Brexit Brief Newsletter

June 2019

This month’s issue of the Brexit Brief has plenty of news on the border and the backstop including a report on customs facilitation in a no-deal scenario; the new Government advisory groups on the backstop; and a report on alternative arrangements to the backstop.  We also have details of the views of the Welsh and Scottish Governments on Brexit; further information on mapping of areas of North/South cooperation and Brexit impacts; and updates on Brexit discussions at Westminster committees. 

 

CONSERVATIVE PARTY LEADERSHIP RACE

The initial list of 10 contenders for leadership of the Conservative Party has been narrowed down to two – Jeremy Hunt and Boris Johnson.  The initial list of 10 also included:

  • Michael Gove
  • Matt Hancock
  • Mark Harper
  • Sajid Javid
  • Andrea Leadsom
  • Esther McVey
  • Dominic Raab
  • Rory Stewart

160,000 Conservative party members will vote by post for the next leader with the result expected on 23 July.  Both Mr Hunt and Mr Johnson have said that they’ll attempt to renegotiate with the EU however are prepared to leave without a deal.

 

REPORT ON THE IRISH LAND BORDER – CUSTOMS FACILITATION IN A NO DEAL SCENARIO

The Department for the Economy published a report ‘The Irish land border - existing and potential customs facilitations in a no-deal scenario’ on 10 June 2019. 

The Department for the Economy commissioned research into customs facilitations that are available in a no-deal scenario as part of the Department’s no deal planning. The aim of the research is to identify the facilitations available to businesses trading across the land border in a no deal context, and to identify whether there is any assistance the Department or its arms-length-bodies can offer businesses in a no-deal scenario.

The report also provides a summary of UK Government’s options in a no deal context, including the use of exemptions and waivers under the World Trade Organization’s General Agreement on Tariffs and Trade (GATT). The report also summarises options that UK Government and the EU could jointly adopt in a no deal context.

The report is based on a no-deal scenario, i.e. there is no transitional agreement between the UK and EU and thus no arrangements to maintain an open border. As such, the report focusses on those customs facilitations that are currently available under EU legislation for businesses rather than on what facilitations could be possible with legislative change, as these would require political agreement.

The report cover note states:

“Overall the report is a sobering reflection of the limited room for manoeuvre for businesses and government in a no deal context. In particular, it confirms the Northern Ireland Civil Service’s concern about the impact of EU tariffs on food exports to Ireland, and the ability of micro- and small enterprises with no experience in customs procedures and operations to continue to export to Ireland.

Cross border trade is significant to the Northern Ireland economy. In 2017, over 90% of NI businesses that exported to the EU were trading across the land border. The total value of this trade was £3.9bn, which represented 38% of all exports and 18% of external sales (which include sales to GB). In 2016, imports from Ireland totalled £2.3bn which represented 34% of all imports and 11% of external purchases….”

 

NEW CHAIR OF THE HOUSE OF COMMONS NORTHERN IRELAND AFFAIRS COMMITTEE

Simon Hoare MP was elected as the new Chair of the Northern Ireland Affairs Committee on 12 June.  Mr Hoare, a Conservative Party MP for North Dorset, took up the Chair with immediate effect.  He said:

"I am thrilled to have been elected as Chair of the Northern Ireland Affairs Committee. The Committee has an important job to do at this crucial time for devolution in Northern Ireland, and I intend to ensure that the Committee continues to provide the essential scrutiny Northern Ireland’s people need."

 

WELSH GOVERNMENT CONFIRMS BACKING FOR SECOND REFERENDUM

Jeremy Miles AM, Counsel General and Brexit Minister provided an update on Brexit to the National Assembly for Wales on 4 June and confirmed that the Welsh Government is backing a second referendum.  He said:

“…as a Government, we will now campaign to remain in the EU. And to make that happen, Parliament should now show the courage to admit it is deadlocked and legislate for a referendum, with 'remain' on the ballot paper. We have been calling for months for the UK Government to make preparations in case a referendum should be necessary. Now Parliament must make sure that it happens.

Let me be completely clear: any deal will require a new mandate from the electorate, and leaving without a deal must require one also. And, of course, any referendum must include remaining in the EU as an option. We have always argued that holding a further referendum risks reinforcing divisions, but the European elections have shown that any belief that the country has come together is wholly illusory. And, of course, there is the chance that a second referendum might lead to the same result as the first. But we will campaign to remain, and we will work with those within this Chamber and outside who share that view.

