Dissecting the ‘Deal’
15 November 2018
SUGGESTED
Labour Market
Brexit
IEA's International Trade and Competition Unit releases briefing on the Backstop
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Julian Jessop analyses the proposed Withdrawal Agreement
Summary
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- UK and EU officials have agreed the text of a draft Withdrawal Agreement and an outline of a ‘political declaration’ on the future UK-EU relationship.
- The transition period anticipated in the Withdrawal Agreement will effectively keep the UK in the Customs Union and the Single Market until the end of 2020, with all ‘four freedoms’ including movement of people, and continued jurisdiction of the ECJ.
- The UK asked for this period, which should provide more than enough time to negotiate and implement a proper Free Trade Agreement. Nonetheless, any ambition to ‘take back control’ would be on hold for nearly two more years.
- The UK will be free to ‘negotiate, sign and ratify’ new trade deals during the transition. But the UK will not be able to implement these deals without EU approval, even if it is practical to do so.
- The financial settlement honours commitments already made during the UK’s membership, but there is still a case for attaching conditions.
- An offer to pay up to £20bn would at least ensure that the rest of the EU would not be out of pocket during the transition period, and cover the UK contribution to pensions. The remainder could then follow the conclusion of a comprehensive Free Trade Agreement (FTA).
- The biggest sticking point is the Irish backstop. This is only supposed to be a temporary solution if an FTA cannot be ratified in time, but the UK would remain tied to customs union and have to commit to continued regulatory alignment too.
- Most importantly, Northern Ireland would be treated differently from the rest of the UK during this time. Many EU laws would continue to have direct effect there, and there would be new checks on goods moving from the rest of the UK.
- In sum, the proposed deal could make it harder to realise the full benefits of Brexit, while threatening the integrity of the Union.
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