Brexit Brief Newsletter

January 2019

This issue of the Brexit Brief gives a summary of the events of January 2019 including the so-called ‘meaningful vote’ on the Prime Minister’s Brexit deal and her subsequent commitment to seek ‘legally binding changes to the Withdrawal Agreement’.  We have information on a Government paper on Northern Ireland which includes details of roles for the Northern Ireland institutions in the backstop process; a summary of the ‘Malthouse Compromise’ on the backstop; details of the latest meeting of the Interparliamentary Forum on Brexit; and information on the progress of Brexit legislation amongst other things. 

 

PRIME MINISTER VISITS BELFAST AND BRUSSELS

Prime Minister Theresa May visited Northern Ireland on 5 and 6 February 2019.  She gave a speech saying "Northern Ireland does not have to rely on the Irish government or the EU to prevent a return to the borders of the past. The UK will not let that happen. I will not let that happen." 

The Prime Minister is due to return to Brussels on 7 February to meet with Commission President Jean-Claude Juncker and Council President Donald Tusk.

Mr Juncker and Mr Tusk will hold a meeting with Taoiseach Leo Varadkar on 6 February with Mr Varadkar due to visit Belfast on 8 February to meet with political parties.

 

NEW CABINET COMMITTEE ON NO DEAL PLANNING

On 7 January 2019, it was confirmed that the Prime Minister is setting up a new cabinet committee to deal with no-deal planning. The new ‘EU Exit and Trade (preparedness) sub-committee’ will be chaired by the Prime Minister and will take over Brexit planning responsibilities including contingency planning and engagement with the EU.  Its terms of reference are ‘To oversee and ensure effective delivery of plans for an orderly exit from the European Union’.

 

FINANCE (NO.3) BILL

An amendment tabled by Yvette Cooper MP to the Finance (No. 3) Bill was passed on 8 January 2019.  The amendment was to a clause of the Bill which concerns the Treasury’s ability to raise taxes in the event of a no-deal Brexit.  The amendment passed now means that that clause would only come into force if  - there was a Brexit deal; a decision to extend Article 50; or a vote in the House of Commons specifically approving a no-deal Brexit.  Twenty Tory MPs rebelled to back the amendment. It’s suggested that MPs may use a similar three option format in amendments to a range of other Bills in order to give a greater role to Parliament to avoid a no-deal Brexit.

 

GOVERNMENT PUBLISHES PAPER ON NORTHERN IRELAND AND THE BACKSTOP

On 9 January, the Government published ‘UK Government commitments to Northern Ireland and its integral place in the United Kingdom’.  The Government describes the paper as outlining ‘a package of measures to give Northern Ireland a strong voice and role in the backstop process. This includes a new Stormont lock to give Northern Ireland the power to reject new EU laws and regulation in the backstop.’ 

The paper sets out a number of commitments

  • Ensure a strong role for the Northern Ireland Assembly before Northern Ireland specific backstop provisions are given effect in domestic law;
  • Seek the agreement of the Northern Ireland Assembly if the UK Government were ever to consider agreeing to add new areas of law applying specifically to Northern Ireland to the Protocol;
  • Provide a guarantee that nothing in the Protocol will change the scope, functions or remit of the North-South Ministerial Council or the North-South Implementation Bodies, in particular, the current basis on which the discussions of these bodies observe the three stranded approach - or change any areas of North-South Cooperation without explicit agreement from the Northern Ireland Executive;
  • Set out a commitment to a role for the Northern Ireland Executive through the UK’s presence on the Joint Committee, Specialised Committee on the Northern Ireland Protocol and the Joint Consultative Working Group established by the Withdrawal Agreement where Northern Ireland-specific issues are to be discussed;
  • Provide a guarantee that the UK will ensure that all engagement and dialogue under the governance arrangements applying to the Withdrawal Agreement will be consistent with the well-established three stranded approach set out in the Belfast Agreement, with no change to the role of the UK or Irish Governments;
  • Outline measures to guarantee the integral place of Northern Ireland in the UK economy, guaranteeing the same unfettered access for Northern Ireland businesses to the rest of the UK;
  • Ensure there would be no divergence in practice between the rules in Great Britain and NI covered by the Protocol in any scenario in which the backstop took effect;
  • Work with a restored Northern Ireland Executive to deliver on the enhanced role for Stormont to support the Northern Ireland economy the backstop provides - with Government support to facilitate the Executive using its new powers to drive growth across Northern Ireland; and
  • Ensure that the voice of a restored Northern Ireland Executive, along with the other devolved administrations, is at the heart of our work in negotiations on our future relationship.

 

JEREMY CORBYN SPEAKS IN ADVANCE OF ‘MEANINGFUL VOTE’

Giving a speech in Wakefield on 10 January 2019, Labour leader Jeremy Corbyn said “Let there be no doubt. Theresa May’s deal is a bad deal for our country and Labour will vote against it next week in Parliament.

And remember, the only reason Parliament is having what has become known as the meaningful vote is because Labour secured that concession from the government.  I would like to pay tribute to Keir Starmer and his team for all their hard work throughout this process.

If the government cannot pass its most important legislation, then there must be a general election at the earliest opportunity. A government that cannot get its business through the House of Commons is no government at all. It has lost its mandate so must go to the country to seek another.

So I say to Theresa May: if you are so confident in your deal then call that election and let the people decide.

If not, Labour will table a motion of no confidence in the government at the moment we judge it to have the best chance of success.

Clearly, Labour does not have enough MPs in Parliament to win a confidence vote on its own. So members across the House should vote with us to break the deadlock.

On Labour’s Brexit plan he said “.... our alternative plan prioritises jobs growth and rights.

