The draft withdrawal agreement would severely curtail the advantages of leavingby Ruth Lea / November 21, 2018 / Leave a comment
Theresa May delivers a keynote speech at the annual CBI conference. Photo: Xinhua/Ray Tang The draft Brexit Withdrawal Agreement, all 585 pages of it, was released last week, alongside the outline of the political declaration for the “future relationship,” comprising just seven pages. The documents had a mixed reception, and no wonder, for the government does not seem to be pursuing a proper Brexit at all. The Withdrawal Agreement confirmed much of what we already knew. We are expected to make a considerable financial payment (estimated at £35-39bn) and there will be an implementation period after Brexit Day, during which it is planned that we will negotiate the future relationship. During this period, the UK will de facto remain a member of the EU, conforming to all the rules and regulations, even though de jure we will be a third country and no longer a member of the EU’s institutions. In addition, the Withdrawal Agreement fleshed out the Northern Ireland “backstop,” one of two options intended to become operative if the “future relationship” is not ready. The second option is an extension of the transition period. The proposals relating to the “backstop” are, in my view, draconian. Firstly, the UK and the EU will be in a “single customs territory,” in which the UK will align tariffs and rules to the EU’s. Secondly, there will be wide-ranging regulatory alignment to ensure a “level playing field,” relating to the EU’s state aid rules, competition policy, labour and social protection, and environmental protection. Thirdly, concerning Northern Ireland, there will be additional alignment conditions and checks on goods. And, finally, any termination of the “backstop” will be decided by the EU-UK Joint Committee. The British government could not unilaterally end the agreement. Putting aside the provocative proposals relating to Northern Ireland, it is quite clear that the UK, if ever subject to the “backstop,” would have little autonomy under the regime. Any notion of completing and operating trade deals with third countries would seem to be ruled out. Moreover, the freedom to modify a large swathe of regulations would be severely curtailed. The Brexit dividends of trade deals and regulatory reform would disappear. However, the “backstop” may never become operative. It could be that the “future relationship” may be ready by the end of the transition period, whether after 31st December 2020 or after any extension, and seamlessly becomes applicable. This is where the proposals relating to the future relationship become key. They are no less problematic. Granted the proposals include a free trade agreement (FTA), which should be helpful for our exporters, and even more so for the EU’s (the EU had a goods surplus of £95bn with the UK in 2017). But, and a big but, the FTA is combined with “deep regulatory and customs cooperation.” The customs arrangements are to be built on “the single customs territory provided for in the Withdrawal Agreement.” And provisions to ensure the maintenance of “open and fair competition” will be built on the aforementioned level playing field arrangements. These conditions of the “backstop” are, therefore, to be the basis for the future relationship. It is clear these “future relationship” proposals are quite incompatible with a clean Brexit: in other words, being unequivocally out of both the customs union and the single market. This is BRINO—“Brexit in name only.” I could never support it. Where do we go from here? Well the speculation is that the Commons will reject this “deal.” What happens then is quite unclear. But the chances of a Brexit under tried and trusted WTO rules becomes increasingly likely. There is no doubt in my mind, this is to be greatly preferred to the “deal” on the table. Of course, there must be administrative agreements to ensure planes fly and citizens’ rights are respected, but the British government and the Commission have already made some progress on this score. It is now incumbent on both of them to be ready for a “no deal” outcome. If not, they will have failed.