In the meantime, we must continue our preparations for the possibility of leaving the EU without a deal at the end of October. Since the extension was agreed in April, we have been taking the opportunity to review the preparations that we made as the anticipated departure date neared in April. It is important that we take stock and think about how best to build on all the valuable work done across the public sector and beyond. It remains the case that it is not possible to mitigate fully the impacts of a 'no deal' exit on Wales, either in the short or in the long term. There is simply no measure that could fully counteract the effects of a lurch into trading under World Trade Organization rules. The imposition of tariffs and the potential for delays and blockages at ports because of customs checks are an inevitable consequence of leaving the European Union without a deal.

We continue to strike a balance to ensure we allocate resources on 'no deal' preparations appropriately and proportionately, whilst continuing to deliver other priorities and also to prepare to ensure that Wales’s interests are reflected in any future negotiations. But with the current parliamentary impasse, the lack of any consensus about a way forward, and the prospect of a hard Brexiteer leading the Conservative Party and the country, the threat of no deal remains very real, and so we must prepare for it….”

The National Assembly held a debate on a confirmatory referendum on 5 June. The motion was submitted by Plaid Cymru and stated ‘To propose that the National Assembly for Wales declares its unequivocal support for a confirmatory referendum on whatever terms proposed by any Prime Minister that the United Kingdom leaves the European Union, with remain on the ballot paper.’.  The motion was agreed with 36 votes for the motion, 16 votes against and 0 abstentions.

 

FM SPEECH ON ‘BREXIT AND BEYOND: WHERE NEXT FOR SCOTTISH-EU RELATIONS?’

Speaking at an event at the European Policy Centre in Brussels on 12 June on the theme of ‘Brexit and beyond: where next for Scottish-EU relations?’ Scotland’s First Minister Nicola Sturgeon said

“….increasingly, the likeliest way of avoiding a hard Brexit, or a no-deal Brexit, is for the UK to avoid Brexit altogether…………….

And that’s an option my party, the Government will support, particularly if that is the only alternative to crashing out in October or any time with no deal. But perhaps the likelier route to avoiding Brexit – particularly if we can persuade the Labour opposition in the House of Commons to endorse this unequivocally – is a second referendum.

That said there is no guarantee that there would be a majority in the UK as a whole for remaining in the EU in a second referendum. And of course there would only be time for that to happen if the EU can be persuaded to agree a further extension to the Article 50 process.

However, it would offer the opportunity for those of us who want to see the UK stay in the EU to make and to win that argument.

Because there’s not very much clear in the UK right now but I think one thing that is clear is that very few people voted for the current position of chaos. And of course the specific details of what Brexit involves weren’t really known in 2016, they are much better known and much better understood now.

So in these circumstances, checking whether people across the UK still want to go ahead with Brexit is the obvious – to my mind - democratic course of action. So that is what my Government will argue for and we will work with others to try to bring that about.”

 

LABOUR ATTEMPT TO FORCE A VOTE ON NO-DEAL BREXIT FAILS

On 12 June, an Opposition Day in the House of Commons (i.e. a day when the Labour Party rather than the Government can decide the topic for debate), the Labour Party held a debate asking the House to vote on whether it would like to have a further debate on 25 June on matters relating to Brexit.

If passed, it would have given opponents of a no-deal Brexit the chance to table legislation to prevent the UK from leaving the EU without an agreement on 31 October 2019.

The Liberal Democrats, Green Party and Scottish National Party voted in favour of the motion however, the proposal was defeated in the vote – 309 votes to 298.

 

NEW BODY TO MONITOR EU CITIZENS’ RIGHTS IN THE UK TO BE BASED IN SWANSEA

The new Independent Monitoring Authority (IMA) to monitor the rights of EU citizens if the UK leaves with a Brexit deal will be established in Swansea.

The Government pledged to establish the IMA as part of the agreement between the UK and EU to monitor the rights of the more than 3 million EU citizens who live in the UK.

Secretary of State for Wales Alun Cairns said that the new authority would comprise lawyers and legal experts who would ensure that the rights of EU citizens living in the UK were upheld.