That is why we have called for a new customs union with a British say in future trade deals; a strong single market relationship; and a guarantee to keep pace with EU rights and standards.

Combined with the election of a radical Labour government our alternative plan will allow us to make the fundamental changes that are so badly needed in our country, while respecting those who voted both leave and remain.”

 

EXCHANGE OF LETTERS BETWEEN THE UK AND EU

On 14 January 2019, the Prime Minister initiated an exchange of letters between the UK and EU seeking to provide clarity and possibly reassurance that the provisions on the backstop in the Withdrawal Agreement are temporary and will likely be superseded by a trade deal.  This is part of her three stranded campaign to win support for her deal – proposing to give Parliament a bigger say over the future trade terms, set out how the agreement will operate in Northern Ireland and obtain more reassurances from the EU. 

In her letter to Commission President Juncker and Council President Tusk, the Prime Minister said:

"In order to reinforce this joint commitment to getting the future relationship settled energetically and quickly we should:

  • agree that exploratory talks focused on delivering it can begin as soon as the Withdrawal Agreement is signed, which could in turn be immediately after the UK Parliament has voted in favour of the deal;
  • recognise that these talks should cover all strands of the relationship in parallel, giving particular urgency to discussion of ideas, including the use of all available facilitative arrangements and technologies, for replacing the backstop with permanent arrangements that ensure its underlying objectives continue to be met. These ideas need not replicate the provisions of the Protocol in any respect, and the UK is ready to work ambitiously and creatively with the EU on this. I would welcome your mutual commitment in this regard;
  • confirm the legal connection between the Withdrawal Agreement and the Political Declaration, and making that link clear in the way we present the documents; and
  • agree that if we are in a situation where we have negotiated a new agreement, but the backstop risks coming into force because ratification is not complete, we in the UK will do what is necessary to apply the new agreement provisionally pending ratification, rather than default to the backstop, and we expect the Commission to make the appropriate recommendations in relation to the EU too. Such provisional application is, of course, normal in trade agreements."

In response, Presidents Juncker and Tusk said;

“As you know, we are not in a position to agree to anything that changes or is inconsistent with the Withdrawal Agreement…

On the 13 December, the European Council (Article 50) decided on a number of additional

assurances, in particular as regards its firm commitment to work speedily on a subsequent agreement that establishes by 31 December 2020 alternative arrangements, so that the backstop will not need to be triggered.

The European Council also said that, if the backstop were nevertheless to be triggered, it would only apply temporarily, unless and until it is superseded by a subsequent agreement that ensures that a hard border is avoided, and that the European Union, in such a case, would use its best endeavours to negotiate and conclude expeditiously a subsequent agreement that would replace the backstop, and would expect the same of the United Kingdom, so that the backstop would only be in place for as long as strictly necessary….

As for the link between the Withdrawal Agreement and the Political Declaration, to which you make reference in your letter, it can be made clear that these two documents, while being of a different nature, are part of the same negotiated package. In order to underline the close relationship between the two texts, they can be published side by side in the Official Journal….

The European Commission also shares your intentions for the future relationship to be in place as quickly as possible.

Given our joint commitment to using best endeavours to conclude before the end of 2020 a subsequent agreement, which supersedes the Protocol in whole or in part, the Commission is determined to give priority in our work programme to the discussion of proposals that might replace the backstop with alternative arrangements. In this context, facilitative arrangements and technologies will be considered. Any arrangements which supersede the Protocol are not required to replicate its provisions in any respect, provided that the underlying objectives continue to be met.

Should the parties need more time to negotiate the subsequent agreement, they could decide to extend the transition period, as foreseen in the Withdrawal Agreement. In that case, the Commission is committed to redouble its efforts and expects the same redoubled efforts from your negotiators, with the aim of concluding a subsequent agreement very rapidly. Were the backstop to enter into force in whole or in part, it is intended to apply only temporarily, unless and until it is superseded by a subsequent agreement.

Finally, in response to your concern about the timetable, we would like to make it clear that both of us will be prepared to sign the Withdrawal Agreement as soon as the meaningful vote has passed in the United Kingdom Parliament. This will allow preparations for the future partnership with the United Kingdom immediately thereafter to ensure that negotiations can start as soon as possible after the withdrawal of the United Kingdom from the European Union.”

 

PRIME MINISTER SPEAKS IN ADVANCE OF ‘MEANINGFUL VOTE’

Speaking in Stoke-on-Trent on 14 January 2019, the Prime Minister said  “What if we found ourselves in a situation where Parliament tried to take the UK out of the EU in opposition to a remain vote?

People’s faith in the democratic process and their politicians would suffer catastrophic harm.

We all have a duty to implement the result of the referendum.

Ever since I reached an agreement with the EU on a Withdrawal Agreement and declaration on our future relationship I have argued that the consequences of Parliament rejecting it would be grave uncertainty - potentially leading to one of two outcomes.

Either a ‘no deal’ Brexit, that would cause turbulence for our economy, create barriers to security cooperation and disrupt people’s daily lives.

Or the risk of no Brexit at all – for the first time in our history failing to implement the outcome of a statutory referendum and letting the British people down.

These alternatives both remain in play if the deal is rejected.

There are differing views on the threat that a no deal exit poses.

I have always believed that while we could ultimately make a success of no deal, it would cause significant disruption in the short term and it would be far better to leave with a good deal.

Others in the House of Commons take a different view and regard no deal as the ultimate threat to be avoided at all costs.

To those people I say this: the only ways to guarantee we do not leave without a deal are: to abandon Brexit, betraying the vote of the British people; or to leave with a deal, and the only deal on the table is the one MPs will vote on tomorrow night.”

Later that day, the Prime Minister made a statement to the House of Commons on leaving the EU including updating the House on the exchange of letters with EU leaders.

