The Johnson Brexit Deal: Three things to note

By Andrew Eaton and our Brexit Taskforce  - 25 October 2019

Following the vote in Parliament on Tuesday, 22 October 2019, against the Government's proposed timetable for passing the EU Withdrawal Agreement Bill, the UK Government has decided to put a pause on implementing the Brexit deal. 

As a result, Brexit looks set to be delayed beyond 31 October 2019, subject to the approval of an extension of the UK's EU membership beyond that date by the EU27 leaders in the coming days. However, Johnson remains committed to the deal he has negotiated with the EU and will seemingly continue to argue that it should provide the terms on which the UK leaves the EU in the near future. The most immediate question right now is whether Johnson wants to push for Brexit to happen before or after a General Election.

The Johnson deal is so far the only form of Brexit that the UK Parliament has positively voted for. As such, it is worth scrutinising what the implications of this deal would be. Here are three things to note about the Johnson deal.

The first thing to note is what it hasn't changed.

As has been widely reported, the recent negotiations since Johnson became Prime Minister have centred around amendments to the Protocol to the Withdrawal Agreement concerning Northern Ireland and to the (non-binding) Political Declaration on the future relationship.

The remainder of the Withdrawal Agreement remains as it was agreed by Theresa May's government. This means the provisions on the citizens' rights, the financial payment from the UK to the EU and the transitional arrangement are unchanged.

It's therefore worth reminding ourselves what happens under the transitional arrangements.

If the Withdrawal Agreement is ratified by the UK and European Parliaments and implemented in the UK by legislation, the UK would formally leave the EU at the agreed date and enter the transitional arrangements. Under these arrangements, the UK will remain bound by most EU law largely as if it were still a Member State of the EU, subject to two important changes:

  1. it will no longer participate in the institutions of the EU (no MEPs, no EU Commissioner for the UK, no attendance at EU Council meetings); and
  2. while the UK remains bound by any international agreements entered into by the EU with third countries, there will be no reciprocity without the consent of those third countries. This could prove problematic if any third country that is party to any such agreements refuses to recognise the UK as continuing to participate in such agreements.

The transitional period is due to end on 31 October 2020. However, there is an option under the Withdrawal Agreement for a single extension of precisely one or two years, if agreed unanimously in advance between the UK and the EU27 by 1 July 2020.

The present intention of the UK Government and the EU is to negotiate the long term future relationship during the transitional period. However, almost all qualified commentators consider it highly unlikely that this can be achieved within three years, let alone in the 14 months between 31 October 2019 and the default end of the transitional period. If Brexit doesn't happen by the 31 October 2019, there will be even less time. Nevertheless, Boris Johnson has repeatedly said that he would not be willing to extend the transitional period beyond 31 December 2020 (although certain MPs have suggested that they will try to amend the EU Withdrawal Agreement Bill so that it is Parliament who decides). If no extension to the transition or future relationship agreement has been agreed by 31 December 2020, the Northern Ireland Protocol would apply.

The second thing to note is what is in the new Northern Ireland Protocol, which has replaced Theresa May's Backstop.

Theresa May's Withdrawal Agreement was rejected three times by the House of Commons in part because the Northern Ireland backstop arrangements (the "Backstop") was considered unacceptable. The Backstop, in summary, provided for the UK essentially to remain within the EU Customs Union and aligned to a number of Single Market rules on goods until a new future relationship agreement was reached. The main issue MPs had with this was that the Backstop would persist unless and until such an agreement was reached without any way for the UK unilaterally to withdraw from the arrangements.

This version of the Backstop has now been replaced by what is described as a "Northern Ireland-only" backstop. As the name suggests, it applies only to Northern Ireland.

This means that, in the event that the transitional period ends with no agreement on the future relationship:

  • Northern Ireland would acquire a unique status whereby:
    • It would be part of the UK's customs territory – meaning it would be included in any free trade agreements that the UK will conclude with third countries, provided that those agreements do not prejudice the arrangements set out in the new Northern Ireland Protocol; but
    • it would also fully align its regulations with those of the EU Single Market and Customs Union to avoid regulatory and customs checks at the land border between the Republic of Ireland and Northern Ireland.
  • Meanwhile, the rest of the UK (i.e. Great Britain) would not be required to align with EU Single Market and Customs Union rules. This essentially amounts to a no deal Brexit having been baked into the Withdrawal Agreement for Great Britain at the end of the transitional period and it is the reason why there would be a Customs border down the Irish Sea in these circumstances.

Another key aspect of the new Northern Ireland protocol is the need for a renewal of democratic consent by the Northern Ireland assembly (by simple majority) after four years of the arrangement being in place (and every subsequent four years). This means that the new arrangements could not persist beyond this date against the will of the Northern Irish assembly. However, the alternative in these circumstances, referred to in the Northern Ireland Protocol as the "default position", (assuming there is no future relationship at that stage) is that Northern Ireland would revert to being only in the UK customs territory – i.e. it would exit the protocol on a "no-deal" basis and a hard border would be created between Northern Ireland and the Republic of Ireland.

The third thing to note is what is not covered by Withdrawal Agreement.

While the UK and the EU have agreed the Political Declaration, this is non-binding. Rather, it is a political sign-post concerning the parties' desired direction of travel in the future relationship negotiations; essentially a heads of terms as to the matters on which they will seek to agree new arrangements.

Not only does the text of the Political Declaration leave many important issues undecided at this stage, but it is also subject to change, particularly if the UK's negotiating priorities shift in the meantime, for example due to a change in government following a General Election.

The EU Withdrawal Agreement Bill also includes a clause which would require the UK's negotiating mandate to be approved by Parliament before negotiations can begin. If passed, this would provide a key moment for MPs to bind the Government in the negotiations on the future relationship to, for example, seek to agree alignment with certain Single Market rules or to enter into a new customs arrangement or Customs Union with the EU.

However, the key point at this stage is that everything is still up for grabs as regards the UK's future relationship with the EU. What will be different is that the UK and EU will be able to embark on real trade negotiations. With, on any view, a very short window of opportunity to agree a future relationship in unprecedented circumstances, it is vital the businesses engage vigorously and positively in that process. And not just with the UK government. Parliament will play a key role, as will the EU27 member states. Businesses have a unique ability to provide insights and strategic direction to all of those influencer and negotiators, and need to do so urgently. As we approach a likely general election in the UK, no-one should lose sight of the fact that the Brexit negotiations are, in truth, only just about to begin.

 

This is an update to our previous note of 18 October 2019 - The Johnson Brexit Deal: What it means and what happens next

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