"It is a highly specialised area of law," said Mr Cairns. "I can confirm that it is going to be based in Swansea. All parts of the UK were fighting for it." He added that the new body would be guaranteed for 30 years, and it would be set up as soon as the UK left the EU.

 

NO-DEAL' BREXIT: EUROPEAN COMMISSION TAKES STOCK OF PREPARATIONS

On 12 June, the European Commission published its fifth Brexit Preparedness Communication on the EU’s Brexit preparedness and contingency measures, particularly in light of the extension of the Article 50 period to 31 October 2019.  

In its press release accompanying the publication, the Commission stated:

“In light of the continued uncertainty in the United Kingdom regarding the ratification of the Withdrawal Agreement – as agreed with the UK government in November 2018 – and the overall domestic political situation, a ‘no-deal' scenario on 1 November 2019 very much remains a possible, although undesirable, outcome.

Since December 2017, the European Commission has been preparing for a ‘no-deal' scenario. To date, the Commission has tabled 19 legislative proposals, 18 of which have been adopted by the European Parliament and Council. Political agreement has been reached on the remaining proposal – the contingency Regulation on the EU budget for 2019 –, which is expected to be formally adopted later this month. The Commission has also adopted 63 non-legislative acts and published 93 preparedness notices. In light of the extension of the Article 50 period, the Commission has screened all these measures to ensure that they continue to meet their intended objectives. The Commission has concluded that there is no need to amend any measures on substance and that they remain fit for purpose. The Commission does not plan any new measures ahead of the new withdrawal date.

…. Today’s Communication provides details on the extensive preparations in the EU27 in areas such as citizens' residence and social security entitlements, customs and taxation, transport, fishing, financial services as well as medicinal products, medical devices and chemical substances.

A ‘no-deal' scenario

In a ‘no-deal' scenario, the UK will become a third country without any transitional arrangements. All EU primary and secondary law will cease to apply to the UK from that moment onwards. There will be no transition period, as provided for in the Withdrawal Agreement. This will obviously cause significant disruption for citizens and businesses and would have a serious negative economic impact, which would be proportionally much greater in the United Kingdom than in the EU27 Member States.

As outlined by President Juncker in the European Parliament on 3 April 2019, should a ‘no-deal' scenario occur, the UK would be expected to address three main separation issues as a precondition before the EU would consider embarking on discussions about the future relationship. These are:

(1)    protecting and upholding the rights of citizens who have used their right to free movement before Brexit,

(2)    honouring the financial obligations the UK has made as a Member State and

(3)    preserving the letter and spirit of the Good Friday Agreement and peace on the island of Ireland, as well as the integrity of the internal market.

The EU's ‘no-deal' preparedness and contingency work: continued vigilance in selected areas

Preparing for the UK's withdrawal is a joint effort by public administrations and economic operators. The Commission has held extensive technical discussions with the EU27 Member States both on general issues of preparedness and contingency work and on specific sectorial, legal and administrative preparedness issues. The Commission has also completed a tour of the capitals of the 27 EU Member States. The visits showed a high degree of preparation by Member States for all scenarios.”

 

BREXIT SECRETARY PRESSES FOR AGREEMENT ON CITIZENS’ RIGHTS

The Secretary of State for Exiting the EU Steve Barclay wrote for a second time to the EU on 17 June seeking a ‘joint UK-EU commitment to adopt Part II of the Withdrawal Agreement whatever the outcome of the negotiations’. 

Part II of the Agreement concerns protection of citizens’ rights.  The Withdrawal Agreement has previously been rejected by Parliament. 

The European Commission’s chief negotiator Michel Barnier responded on 18 June underlining that the Withdrawal Agreement is the only way to secure citizens’ rights:

The entry into force of the Withdrawal Agreement is the best way to safeguard the rights of citizens affected by the United Kingdom's withdrawal, both in the European Union and in the United Kingdom. There is no other way to achieve all the benefits that the Withdrawal Agreement provides.

This correspondence follows on from the EU’s previous rejection of the UK’s request in March 2019 to ring fence the provisions for citizens’ rights.