On 14 January the Attorney General Geoffrey Cox wrote to the Prime Minister regarding the Northern Ireland Protocol. This was in response to the letters exchanged between the Prime Minister and the Presidents of the European Commission and Council setting out assurances and clarifications with regard to the Northern Ireland backstop.

5. As you know, it is my opinion, based on the factors set out in my letter of 13 November 2018, reinforced by the joint response, that the balance of risks favours the conclusion that is unlikely that the EU will wish to rely on the implementation of the backstop provisions. It is therefore my judgement that the current draft Withdrawal Agreement now represents the only politically practicable and available means of securing our exit from the European Union.

 

COMMONS ‘MEANINGFUL VOTE’ ON THE PRIME MINISTER’S BREXIT DEAL

The vote on 15 January 2019 on the Prime Minister’s deal was rejected by MPs 432 to 202.  The motion was ‘That this House approves for the purposes of section 13(1)(b) of the European Union (Withdrawal) Act 2018, the negotiated withdrawal agreement laid before the House on Monday 26 November 2018 with the title ‘Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community’ and the framework for the future relationship laid before the House on Monday 26 November 2018 with the title ‘Political Declaration setting out the framework for the future relationship between the European Union and the United Kingdom’.

In voting on the Prime Minister’s motion, the Speaker selected four amendments.

  • Amendment a) in the name of Jeremy Corbyn. This amendment would have rejected the deal, set out some specific reasons for doing so, and disapproved of a no-deal outcome.
  • Amendment k) in the name of Ian Blackford.  This amendment would also have rejected the deal, set out the views of the Scottish and Welsh devolved legislatures, observed the legal implications of “revoking” Article 50 and called for an “extension” to Article 50 to avoid a no-deal outcome.
  • Amendment b) in the name of Sir Edward Leigh.  This amendment would not have rejected the deal but called on the Government to give “assurances” that the UK would “terminate” the Withdrawal Agreement if it became clear that the Northern Ireland backstop was going to become a permanent arrangement.
  • Amendment f) in the name of John Baron. It made the approval of the Prime Minister’s deal conditional upon changes to the negotiated Withdrawal Agreement text to enable the UK to leave the backstop unilaterally.

Jeremy Corbyn, Ian Blackford and Sir Edward Leigh did not move their amendments so only the amendment in the name of John Baron was put to a vote. It was defeated by 600 votes to 24.

As a result of the vote, the Government then had 21 days to: “make a statement setting out how Her Majesty’s Government proposes to proceed in relation to negotiations for the United Kingdom’s withdrawal from the EU under Article 50(2) of the Treaty on European Union.” The Prime Minister explained immediately after the vote that the Government would both make a statement and table a motion on or before Monday 21 January, bringing forward the statutory timetable. This then meant that a debate on next steps had to take place no later than 30 January (i.e. within 7 sitting days).

Labour leader Jeremy Corbyn immediately indicated that he had tabled a motion for vote of no confidence in the Government.  The vote took place on 16 January 2019 and was negatived 306 votes to 325.

 

EU REACTION TO THE OUTCOME OF THE ‘MEANINGFUL VOTE’

In a statement issued immediately following the result of the vote, European Commission President Jean-Claude Juncker said “The European Commission, and notably our Chief Negotiator Michel Barnier, has invested enormous time and effort to negotiate the Withdrawal Agreement. We have shown creativity and flexibility throughout. I, together with President Tusk, have demonstrated goodwill again by offering additional clarifications and reassurances in an exchange of letters with Prime Minister May earlier this week. 

The risk of a disorderly withdrawal of the United Kingdom has increased with this evening's vote. While we do not want this to happen, the European Commission will continue its contingency work to help ensure the EU is fully prepared.

I urge the United Kingdom to clarify its intentions as soon as possible.

Time is almost up.”

Speaking at the plenary session of the European Parliament on 16 January, First Vice President Frans Timmermans said “The vote last night in the House of Commons was crystal clear. The Withdrawal Agreement has been rejected. And now we will have to look for a way forward.

The Commission regrets the rejection of the Withdrawal Agreement, as the representative of the Council said, because we do believe this was the best possible outcome. In a situation where two parties were negotiating, looking after their own interest, the Commission negotiated – Michel Barnier did a remarkable job in negotiating on behalf on the 27 –, the British government negotiated on behalf of the United Kingdom – and we do believe that the outcome of that negotiation led to a Withdrawal Agreement which did as little harm as possible.

Nobody should be under any illusion: Brexit does harm. It does harm to the United Kingdom. It does harm to the European Union. And we are under an obligation as politicians to limit the harm to the absolute minimum possible. We do believe the Withdrawal Agreement delivered on that obligation.”

Chief Brexit Negotiator Michel Barnier said “Contrary to what was said over the past weeks and days, the deal that we reached with the British government – a deal of almost 600 pages – is a good deal. It is obviously the result of a compromise. It is the best possible compromise. And, once again, we worked on this objectively………………

When speaking of this future relationship – which is obviously more important for the future and for the future of our continent – I would like to recall that your Parliament and the European Council have always said that if the United Kingdom chooses to change its red lines, and to be more ambitious and go beyond a simple free trade deal in our future relationship, then the EU would be ready to immediately support this evolution and respond favourably. …..

An orderly Brexit remains our absolute priority over the coming weeks. However, as I speak, no scenario can be ruled out. This is particularly true of the scenario which we are trying to avoid: a no-deal scenario. It is 16 January today. We are only 10 weeks away from the end of March, the moment when the UK has chosen to become a third country.

And today, 10 weeks away, the risk of a no deal has never been so high.

