On 14 November the UK and European Commission jointly published an updated version of the draft Withdrawal Agreement (WA) and outline Political Declaration (PD). These documents represent the agreements reached by the UK's and EU's negotiating teams.
Following the publication of the Withdrawal Agreement, the BCC has put together a FAQ on the agreement and the likely next steps in the process.
If you have any questions, or would like any further information, please get in touch.
The Withdrawal Agreement sets out the agreement for how the UK leaves the European Union and what the transition arrangements will be while a future relationship is negotiated and agreed. The Agreement concerns four things:
1. Protecting citizens’ rights both during and after the transition period (EU citizens in the UK and vice versa)
2. Ensuring the UK’s continued participation in the economic and legal institutions of the EU (Customs Union, Single Market, European Court of Justice etc.) during the transition period, but not the political processes (voting rights etc)
3. Financial settlement – what the UK will pay the EU on leaving and the mechanics of that
4. Protocols for maintaining the free movement of people and goods on the island of Ireland in all eventualities (the so-called ‘backstop’) and protocols on other territories e.g. Gibraltar and Cyprus.
A Withdrawal Agreement approved by the UK Government, the Governments of the EU27 and the UK and EU Parliaments would unlock the transition period of 21 months, through to December 2020. While this doesn’t give business long-term certainty, it would mean there would be no immediate change to trading conditions for businesses in most areas.
This will be the heads of terms for the future relationship and set the parameters for any post-withdrawal trade deal.
An agreed and mutually-approved Political Declaration would mark the end of the beginning, rather than the beginning of the end, when it comes to agreeing the UK’s future relationship with the EU. It would remove the immediate uncertainty over the terms of trade post-29 March 2019, but medium-term uncertainty will remain beyond December 2020, and further deadlines and cliff edges remain possible.
The transition period is the period of time between the Withdrawal Act coming into force, and the UK’s current relationship with the EU coming to an end.
Under the Agreement, a transition period comes into force when the UK leaves the EU on 29 March 2019 and will ensure that there are few changes to how trade operates until the end of the transition period in December 2020.
The transition period is timetabled to end in December 2020, at which point it is hoped that the future relationship between the UK and the EU will be finalised.
Article 3 of the Withdrawal Agreement (p308) allows for the UK to apply to extend the transition period past December 2020. Any extension would have to be applied for by July 2020. Whilst the amount of time that the transition period can be extended is not stated, the period can only be extended once. (p207)
The backstop is a backup plan to prevent a hard border between Northern Ireland and the Republic of Ireland, in the event of the transition period ending and no decision on the future relationship being reached.
The UK and the EU agreed a backstop is needed they also agreed on what it needs to achieve - maintaining cross-border cooperation, supporting the all-island Ireland economy and protecting the Good Friday peace agreement.
The backstop plan means that if there is not an outcome in trade talks by the end of the transition period, then the whole of the UK will remain in a customs union with the EU. Under the plan, Northern Ireland would remain even more closely aligned with the EU customs and VAT regimes and single market rules to guarantee no hard Irish border.
The backstop is based on maintaining full alignment with the rules of the EU's internal market and its customs union.
If the backstop came into force, EU customs rules will be extended across the whole of the UK for a temporary period. There would be a single customs territory between the UK and the EU in that time.
The backstop would also protect trade from the UK to the Republic – so-called east-west trade - as well as guaranteeing free trade from North to South.
The UK and Ireland are currently part of the EU single market and customs union, so products do not need to be inspected for customs and standards. At present, goods and services are traded between the two jurisdictions on the island of Ireland with few restrictions.
Article 6 states that the backstop, consisting of “a single customs territory between the Union and the United Kingdom”, will apply from the end of the transition period “unless and until ... a subsequent agreement becomes applicable”. (p311)
The backstop that would see the UK, as a whole, remaining aligned with the EU customs union for a period of time after 2020.
Article 20 of the Withdrawal Agreement (p329) states that for the backstop to end it would require the agreement of both the EU and the UK.
Should either party decide that the backstop is no longer needed, they must notify the other party explaining why. Within six months of notification, a five-member Joint Committee will decide if the conditions are sufficient for the backstop to no longer be needed.
The Joint Committee would consist of two members for the EU, two members from the UK and one member by "mutual agreement". (p329)
It says the UK and EU will use their "best endeavours" to agree a new deal which negates the need for the backstop arrangements - in whole or in part - by 31 December 2020 - the final day of the transition period.
The UK couldn't sign its own trade deals with other countries if it was in a "customs union" with the EU. The agreement states that whilst the UK can start to negotiate trade deals during the transition period, the UK cannot implement them without the EU’s permission. (p204)
Article 8 of the Agreement states that in the event of the backstop arrangement being put into place, goods from Northern Ireland would have to be labelled differently, either UK(NI) or United Kingdom (Northern Ireland). (p314)
The British Chambers of Commerce has produced a risk register looking at the real-world questions businesses face. Firms of every size and sector need clarity in order to take decisions, invest and prepare for the future. As HM Government negotiates our future partnership with the EU, the British Chambers of Commerce is assessing the progress on 24 business-critical issues. You can access the Risk Register here.
The British Chambers of Commerce has also produced a Business Brexit Checklist. The Checklist has been created to help businesses to consider the changes that Brexit may bring to firms, and to help businesses in planning for change, at both operational and board levels. You can access the Business Brexit Checklist here.