After a final straight line of negotiations that began on 14 October, negotiators from the European Union and the United Kingdom managed, on the morning of Thursday 17 October, to tie up a new agreement for the United Kingdom's orderly withdrawal from the EU. An agreement that the Twenty-Seven then endorsed in the evening (see other news).
This is actually a fourth draft agreement, following the agreement reached in November 2018 by the Twenty-Seven with Theresa May and the two subsequent draft interpretative declarations that had failed in the British Parliament. And it is Saturday 19 October that Westminster will again be asked to vote.
Brexit is “a test of patience”, said Michel Barnier, the EU chief negotiator, on Thursday. But according to him, it is a “fair and reasonable” agreement, which preserves the rights of European citizens living in the United Kingdom and those of British people living in the EU, which also preserves the rights of companies and which respects the United Kingdom's financial commitments until the end of 2020.
Commission President Jean-Claude Juncker, together with British Prime Minister Boris Johnson, also welcomed a “fair and reasonable” agreement, while M. Johnson referred to an “excellent agreement” and urged British MPs to finally “achieve” Brexit.
“I think it's a good deal”, commented Irish Leo Varadkar when he arrived in Brussels. “It allows the United Kingdom to leave the EU in an orderly manner, with a transition period that is really important for businesses and citizens in the EU and the United Kingdom. And it also creates a unique solution for Northern Ireland, recognising its unique history and geography”.
What does the agreement contain? The discussions in recent weeks have focused on Northern Ireland and in particular on the protocol on Northern Ireland.
European negotiators abandoned the backstop proposed in 2017 and 2018 in order to keep Northern Ireland in the Single Market and Customs Union and, in a second version, to keep the whole United Kingdom in a single Customs Union with the EU in order to avoid any return of border controls between the two Irelands.
To this end, Boris Johnson's government has therefore agreed that these customs controls should be carried out between Great Britain and Northern Ireland or at the point of entry into Northern Ireland, but under no circumstances on the island's territory and even less near the border with the Republic of Ireland.
Secondly, the British customs authorities will follow two sets of rules: apply the United Kingdom's rules and tariffs for any product from Great Britain or third countries not destined for the European market and apply the EU's rules and tariffs for any other product destined for the single market. It is the British authorities that would also collect the customs duties on behalf of the EU and transfer them to it.
How do we know that a product not destined for the single market will not end up entering it in one way or another? “There is a risk”, Michel Barnier acknowledged on Thursday morning, but this will require the expertise of competent officers. Specific criteria will be defined by a joint committee and each shipment will have to be carefully examined by the UK authorities according to its final destination, the negotiator explained.
For other necessary controls, such as plant health checks and compliance checks, for example on live animals, the United Kingdom has already promised to align its regulations with EU standards. The customs issue therefore had to be resolved.
Another step forward is the agreement on consent – or veto power – given to the Northern Ireland Assembly. It was agreed that the Stormont Assembly (when it is reinstated) will be able to decide on the fate of this new system, 4 years after its entry into force (i.e., after the end of the transition period after Brexit which should end, in theory, at the end of 2020).
A positive double majority vote would mean that these rules are renewed for 8 years, explained Michel Barnier. A positive simple majority vote would mean extending this system for another 4 years. This is a way to reassure the Irish Prime Minister, Leo Varadakar, who needed long-term security. If the vote is negative, there would then be an exit period from this new regime spread over 2 years.
VAT rules were the last sticking point. Negotiators have agreed that EU VAT rules will continue to apply in Northern Ireland, which will however remain part of the United Kingdom's VAT area, with the UK authorities remaining responsible for the application of VAT legislation, including the collection of VAT and the setting of VAT rates. The United Kingdom will retain the revenue generated by this tax.
VAT exemptions and reduced rates applied in Ireland may also be applied in Northern Ireland, in order to avoid distorting a level playing field on the island.
A guaranteed ‘level playing field’ after Brexit? The Twenty-Seven wanted to avoid social dumping and unfair competition from the United Kingdom that would undermine their environmental, tax or social standards. Both sides agreed to work towards a common set of rules to be followed.
The United Kingdom, on the other hand, has not moved and continues to demand only a free trade agreement.
“Any other option (such as joining the European Customs Union one day) has therefore been eliminated”, M. Barnier explained. But London will only have a free trade agreement in proportion to its commitments on this level playing field, he reminded the audience.
This future trade relationship should, in theory, target as many services and goods as possible, but the EU has already said in the past that financial services could not be part of it.
See revised Protocol on Ireland and Northern Ireland included in the Withdrawal Agreement: http://bit.ly/2VRB68v
See revised Political Declaration: http://bit.ly/2pqLpEm
See European Council (article 50) conclusions on Brexit: http://bit.ly/2qlrUNL (Original version in French by Solenn Paulic with editorial staff)