 

OVERVIEW OF NORTHERN IRELAND TRADE

On 19 June, the Northern Ireland Statistics and Research Agency (NISRA) published an overview of Northern Ireland Trade. The slides provide an analysis of Northern Ireland’s current trade with:

  • Great Britain (GB)
  • Ireland (IE)
  • The Rest of the European Union (REU)
  • The Rest of the World (RoW)

 

In 2017, Northern Ireland sales to GB accounted for 53% of total external sales and 17% of total sales.  Sales to Ireland were 38% of total exports, 18% of total external sales and 6% of total sales.

Businesses with less than 50 employees account for 27% of the value of NI external sales to GB and 47% of sales to Ireland

NISRA’s Broad Economy Sales and Exports Statistics estimate that during 2017:

  • Total sales were estimated to be worth £66.6 billion, a decrease of 1.7% (£1.1 billion).
  • External sales (sales to all markets outside NI) decreased by £2.4 billion (10.1%) to £21.4 billion, and accounted for almost a third (32.1%) of total sales.
  • Sales to GB decreased by 20.2% (£2.9 billion) to £11.3 billion.
  • Exports (sales outside the UK) increased by £467 million (4.8%) to £10.1 billion.
  • Exports to IE increased by £540 million (16.2%) to £3.9 billion.
  • Exports to the REU (excluding IE) decreased by £269 million (12.1%) to £2.0 billion.
  • Exports to the RoW increased by £195 million (4.8%) to £4.3 billion
  • NI sales to GB accounted for 53% of total external sales and 17% of total sales
  • NI sales to IE were 38% of total exports, 18% of total external sales and 6% of total sales
  • businesses with less than 50 employees account for 27% of the value of NI external sales to GB and 47% of sales to Ireland

 

DAVID LIDINGTON GIVES EVIDENCE TO THE LORDS EU COMMITTEE

On 19 June, Chancellor of the Duchy of Lancaster David Lidington gave evidence to the House of Lords EU Committee on his Brexit related responsibilities.

On the relationship between the UK and Irish governments, Mr Lidington said:

“There is no doubt that Brexit has put the bilateral relationship under strain. There are difficulties that have to be worked through in trying to effect the reconciliation that I referred to a moment ago. There is also no doubt that for people in Northern Ireland who think of themselves as Irish, there is a worry that it might become more difficult for them to be comfortable about being Irish within the United Kingdom jurisdiction if we are not in the EU and Ireland is.

Having said that, it is important that we put in place a set of mechanisms to ensure that there remain not just close but structured close bilateral relationships between London and Dublin post exit. Both the Taoiseach and the Tánaiste have come up with some very interesting creative proposals for formal structures—perhaps having an annual summit of the Taoiseach, the Prime Minister and a group of senior Ministers from either side. We could perhaps look at the early years of the Franco-German treaties and ask ourselves whether there are lessons there that we can learn about trying to have a strategic and structured bilateral relationship that will help to safeguard all the progress that we have made. People look back to 2012 and 2013, with the Queen’s visit to Ireland and the President’s return visit here, as particular high points. It is very important not just that this Government but their successor put a lot of effort into maintaining that relationship.

Those of us who are old enough to remember the Troubles, even if we were not living in Northern Ireland at the time, never want to see them come back. You can walk round the memorial garden at the PSNI headquarters and see the names recorded on the plaques of the police officers who lost their lives from the 1960s and through the 1970s and 1980s in particular but into the 1990s as well. The death toll was horrifying and the pain is still felt by victims on all sides today.

…………………. Having worked closely with the Prime Minister, I know of no one at a senior level in politics who cares more deeply about maintaining peace in Northern Ireland, the progress that has been made and the public assent for the union in Northern Ireland. Often it has been conversations with some of the more moderate nationalist community groups that have made the biggest impression on her.”