Our resolution is to avoid such a scenario, but we also have a responsibility. That is why, on our side, we are intensifying our efforts on our side to deal with this scenario. We – the European Commission, all its services, the Secretariat-General of the Commission– began this work many months ago with the Member States and with you. This work will be accelerated with all partners, all stakeholders who may be called upon to adopt rapidly contingency measures to deal with the consequences of this scenario.

Our conviction is that this compromise that we have found with the British government remains the best compromise possible.”

 

COMMONS BREXIT COMMITTEE RESPONSE TO THE ‘MEANINGFUL VOTE’

The House of Commons Exiting the EU Committee published its response to the vote on the Withdrawal Agreement and Political Declaration on 16 January suggesting that MPs should be able to vote on four options for next steps:

  1. Hold another vote in Parliament on the draft Withdrawal Agreement and Framework for the Future Relationship.
  2. Leave the EU with no deal on 29 March 2019 with no agreement on future relations in place and with no transition / implementation period.
  3. Call on the Government to seek to re-negotiate the deal to achieve a specific outcome, be it a variation of the terms of the separation set out in the Withdrawal Agreement or providing greater clarity about the end state of future relations as set out in the Political Declaration.
  4. Parliament could decide to hold a second referendum.

The Committee concluded “It is vital that the House of Commons is now given the opportunity to identify an option that might secure a majority. We recommend that this is done by holding a series of indicative votes on the options we have set out above as soon as possible. In deciding how to proceed on 21 January, the House and the Government will need to identify not only where a majority might be found but also what decision-making process might allow for the reflection of the view of the House as a whole, including the possibility of free votes and how to enact any decision made.

The most important question to be considered by the House in generations cannot be determined simply by the running down of the clock. This would lead either to a default exit with no deal, or to the House being offered a Hobson’s choice of the deal currently on offer or no deal. If Parliament cannot reach a view in time, then the House should be able to express its opinion on extending Article 50.”

 

PRIME MINISTER STATEMENT TO THE COMMONS AND VOTE ON ‘NEXT STEPS’

Prime Minister May made a statement to the House of Commons on 21 January. 

A number of MPs laid amendments to the motion aimed at stopping the UK from leaving the EU without a deal and to seek a number of ‘indicative votes’ on the options.  

An amendment laid by Yvette Cooper MP would give time for a Bill – the European Union (Withdrawal) (No. 3) Bill - which states that if there is no Brexit deal in place by the end of February, the government must put a binding motion before the House to seek an extension to Article 50 until the end of 2019.   This Bill would supersede the Private Member’s Bill presented by Nick Boles MP on 15 January 2019 which required the Government to request an extension to the Article 50 Brexit process in certain circumstances. The Bill proposed by Yvette Cooper differed in that it did not provide a statutory role in the process for the House of Commons Liaison Committee.

Former attorney general Dominic Grieve laid an amendment which would allow a motion put forward by a minority of 300 MPs from a least five parties, including 10 Conservative MPs, to be debated as the first item in the Commons the following day.  This amendment would give Parliament power to hold a series of ‘indicative votes’ on Brexit options and point the way to which option could command a majority.

On 29 January, the House of Commons voted on the statement on what should happen next for Brexit.  The business motion allowed the Speaker to select an unlimited number of amendments.  The Speaker selected 7 amendments, 2 of which were agreed by the House – amendment (i) in the name of the Dame Caroline Spelman and (n) in the name of Sir Graham Brady.

  • Amendment i), at end, add

“andrejects the United Kingdom leaving the European Union without a Withdrawal Agreement and a Framework for the Future Relationship.”— (Dame Caroline Spelman.)

  • Amendment (n), at end, add

“and requires the Northern Ireland backstop to be replaced with alternative arrangements to avoid a hard border; supports leaving the European Union with a deal and would therefore support the Withdrawal Agreement subject to this change.”— (Sir Graham Brady.)

The House then voted on the motion as amended and resolved:

That this House, in accordance with the provisions of section 13(6)(a) and 13(11)(b)(i) and 13(13)(b) of the European Union (Withdrawal) Act 2018, has considered the Written Statement titled “Statement under Section 13(4) of the European Union (Withdrawal) Act 2018” and made on 21 January 2019, and the Written Statement titled “Statement under Section 13(11)(a) of the European Union (Withdrawal) Act 2018” and made on 24 January 2019, and rejects the United Kingdom leaving the European Union without a Withdrawal Agreement and a Framework for the Future Relationship, and requires the Northern Ireland backstop to be replaced with alternative arrangements to avoid a hard border; supports leaving the European Union with a deal and would therefore support the Withdrawal Agreement subject to this change.

It is worth noting that this motion as agreed is not binding on the Government and rather was tabled to fulfil the procedural requirements under Section 13 of the EU (Withdrawal) Act 2018

Responding to the outcome of the vote, the Prime Minister said “Tonight, a majority of hon. Members have said that they would support a deal with changes to the backstop combined with measures to address concerns over Parliament’s role in the negotiation of the future relationship and commitments on workers’ rights in law where need be. It is now clear that there is a route that can secure a substantial and sustainable majority in this House for leaving the EU with a deal. We will now take this mandate forward and seek to obtain legally binding changes to the withdrawal agreement that deal with concerns on the backstop while guaranteeing no return to a hard border between Northern Ireland and Ireland. My colleagues and I will talk to the EU about how we address the House’s views.”

In terms of next steps, the Prime Minister will table a motion for another debate on 14 February 2019 in the absence of a revised deal being brought back to the House.

“First of all, as I have said, we will bring a revised deal back to this House for a second meaningful vote as soon as we possibly can. While we will want the House to support that deal, if it did not, we would—just as before—table an amendable motion for debate the next day. Furthermore, if we have not brought a revised deal back to this House by Wednesday 13 February, we will make a statement and, again, table an amendable motion for debate the next day. So the House will have a further opportunity to revisit this question of leaving without a deal. Today, we can and must instead focus all our efforts on securing a good deal with the EU that enables us to leave in a smooth and orderly way on 29 March.”

