Brexit negotiations: Can May’s Britain bounce back?

Visit of David Davis, British Secretary of State for Exiting the European Union, to the EC
Date: 19/03/2018. Location: Brussels – EC/Berlaymont. © European Union , 2018. Source: EC – Audiovisual Service. Photo: Mauro Bottaro.

It was last Monday when the EU and UK announced a transition agreement till the end of 2020 providing thus the opportunity for a smoother Brexit. However, there are still unsolved issues that need intensive discussions such as the border between Northern Ireland and Ireland.

The business world saw this accord positively as they will have the chance to continue enjoying the benefits of the without constraints access to the customs union and single market. Even if businesses are relieved to a certain extent by the current uncertainty, it is still quite foggy how the remaining obstacles will be surpassed.

It seems that the trade negotiations are going to be vital for the unlocking of the “white” part of the Draft Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community.

Transition agreement at a glance

The EU and UK have issued a 129 page draft agreement two days ago providing, among others, a 21-month transition period. There are parts in the agreement which have been agreed by both sides (green part), others where clarifications are required but the main policy objective has been agreed (yellow part) and others which are not agreed and are about to be under extensive negotiations (white part).

However, it is mentioned in the agreement that the transition period will be considered legally binding after its ratification. More specifically, it is stated in article 121 that: “There shall be a transition or implementation period, which shall start on the date of entry into force of this Agreement and end on 31 December 2020”. Negotiators hope though to reach an agreement before the end of the year.

The thorny issue which has not yet been agreed lies on the “hard border” between Northern Ireland and Ireland. It was mentioned by both Michel Barnier and David Davis that there is no intention of a “hard border”. Furthermore, it is stated in the draft text that “backstop” (Northern Ireland remains within the EU customs union) will be applied unless a solution is found which avoids “hard border”.

In detail, it is underlined in green under article 15 that: “Should a subsequent agreement between the Union and the United Kingdom which addresses the unique circumstances on the island of Ireland, avoids a hard border and protects the 1998 Agreement in all its dimensions, become applicable after the entry into force of the Withdrawal Agreement, this Protocol shall not apply or shall cease to apply, as the case may be, in whole or in part, from the date of application of such subsequent agreement and in accordance with that agreement”.

Business leaders calm down

The business world welcomed the announcement of this agreement characterizing it as a positive sign in a period of uncertainty for the UK. Adam Marshall, director general of the British Chambers of Commerce said in a statement: “While some companies would have liked to see copper-bottomed legal guarantees around the transition, the political agreement reached in Brussels is sufficient for most businesses to plan ahead with a greater degree of confidence”. What is more, Carolyn Fairbairn, director general of the Confederation of British Industry, mentioned that this is “a critical milestone and will provide many hundreds of businesses with the confidence to put their contingency planning on hold and keep investing in the UK”.

On the other hand, there were opinions which were not too optimistic. In particular, Mats Persson, head of international trade at the advisory firm EY, said: “businesses faced a decision: whether to put their faith in a political agreement — and assume the transition will take place, and stop contingency planning — or to trust in legal certainty, and take nothing for granted. I’d say a 50-50 split among businesses I speak to.”

Northern Ireland’s fishermen concerns

The Northern Ireland (NI) fishermen found the agreement disappointing as they were expecting the UK to take over control of the fishing waters after March 29, 2019. On the contrary, based on the draft accord and under article 125, the UK will be consulted on fish quotas during the transition period.

Harry Wick, head of the NI Fish Producers Organisation, stated on the issue that the UK government is jeopardizing the fishing companies. More specifically, Harry Wick said: “The government had thrown the fishing industry under the Brexit bus and that Northern Ireland fishing businesses could be under threat. The danger of signing us up to the Common Fisheries Policy for another few years, where we’ve no voice at the table and where we’re only consulted, then Europe can set policies that detrimentally affect the UK. This could push many of our fishing businesses to the wall.”

UK gives it all for what?

Theresa May has made too many concessions in this agreement to secure a transition period that could ease the uncertainty in the business world and allow UK to make new trade deals. Does the UK premier have something else in her mind and only seeks for  more time?

All in all, a lot of work remains to be done till the completion of the final agreement between the EU and UK as it is highly likely that the Northern Ireland border issue will oscillate both sides for a long time with potential solution not to be on the horizon.

The next round of negotiations is expected to continue after the EU leaders sign off on the agreement at the summit which will take place in Brussels on Thursday and Friday.

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