Brexit Update 

Draft Withdrawal Agreement

On Wednesday 28 February 2018, the EU published its first draft of the Brexit withdrawal treaty. This is the Commission’s interpretation of what it believes, has so far been agreed with the UK. The document includes:

  • proposed terms of UK departure
  • citizens’ rights, both UK and EU citizens
  • ECJ to oversee the Withdrawal Agreement
  • Three options for the land border between the UK and the EU (Northern Ireland and Republic of Ireland). The draft includes the EU’s preferred option for the border issue, this is the UK Government’s least preferred option.
    • The EU proposes that Northern Ireland remain part of the “customs territory” of the EU to avoid a hard border, ensuring alignment between Northern Ireland and the Irish Republic (EU).

The draft withdrawal document has now been provided to UK Government for negotiation.

UK Government response:

  • May has said she will not sign any agreement
  • May met European Council President Donald Tusk at Downing Street on Thursday (1 March), and reiterated her opposition to the draft withdrawal agreement text on Northern Ireland.

Theresa May’s Trade Deal – five tests

On Friday, 2 March, Prime Minister Theresa May, set out her views of what she believes the UK-EU deal will look like and the Governments new approach to the negotiations (five-point test, below). Detailing what she described as ‘hard facts’, the PM said, both sides needed to accept that "neither side can have exactly what we want" but she was confident that an agreement can be found.

Key Statements and themes from the speech:

  • Government wants “the broadest and deepest possible agreement — covering more sectors and co-operating more fully” than any other trade agreement. This is significant for financial services.
  • “We do not want to go back to a hard border in Northern Ireland”. We have said no to any hard infrastructure. “But we can’t do it on our own, it is for all of us to work together”. “Just as it would be unacceptable to go back to a hard border… it would also be unacceptable to break up the United Kingdom’s own single market”. “I am not going to let anything” set back “the integrity of our Union” or the historic work we have achieved
  • We will not accept a Norway or Canada trade model and access to each other’s markets must be fair. "We are leaving the single market, life is going to be different,". Access to each other’s markets would be "less than it is now,"
  • The deal on access to each other's markets had to be on fair terms - with the need for "binding commitments". She said the UK wanted the freedom to negotiate trade deals, control of laws and "as frictionless a border as possible" with the EU but said any disputes about the future relationship could not be ruled on by "the court of either party".
  • The UK will not embark in a “race to the bottom on standards” and we will be a “champion of free trade.”
  • The "jurisdiction of the European Court of Justice in the UK must end" but we may look to the ECJ for guidance on cases and where we are still part of EU programmes, the ECJ will apply.
  • The UK will continue with the ICO and GDPR
  • No deal, is still better than a bad deal

The five tests that the UK Government will be using through the remaining Brexit negotiations and to assess the Brexit deal are:

  1. Implement the decision of the British people [, the referendum result].
  2. Reach an enduring solution
  3. Protect our security and prosperity
  4. Deliver an outcome that is consistent with the kind of country we want to be
  5. Bring our country together and strengthen the precious union of all our people

Northern Ireland and Irish Republic Trade

  • Recognition from the Prime Minister that her plan to maintain a soft border on the island of Ireland, would mean that the UK could not undercut the EU on the regulation of goods.
  • 'To avoid a hard border, we also need an agreement on customs' NOT the customs union 'that would not be compatible with a meaningful trade policy'

Conclusion

The NFDA continues to support free and frictionless trade and freedom of movement of labour with the EU. The announcement that the Government wants ‘broadest and deepest possible agreement’ indicates that the Government negotiating position also supports a trade agreement that would allow the easiest possible movement of goods, services and people.  The Government has also indicated they want a fair agreement that does not put the UK at a disadvantage.