With regards to a revised deal, the requirements under Section 13 of the EU (Withdrawal) Act will apply – i.e. the House of Commons must approve the deal in a ‘meaningful vote’; the House of Lords will hold a debate on the deal; and the EU Withdrawal Agreement Bill must be passed by both Houses in order to implement the deal.

 

REACTION TO THE PRIME MINISTER’S PROPOSAL FOR A REVISED DEAL

Prime Minister May held a phone call on 30 January 2019 with European Union President Donald Tusk. While there was no official readout of the call from the UK side, President Tusk subsequently tweeted:

Following the vote, the Irish Government released a statement saying “The EU position on the Withdrawal Agreement, including the backstop, is set out in the conclusions of the December meeting of the European Council. It has not changed.  

The Withdrawal Agreement is not open for re-negotiation.

The Agreement is a carefully negotiated compromise, which balances the UK position on customs and the single market with avoiding a hard border and protecting the integrity of the EU customs union and single market. “ 

The Taoiseach and the Prime Minister also spoke by telephone and agreed to stay in touch over the coming period.

On 30 January, European Commission President Jean-Claude Juncker and Chief Brexit Negotiator Michel Barnier addressed the European Parliament on the subject of the UK’s exit from the EU. 

President Juncker said “The Withdrawal Agreement and Political Declaration agreed by all 27 Leaders and the United Kingdom government is the result of that. The Withdrawal Agreement remains the best and only deal possible. …..

Sometimes, from time to time, I have the impression that some hope that the 26 other countries will abandon the backstop and so Ireland at the last minute. But this is not a game. And neither is it a simple bilateral issue. It goes to the heart of what being a member of the European Union means. Ireland's border is Europe's border – and it is our Union's priority…….

The concept of 'alternative arrangements' is not new. It was discussed in the negotiations. It is referred to in the Political Declaration. And in our letter to Prime Minister May, Donald Tusk and I committed to exploring it further as a matter of priority. But a concept is not a plan. It is not an operational solution. “

Mr Barnier said “For us, the Withdrawal Agreement is – and remains – the best and only way to ensure the UK's orderly withdrawal and to put in place, in an orderly manner, the sovereign decision of the majority of the British people to leave the European Union – which we respect.  I think that we can reach this objective, if each and every one of us is realistic and clear-headed, respectful and responsible.

The backstop is part and parcel of the Withdrawal Agreement and it will not be renegotiated…the Irish border will become – as was the UK's decision – the European Union and Single Market's border.  It will be our new external border. What is in play here is the protection of all EU consumers and businesses.

The UK's decision to leave the Union, the Single Market and the Customs Union has a practical consequence: every product that enters Northern Ireland from Great Britain enters not only Northern Ireland and Ireland, but also the Single Market, in your countries. Safety requires fiscal, sanitary, veterinary, regulatory controls. We do this at each of our external borders, everywhere in the European Union. We owe this protection to consumers and to all those who live in the Single Market.

……As the President said, we are, however, open to alternative arrangements, as discussed by the House of Commons yesterday. The Protocol on Ireland and the Political Declaration mention them. The letter by Presidents Tusk and Juncker made it a priority in the future negotiations. We are ready to work on them immediately after the signature of the Withdrawal Agreement.

But nobody today – on either side – is able to clarify precisely what these alternative arrangements are operationally and how they would effectively achieve the objectives of the backstop. That is why, at this current moment and given the Withdrawal Agreement, we need the backstop as it is.

On this point, and beyond the question of alternative arrangements which I have just spoken about, the European Council, just like the European Parliament, have many times clearly rejected the idea of a time limit or a unilateral exit from the backstop because that would remove the meaning of the backstop, which is an insurance policy, something that we do not want to use, but that we need.

I would add, finally, that the Withdrawal Agreement goes beyond the Irish question:

It secures the rights of the 4.5 million citizens. …and whatever happens, citizens' rights will remain our priority. 

It protects all beneficiaries of the EU budget by ensuring that all commitments made at 28 will be financed at 28;

It puts in place a 21-month transition period during which businesses and administrations on both sides will have time to prepare for our future relationship and during which we will have time to negotiate our future relationship.

This agreement is necessary to build the trust that we need between the United Kingdom – which will remain an ally, friend, and partner – and the European Union.

On the future relationship, the EU is ready – and will remain ready over the coming days – to be more ambitious and to rework the nature and intensity of our future economic relationship, in particular.”

 

THE ‘MALTHOUSE COMPROMISE’

Following the vote in the Commons, a compromise plan has emerged which has the support of a number of Conservative Party Remain and Leave MPs.  The plan, dubbed the ‘Malthouse Compromise’ after Housing Minister Kit Malthouse pushed for both sides to enter talks, would involve a redrafting of the backstop and an extension of the transition period until 2021.  It’s understood that the plan is backed by European Research Group members Jacob Rees-Mogg and Steve Baker; Remain-backing ministers Stephen Hammond and Robert Buckland; Treasury Committee Chair and former Cabinet Minister Nicky Morgan; and Leave-backing minister Kit Malthouse, 

The redrafting of the backstop is based on ‘A Better Deal’ – a plan drafted by Steve Baker MP, a former minister in the Department for Exiting the EU.  The plan focuses on a number of options to deal with the border issues including the use of new technology, trusted trader schemes, automatic number plate recognition and the maximum facilitation (or ‘max fac’) model floated by the Cabinet last year.