In relation to the sequencing of the UK-EU negotiations particularly with reference to discussions on the border in Ireland:  

“…the European institutions, the Commission in particular, misunderstood unionism. I do not think they got, or get, the importance of unionism as a felt identity by the greater number of people living in Northern Ireland, and the Commission grossly underestimated the way in which unionism is central to the Conservative Party’s conception of itself. I remember saying to counterparts in other European Governments and to the Commission and European parliamentarians about the version that was published in February 2018—the one that the Prime Minister said no British Government could ever sign up to—“Be in no doubt: that is something that I could not sign”. No one but the most pro-remain Minister in the British Government could ever put their name to it, because it flies against a fundamental principle of how we think about the United Kingdom, and it has a read-across beyond Northern Ireland to Scotland. “

On resolving the outstanding issues regarding the border:  

“I do not think there are easy panaceas; if those existed, they would have been found. However, I think that while alternative arrangements are derided, they should not be. There are things that could be done with technology, though we also need to acknowledge that the obstacles are real when it comes to things like phytosanitary checks on livestock, and that even if you have the best technology you still have to address the issue of the need for legal derogations from normal EU legal rules—for example, requiring all livestock and food products to be checked at the border—and you have to deal with enforcement. We know that there is a commitment on both sides not to have cameras or any other infrastructure on the border, and, frankly, they would be blown up or ripped out if anyone tried to install them, but there is the issue of the extent to which, even if you had a requirement to comply with rules and make declarations away from the border, you would get compliance from the nationalist side if they believed that in some sense it was adding to the importance of the border. So there are some pretty big political hurdles there.”

 

GOVERNMENT ESTABLISHES ADVISORY GROUPS ON THE BACKSTOP

The Government has established two of the three advisory groups to inform its negotiating position in relation to the backstop.  The Government pledged in March 2019 to establish a group of technical experts in trade and customs; a  business and trade union engagement group; and a parliamentary engagement group. The Government has made available £20 million of funding to support the development, testing or piloting of ideas, including those that emerge from these groups.

The Technical Alternative Arrangements Advisory Group was established to test ideas on alternatives to the backstop and its inaugural meeting was held on 20 June co-chaired by Brexit Secretary, Steve Barclay, and Financial Secretary to the Treasury, Jesse Norman.

Technical Alternative Arrangements Advisory Group Members:

  • Steve Elliott
  • Michael Bell
  • Mike Thompson
  • Dominique Willems
  • Allie Renison
  • Hans Maessen
  • Declan Billington
  • Ruth Corkin
  • Pablo Muñiz
  • Dr David Smith
  • Tim Mairs (representing PSNI)
  • Peter MacSwiney
  • Dr Katy Hayward
  • Dr Lorand Bartels
  • Dr Graham Gudgin

The Business and Trade Union Alternative Arrangements Advisory Group will ensure work on alternative arrangements to help replace the Northern Irish backstop by the end of 2020 is informed by the views of those trading within the island of Ireland and across the Irish Sea.  This group held its inaugural meeting on 26 June, chaired by co-chaired by Brexit minister Robin Walker and Business, Energy and Industrial Strategy minister Andrew Stephenson.

Business and Trade Union Alternative Arrangements Advisory Group members:

  • Aodhán Connolly, British Retail Consortium NI, Director
  • John McGrane, British Irish Chamber of Commerce, Director General
  • Dr Mike Johnston, Dairy Council for Northern Ireland, Chief Executive
  • Seamus Leheny, Freight Transport Association NI, Policy Manager
  • Angela McGowan, CBI NI, Director
  • Karen Marshall, BoW Leather, Managing Director
  • Aidan Gough, InterTradeIreland, Designated Officer and Director of Strategy and Policy
  • Conall Donnelly, Northern Ireland Meat Exporters Association, Executive Director
  • David Nicholl, NC Engineering, Director
  • Wilson Del Socorro, Diageo, Global Director of Public Affairs
  • Wesley Aston, Ulster Farmers’ Union, Chief Executive
  • Ian Hampton, Stena Line, Chief People, Communications and Sustainability Officer
  • Marcus Wachtmeister, BMW Group UK, Head of Government Affairs
  • Tom McGroder, Sensata Technologies (Schrader Electronics), Global Trade Compliance EU Regional Manager
  • Clare Guinness, Warrenpoint Harbour, Chief Executive
  • Owen Reidy, Irish Congress of Trade Unions, Assistant General Secretary
  • Dr Gerard O’Hare CBE, DL, Belfast Harbour, Board Member
  • Craig Jones, General Electric, Director of Government Relations

 

NEW DOCUMENTS ON NORTH-SOUTH COOPERATION PUBLISHED

On 20 June, the Committee on Exiting the European Union published:

The scoping document outlines 142 areas of joint North-South cooperation on the island of Ireland. For each area, the document:

  • Specifies the extent to which it is underpinned by the Good Friday Agreement, and; 
  • The extent to which each is underpinned by existing EU legal and policy frameworks.

