approval by the UK Cabinet, the UK Government and the European Union published the provisionally agreed text of the draft agreement on the terms of withdrawal of the UK from the EU.
The draft agreement, which runs to some 585 pages, is accompanied by a ‘Political Declaration’ as to the framework of a future trade deal between the UK and the EU. However, the latter provides only a very basic and high level outline of intent – for example, a comprehensive free trade arrangement for goods; “ambitious, comprehensive and balanced arrangements” on trade in services – and will be subject to considerable further negotiation.
As expected, the draft agreement provides for an implementation or transition period until 31 December 2020, during which time the status quo will prevail. Of note, Article 132 provides a mechanism for extending the transition period, although the end date has been left undefined in the draft. During such period, the UK would continue to contribute to the EU budget.
One of the most controversial aspects of the agreement was the so-called ‘backstop’, which we have addressed previously. This arises out of the stated desire to avoid a hard border between Ireland and Northern Ireland despite the UK’s indication that it will no longer be part of the Customs Union once it has left the EU. It is worth noting that the ‘backstop’ option is only intended to apply in the event that no other agreement is reached between the parties regarding future customs arrangements by the end of the transition period. The draft agreement provides that the parties will use their ‘best endeavours’ to achieve such an agreement.
In December 2017, the Government confirmed in the Joint Statement issued by the UK and EU that, in the absence of any other agreement between the EU and the UK, it 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 [Good Friday] Agreement.” However, the UK has rejected the notion that this could be achieved by a "common regulatory area" between Ireland and Northern Ireland as this would effectively create a customs border down the Irish Sea. Accordingly, in October 2018, the UK brought forward further proposals “to explore a UK-wide customs solution” to the backstop.
Under the terms of the draft agreement, the backstop will be in the form of a “single customs territory” between the UK and the EU, which would cover all goods except fisheries. However, the draft also provides for more extensive regulatory alignment with regard to Northern Ireland in order to maintain "full alignment with those rules of the [EU’s] 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 [Good Friday Agreement]”. In practice, and as has been acknowledged by the Commission, this is likely to mean additional checks at ports between Northern Ireland and the rest of the UK, for example compliance checks with EU standards – a point which remains highly contentious.
While the agreement would avoid a cliff-edge Brexit, it must still be approved by both the UK Parliament and the EU.
On the EU side, a qualified majority will be needed, i.e. the approval of 20 of the 27 Member States, as well as the approval of the European Parliament.
On the UK side, section 13 of the EU (Withdrawal) Act 2018 provides that if Parliament does not approve the deal, the Government must make a statement within 21 days setting out how it proposes to proceed in relation to the negotiation. If, by 21 January 2019, there is no agreement in substance or in principle, the Government must then lay statement to that effect, as well as setting out how it proposes to proceed.
As a result, it may be some time before we can be sure that a deal will indeed be achieved.
We will be providing further commentary on specific aspects of the draft deal and political declaration in subsequent posts.