With regard to an extension of the transition period, the Malthouse compromise suggests that if the backstop cannot be renegotiated as above, the Prime Minister would request that the EU27 honour the agreed Brexit transition period, extended for one year, in return for the UK honouring its agreed financial contributions and its commitments on EU citizens’ rights. This would give both sides time to prepare for a departure on WTO terms at the end of 2021 — or to negotiate a different deal.

The plan has not been officially published but the Conservative Home website published an ‘official explainer’ on 3 February 2019.

“The structure of the compromise is to offer the EU a choice of two plans: Plan A is predicated on achieving agreement on a Withdrawal Agreement (WA) that addresses the principal weakness of the current version, the perpetual character of the Irish backstop, and its consequences for the Future Relationship between the UK and the EU. Plan B assumes that agreement on a WA is not possible and that both sides accept a responsibility to act so as to minimize as far as possible the disruption that might arise to people and businesses in the EU and the UK.

Both Plan A and Plan B involve the UK’s ceasing to be a Member State of the EU according to the timetable set by Article 50 of the treaties, that is on 29th March 2019.

In order therefore –

Plan A – “The Deal”:

Essentially we would offer the existing WA with two changes:

First we would extend the implementation period until no later than December 2021. This would involve more money, but also provide a longer period to agree the Future Relationship (FR), with an immovable deadline to act as an incentive for talks.

Second, to address the backstop, we recognize the legitimate concern on both sides of the border on the island of Ireland about the effects of Brexit on the settled border arrangements, and the profound commitment of all parties to the Belfast Agreement. However, it is clear that the current formulation of the backstop is not acceptable to the Commons, and some of the suggested solutions to this problem essentially mean the backstop isn’t a backstop at all. We therefore propose a different basis for the backstop that is capable of being permanent. In essence the nature of the new backstop is a basic free trade agreement and a brief is attached at Appendix 1. It is important to note that the NI border arrangement requires no new technology and relies on existing administrative processes.

All else in the WA remains the same, including, very importantly a guarantee of EU and British citizens’ rights.

If this is not acceptable to the EU, or they require more time to consider it, we would propose our Plan B –

Plan B

Plan B essentially creates a transitional standstill period, at the end of which the UK would overnight become a third country in practice but during which we would have time to avoid disruption in a number of ways:

  1. We would keep plan A on offer for as long as the EU was willing to consider it,
  2. We would offer to pay our net contribution (c.£10bn pa) in exchange for the Implementation Period as negotiated, until no later than Dec 2021, as a standstill period,
  3. We would also offer legal text to support a GATT ArtXXIV “zero for zero” temporary arrangement for execution either at the start of the standstill in the event the negotiated implementation period could not be secured, or at the end of the standstill if the future relationship had not been concluded (more here).
  4. Both sides would prepare for WTO terms fully.
  5. We would create an opportunity to discuss our future relationship with the EU as it would apply from the end of the standstill period.

This transitional period would last until the end of December 2021, during which time we would pay our net EU budget contribution, and cover our other liabilities subject to arbitration (pensions etc.), and we would “stand still” on everything else – so we would remain a member of the customs union and single market, and the various other arrangements to do with security, aviation and so on. Again very importantly we would unilaterally guarantee EU citizens’ rights.

In essence this structure throws a safety net around “No Deal” diffusing the drama and mitigating the possible damage on both sides, with plenty of time allowed to agree a future relationship, which is the desired outcome for everyone. It also allows other non-EU countries to see that the UK has proposed something eminently reasonable which protects our supply chains.

If this structure of two deals is offered to the EU, we would expect it to receive serious consideration by those concerned to achieve a resolution that works for both the UK and EU. Plan A is reasonable and workable and addresses the legitimate concerns about the Irish border. Plan B provides a transitional period in which we can settle remaining differences without unnecessary economic damage or logistical difficulties, retaining optionality for all sides. In both cases there is no prejudging of the form of the FR. Maintenance of the Common Travel Area on the island of Ireland is also an important part of both plans.

The only other option is slamming the door, which would seem irrational and unfair given that the EU have pledged to use best endeavours to agree a smooth and civilized exit. On this basis, given the widespread support for this compromise, and the demonstrated majority for it, we would welcome the opportunity to develop it further with the Prime Minister such that it could be offered to our EU allies as a profoundly reasonable solution.

Appendix 1: The New Backstop

  • A revised Withdrawal Agreement (WA) which can be negotiated with the EU, thus avoiding No Deal and honouring the referendum result, whilst protecting the national interest.
  • Our proposed new backstop would guarantee departure from the Customs Union, Single Market and all EU rule-making for the entire UK.
  • It can be negotiated because it builds on the EU’s own offer (rather than asking them to compromise the single market) and the concept has already been positively received by the EU privately (they will not publicly back it whilst a permanent customs union is on the table).
  • It retains the vast majority of the draft WA but crucially removes the four poison pills that have prevented the draft WA from finding widespread support in Parliament and the country at large.
  • One of the reasons that Parliament is hostile to the Prime Minister’s current proposal is that it would place the UK in a “single customs territory” by virtue of the backstop, giving the EU no incentive to make concessions in future trade negotiations (thereby putting UK interests such as fishing at great risk). It should be noted that any single customs territory that is not the full Customs Union will require checks and customs certificates, such as Turkey is required to use.
  • This alternative WA proposes a new Free Trade Agreement (FTA) with zero tariffs and no quantitative import restrictions, and a Customs and Trade Facilitation Chapter that will deploy advanced customs and trade facilitation measures which include specific solutions for the Irish border, so the leverage would be the same on both sides. It also addresses the non-regression clauses so as to make them two-way and of the language that would be used in any trade agreement, allowing any potential end state arrangement.
  • The new backstop does not imperil the Union as it represents a permanent solution to the Northern Ireland / Ireland border making it both a backstop and a front stop. It does not require any differences between NI and GB beyond those that exist today.
  • The new backstop will include a Free Trade Agreement in Goods, a Customs and Trade Facilitation Chapter, as well as: commitment by all parties not to place infrastructure on the Northern Ireland border; the UK adopting EU rules of origin; regulatory recognition such as in sanitary and phytosanitary (SPS) measures; in facility and inland clearance; and level playing field provisions on areas such as labour – in other words normal practice in FTAs.
  • This reformed WA is likely to command a majority in the House of Commons – it is already supported by both leave-backing and remain-backing MPs and, crucially, the DUP.”

