The_Week_UK_-_Issue_1251__02_November_2019_UserUpload.Net

Briefing NEWS 11

2November2019 THE WEEK

HowdoeshisdealdifferfromMay’s?
Notmuch,overall.Onlytwosections
havechangedfromtheearlieragreement
negotiatedbyTheresaMay.Therestof
thelegaldocumentisexactlythesame.If
passed,itwillguaranteethatUKcitizens
intheEU,andEUcitizensintheUK,will
retaintheirresidencyandsocialsecurity
rightsafterBrexit.Itmakesallsortsof
arrangementstoensureanorderlyexit,
includingatransitionperiodthatlasts
untilDecember 202 0–untilwhichtime
theUKwillcontinuetoapplyallEUlaw.
Itpreservesthesamefinancialsettlement:
Britain’sdivorcepaymentiscurrentlyset
ataround£33bn.Themostsubstantial
changescomeinthe“Protocolon
Ireland/NorthernIreland”,whereanew
compromisehasbeenreachedon“the
twoCs”: customsandconsent.

Which side compromised?
Both sides.TheEU said itwouldnever reopenthewithdrawal
agreement. Itdid, andit offered newconcessions –agreeingto
scrapthe controversialIrish“backstop” (the idea thatif satis-
factoryarrangementscouldnotbe madetodeliveraninvisible
border betweenNorthernIrelandand theRepublic, then the
wholeof the UKwould stay withinthe EUcustomsunion,
meaningthatitwould not beable tostrikeitsown trade deals–a
majorgoalforBrexiters).London,however,hasmadethemore
radicalconcessions.Johnson, like May,had previouslycategori-
callyrejectedanycustomsborderbetweenNorthernIrelandand
therestof the UK. Hehasnowacceptedthis asinevitable.

How will the new customs system work?
NorthernIrelandwilleffectivelyremaininsidetheEU’s customs
unionanditssingle market forgoods.Itsfarmersandcompanies
willfollow EUregulations,meaning milkormachinery willbe
abletocrosstheborderunhindered.At thesametime, itwill
legallyremaininsidethe UK customs territory,sothatit toocan
benefitfromnewtrade deals.ThepriceforthisisthatUK
customs officialswillcheck goods atBritishports beforethey
enter NorthernIreland. Goodswillbe abletopasswithout paying
tariffs ifdeemednot“at risk”of
entering the EUsinglemarket.If the
goodsare “atrisk”,thentariffswill
be paid, butclaimedbackif theyend
up in NorthernIreland. This will
protect theEUfrom havingcheap
foreign products–say,USchlorine-
washed chicken, or Chinese steel–
dumped onitsinternalmarket.

It sounds complicated. Is it?
Very.TheUKhas donewhat it can to
make it simple: forinstance,therewill
be no checks ongoodsenteringGreat
BritainfromNorthern Ireland. Butit
requiresacomplexsystemof custom
declarations forgoodscrossingthe
IrishSea theotherway, with “red”
or “green” channels, depending on
the type and destinationof goods.
Northern Ireland will remain subject
to swathesofEUlawwhichwon’t
applyinthe restof theUK, such as
manufacturingand labelling rules,
anditwillalsoremain insidethe EU’s

VATregime,sothatNorthernIrish

goodsdon’thaveanunfairadvantage

overthosefromtheRepublic.

HowwillBelfast“consent”tothis?

Thenewarrangementswilltakeeffect

immediatelyaftertheBrexittransition

periodendsinDecember 2020 .But

afterfouryears,theNorthernIreland

Assemblywillbegivenasay.Ifit

approvesthem,thetradingruleswill

applyforafurtherfouryears.The

decisionwouldbemadebysimple

majority:theRepublicofIrelanddid

notwanttheunionistside–effectively,

theDUP–tohaveaveto.Andifthe

arrangementswin“cross-community”

supportfrombothunionistsand

republicans,theywillapplyforafurther

eightyears.Butiftheyfailtowinevena

simplemajority,thenewruleswillextendforonlytwoyears–

duringwhichtimeanewsystem willhave tobe worked out.

Why does the DUP oppose the deal?

ThearrangementleavesNorthernIrelandstillwithafootin the

EU,whichiseconomicallyadvantageous,whilekeepingitinthe

UKcustomsterritory.Pollssuggestthataclearmajoritysupport it

inNorthernIreland, andcertainlypreferittoano-deal scenario.

However,itcutsacrosstheGoodFridayAgreement,whichwas

builton theprinciplethatamajority ofbothcommunitieswas

required totake majordecisions. And inthelongterm,if British

regulationsdivergeheavilyfromEUrules, then NorthernIreland

willeffectivelybe carvedoutofthe UK’seconomic zone,and will

become partof the EU’s.ThisiswhytheDUPentirelyrejectsit,

andwhymanyseeitasasteptowardsaunitedIreland.

What’s thesecondmajo rchange?

May’sdealcontained anAnnex4, whichcommittedthe UKto

“openandfaircompetition...toensurealevelplayingfield”.

Thiswas inserted bytheEU tolimittheUK’scapacity togain

what itseesasanunfair advantagebyloweringstandards in,for

instance, socialsecurity oremployment laws.Annex4hasnow

beenremovedfromthewithdrawalagreement, whichislegally

binding,andput in the“Political

Declaration” –theaccompanying

statement onthe futureEU-UK

relationship –whichisnotbinding.

Is the dealagood thing?

Thewithdrawalagreement is only

the end of the beginning: the future

dependsonthe shape oftheeventual

free tradedeal (see box).But this

dealwouldallow the UK torecover

itssovereigntyand pursue an

independenttradepolicy, which is

whymostBrexiters support it.And

it doesso in aform that Brussels finds

acceptable,becauseitavoidsahard

borderinIreland andpreserves the

integrity of the EU singlemarket. It

also hasthe advantage ofbeing a

workableplan that respectsthe

referendum result,unlikeanything

putforward by thepro-Remain

camp. The price for thatis that it

makessignificantchangestothe UK,

whichmaybecomepermanent.

Agood deal for the UK?

MPsremainbitterlydividedover BorisJohnson’swithdrawal agreement with the EU.Howwoulditwork?

Johnson and Jean-Claude Juncker: “frictionless”?

The deal to come

Even if this deal passes, we are nowhere near getting

Brexit “done”, as the Government slogan has it. The

plan is that, if it goes ahead, the UK and the EU will

work towards another agreement, on our future

trading arrangements.Ameeting to report on progress

is pencilled in for June 2020. The withdrawal

agreement doesn’t prejudge the eventual result, unlike

Theresa May’s, which was designed to pusha“close

economic partnership” and “frictionless” trade based

on close regulatory alignment. Instead, it makes

possibleamore distant relationship based on free

trade, similar to, say, Canada’s.

The basic calculus is the same as it has ever been. The

political declaration states that the new deal “must

ensure open and fair competition, encompassing

robust commitments to ensurealevel playing field”,

and that “the precise nature of commitments should

be commensurate with the scope and depth of the

future relationship and the economic connectedness of

the parties”. Johnson reportedly conceded this point

afterawarningfro mAngela Merkel. What it means is

that themore the UK goes its own way in departing

fro mEUstandards and regulations, the less likely it is

to getagood trade deal with the bloc on its doorstep.