 

‘ALTERNATIVE ARRANGEMENTS’ TO THE BACKSTOP

On 4 February 2019, the Alternative Arrangements Working Group, with Leave and Remain MPs met for the first time.  The Group was set up following Commons’ support for the so-called ‘Malthouse Compromise’.  Members of the working group include Steve Baker, Marcus Fysh, Owen Paterson, Damian Green and Nicky Morgan.  The group will hold regular meetings with Brexit Secretary Stephen Barclay, as well as senior government officials from HMRC, Cabinet Office Europe Unit and Number 10.

Following the group’s first meeting, Steve Baker MP, deputy chairman of the European Research Group said “We had a constructive meeting on the detail…. It was the beginning of a process and I look forward to further meetings.” 

Attorney General Geoffrey Cox - the government's most senior lawyer - is examining the legal changes to the backstop that could be requested – for example whether there can be an exit mechanism or a time limit.

 

INTERPARLIAMENTARY FORUM ON BREXIT

The sixth meeting of Interparliamentary Forum on Brexit was held on 17 January 2019 in the House of Lords.  The Forum comprises attendees representing committees scrutinising different aspects of Brexit from the House of Lords, House of Commons, Scottish Parliament and National Assembly for Wales.  Officials from the Northern Ireland Assembly attended as observers. 

The Forum has been in correspondence with Chancellor of the Duchy of Lancaster, Rt. Hon David Lidington MP, to draw his attention, in the context of the Government’s review of the Joint Ministerial Committee (JMC) structures and Memorandum of Understanding, to key recommendations made the various committees, and the shared belief that the current system of inter-Governmental relations is not fit for purpose and is in urgent need of substantial reform.

At the January 2019 meeting, the Forum met Chloe Smith MP, Minister for the Constitution within the Cabinet Office, who reported on the progress of the Government’s review of the JMC structures. In response to questions, she indicated that it was for the four parliaments to bring forward proposals for a future structure for interparliamentary dialogue and scrutiny of intergovernmental relations post-Brexit, and that if they did so, the Government would be supportive.

Members of the Forum also expressed concern over key issues, including the handling of areas of shared competence, the ambiguity of the Sewel Convention, and the mechanisms for intra-UK dispute resolution. The Forum issued a statement following its meeting.

The next meeting is due to be held in April 2019 at the Scottish Parliament in Edinburgh.

 

NEW MINISTERIAL APPOINTMENTS IN WELSH GOVERNMENT

Announcing his Cabinet and Ministerial appointments in December 2018, the new First Minister of Wales, Mark Drakeford has created a new portfolio in the Cabinet.  Eluned Morgan will be the Minister for International Relations and Welsh Language responsible for international trade promotion, Wales in Europe and maximising the potential of Wales’s overseas offices.

Jeremy Miles has been appointed Brexit Minister and will also take up the post of Counsel General. He will be responsible for representing the Welsh Government on both the Joint Ministerial Committee and the Ministerial Forum on EU Negotiations, as well as overseeing Brexit-related legislation.

Jane Hutt has been appointed as Deputy Minister to work directly for the First Minister on a range of responsibilities including constitutional affairs and inter-governmental relations.

On 8 January in plenary, FM Mark Drakeford confirmed that the Welsh Government will receive £31 million in consequential funding as a result of the additional staff that are being taken on across Whitehall to discharge Brexit-related activity.  He said “that will allow us to strengthen some of the support available to us as a Welsh Government as we do the work to bring legislation forward and put in place 'no deal' preparations.”

The Welsh Government has launched a new website ‘Preparing Wales’ which Brexit Minister Jeremy Miles describes as a single, comprehensive source of guidance for the people of Wales on the actions which the Welsh Government is taking to prepare for the significant impact of a no deal Brexit.  It sets out advice for citizens, organisations and sectors across Wales about the steps that need to be taken to prepare for this outcome.

 

MINISTERIAL FORUM (EU NEGOTIATIONS)

The seventh meeting of the Ministerial Forum (EU Negotiations), a sub-group of the Joint Ministerial Committee (EU Negotiations), was held in Cardiff on 31 January 2019.  The principal agenda items at the meeting were an update and discussion on the UK’s exit from the EU; a discussion on the Future Security Partnership including internal security covering law enforcement and criminal justice; and civil judicial cooperation in the context of the UK’s future relationship with the EU.

 

THE BACKSTOP AND THE BELFAST GOOD FRIDAY AGREEMENT

On 4 February 2019, Lord Trimble, former Northern Ireland First Minister, announced that he is exploring the possibility of initiating judicial review proceedings given his consideration that the Protocol on Ireland/Northern Ireland included in the Withdrawal Agreement breaches the terms of the Belfast Good Friday Agreement.  Lord Trimble wants the backstop to be removed and alternative arrangements put in place instead. 

Speaking to BBC Radio 4, Lord Trimble said that the Prime Minister’s deal "turns the Belfast Agreement on its head and does serious damage to it…. Both the British and Irish governments undertook to support the agreement and what they've done, both of them, is broken that promise."  Asked what the likelihood is of him launching the legal challenge was, Lord Trimble said: "If it reminds people to keep their promises, it'll be a good thing."

 

NO DEAL PLANNING

On 4 February 2019, the Government issued updated guidance on arrangements for importers or exporters, using roll on roll off ports or the Channel Tunnel to transport goods between the EU and the UK in the event that the UK leaves the EU without a deal.  The guidance states that “for a temporary period, HMRC will allow most goods moving from the listed roll on roll off locations to leave the UK port or train station before you’ve told us that the goods have arrived”. 

With reference to Northern Ireland, the guidance states “the actions set out in this guidance do not apply to importing or exporting goods between Northern Ireland-Ireland. We will write to you with information about this as soon as we can.”

 

IRISH GOVERNMENT PLANS FOR NO DEAL BREXIT

On 24 January 2019, the Irish Government published the general scheme of the Miscellaneous Provisions (Withdrawal of the United Kingdom from the European Union on 29 March 2019) Bill 2019 – legislative measures which will be required to be in place before 29 March 2019 in the event of a no deal Brexit.    The Bill is described as focusing on ‘broad themes of protecting the citizen, and supporting the economy, enterprise and jobs’.

On 29 January, the Irish Government gave an outline initial assessment of economic and fiscal impact of a no deal Brexit.  The assessment was prepared by the Irish Department of Finance as part of the Government’s contingency planning for a no deal Brexit. Key findings:

  • The results of this initial assessment show that by 2023 the economy would be of the order of 4¼ per cent smaller than the Budget 2019 forecasts, and of the order of 6 per cent lower than a no Brexit baseline;
  • It shows that a ‘no-deal’ Brexit would result in a substantial slowdown in GDP growth to 2.7 per cent in 2019 (from an estimated 4.2 per cent in Budget 2019) and under 1 per cent in 2020 (from 3.6 per cent) – reductions of 1½ per cent and 2¾ per cent respectively.
  • The phasing-in of the impact requires judgement.
  • The impact would be significant with employment growth slowing sharply and unemployment rising.  Tax revenue would be lower, and expenditure would rise.
  • By 2023, total employment would increase by around 178,000, but this would be some 55,000 below the Budget 2019 forecast.  Employment in 2020 would still be higher than this year – but by a smaller amount.
  • The general government balance would worsen from broad balance to a deficit of 0.2 per cent in 2019 and from a surplus of 0.3 per cent of GDP to a deficit of 0.5 per cent in 2020, with further worsening out to 2023.

 

BREXIT LEGISLATION AND PARLIAMENTARY TIME

Downing Street announced on 7 January 2019 that there were seven bills that have to be implemented in order to provide a smooth exit, including trade, agriculture, healthcare, financial services, fisheries and immigration, as well as legislation for the withdrawal agreement.

Speaking on BBC Radio 4 on 31 January 2019, Foreign Secretary Jeremy Hunt said that "If we ended up approving a deal in the days before the 29 March then we might need some extra time to pass critical legislation."  He said it was “difficult to know” the timeline.

Hours later, Leader of the House of Commons, Andrea Leadsom MP announced that the usual week long February recess for the Commons was being cancelled.   In response, Labour MP Valerie Vaz asked “The House has a lot of business to get through before exit day on 29 March. Other than the withdrawal agreement, six other essential Bills need to be got through: the Trade Bill, the Immigration and Social Security Co-ordination (EU Withdrawal) Bill, the Financial Services (Implementation of Legislation) Bill, the Agriculture Bill, the Fisheries Bill and the Healthcare (International Arrangements) Bill. Will the Leader of the House confirm that there will be substantial debates during those two weeks rather than general debates, which we are seeing next week?

…… The Leader of the House said in business questions on 17 January that she remained confident that all statutory instruments that needed to be brought forward would be in time for exit day. She will know that 600 SI are still to be tabled. Last week, 21 were laid, which was seven short of the Government’s average weekly target. On a scale of one to 10, how confident is she that the SIs will be properly debated by 29 March, given that multiple SIs are sometimes wrapped up in one package?”

In response, Mrs Leadsom said “The hon. Lady asked whether we have time for all our Brexit legislation by exit day. I can absolutely assure her that my day job is to make sure, on a daily basis, that both the primary legislation and the secondary legislation are progressing through the House. That is the case and will continue to be the case. I am confident that the legislation we need to have Royal Assent—or, in the case of secondary legislation, to be made—by the 29 March will be done. On secondary legislation for Brexit, over 360 EU exit SIs have been laid to date. We are making good progress. We are under pressure, but it is all very much under control and we do expect to achieve what we need to do by 29 March.”

 

BREXIT LEGISLATION

For the second time in three months, the Government has revised its estimate of the minimum number of Brexit statutory instruments (SIs) that will be required to prepare the statute book for exit day – this time to ‘fewer than 600’.

The Government has now laid 379 Brexit statutory instruments before Parliament. 63% of the revised anticipated total of 600 SIs have now been laid but 80% of the time available to lay the SIs before exit day has now elapsed.

Nearly three-quarters (276) of the Brexit SIs have been laid by just five government departments: The Department for the Environment (DEFRA), the Department for Business (BEIS), the Treasury (HMT), the Department for Transport (DfT), and HM Revenue and Customs (HMRC).

Assembly Research and Information Services has launched a tool to track Brexit related statutory instruments relevant to Northern Ireland.

The Government is introducing a suite of legislation to deal with Brexit.  A summary of the status of some of this legislation is below. A full list of Bills before Parliament is available here

Acts of Parliament (i.e. are now law)

  • EU (Withdrawal) Act 2018
  • Haulage Permits and Trailer Registration Act 2018
  • Nuclear Safeguards Act 2018
  • Sanctions and Anti-Money Laundering Act 2018Taxation (Cross-border Trade) Act 2018

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