The document was provided to the Committee following a disclosure from the Cabinet Office subsequent to a Freedom of Information request made by a member of the public.

Ahead of the publication, on 8 December 2017, of the Joint Report on progress during phase 1 of negotiations under Article 50 TEU on the UK’s orderly withdrawal from the EU, areas of North-South cooperation were the subject of a scoping exercise undertaken by the UK Government, Northern Ireland Civil Service, European Commission and Government of Ireland.

On 7 December 2018, the Department for Exiting the European Union published a “technical explanatory note on the North-South cooperation mapping exercise, including a list of areas of current North-South cooperation both formal and informal.”

On 21 June, the European Commission published a report that comprises short summary reports of the discussions held between UK/EU on North-South cooperation on the island of Ireland and a list of areas of North South cooperation.

Policy areas of cooperation discussed in the mapping exercise include:

  • North South Implementation Bodies
  • Agriculture
  • Environment
  • Transport
  • Health
  • Tourism
  • Education
  • Energy
  • Higher and further education
  • Telecommunications and broadcasting
  • Sport, arts and culture
  • Justice and security
  • Inland fisheries
  • Social Security/Social Welfare
  • Urban and Rural Development
  • Enterprise Development
  • Housing
  • Public Services
  • Local Councils
  • Fresh Start Agreement
  • Statistics

 

EUROPEAN COUNCIL MEETING

The European Council met 20-21 June.  The UK’s exit from the EU was not included on the agenda for the EU28 and therefore not included in the Council’s conclusions from the meeting.

Speaking in advance of the Council meeting, Taoiseach Leo Varadkar said:

"Negotiations can only happen between the UK and EU, we're not going to allow negotiations to move to an intergovernment level in any way…, the Withdrawal Agreement is not going to be reopened, but we're willing to consider amendments to the political declaration."

Asked about a further extension to Article 50, the Taoiseach said: "There is very much a strong view across the EU that there shouldn't be any more extensions. While I have endless patience some of my colleagues have lost patience, quite frankly, with the UK and there's enormous hostility to any extension."

There could be an extension for a general election or a second referendum, he said, but "what won't be entertained is an extension for further negotiations."

At the end of the Council meeting, the EU27 leaders met without Prime Minister Theresa May and briefly addressed the issue of Brexit. Presidents Tusk and Juncker updated the heads of state or government on the state of play. Leaders agreed that the EU27:

  • look forward to working together with the next UK Prime Minister
  • want to avoid a disorderly Brexit and establish as close a future relationship as possible with the UK
  • are open to talks when it comes to the Declaration on future UK-EU relations if the position of the United Kingdom were to evolve, but the withdrawal agreement is not open for renegotiation
  • have been informed of the state of play of planning for a no-deal scenario

 

ALTERNATIVE ARRANGEMENTS COMMISSION PUBLISHES INTERIM REPORT

The Alternative Arrangements Commission, set up to seek alternatives to the backstop, published its interim report on 24 June.   The Commission’s recommendations are:

  1. Working Alternative Arrangements should be fully up and running within three years.
  2. Alternative Arrangements are available by harnessing existing procedures and technologies and Customs best practice; futuristic high-tech solutions are not required.
  3. A one size fits all solution should be avoided; instead people and traders should be given the maximum possible choice of options.
  4. Special Economic Zones, based on relevant WTO exemptions covering frontier traffic and national security, offer potentially valuable solutions which respect the realities of border and cross-border communities
  5. A multi-tier trusted trader programme for large and medium sized companies should be introduced, with exemptions for the smallest companies.
  6. Sanitary and Phyto-Sanitary (SPS) checks should be carried out by mobile units away from the border using the existing EU Union Customs Code or a common area for SPS measures.
  7. New technology has a role to support policy, but any technology suggested for
    deployment in the first instance should already be in use elsewhere.
  8. An Alternative Arrangements Protocol proposing a way forwards which avoids a hard border and ensures the Backstop is never triggered should (i) be inserted in the existing Withdrawal Agreement, or (ii) be utilised in any other Brexit outcome

Following publication of the interim report, the Commission plans to visit Ireland, Northern Ireland and major EU capitals in order to present its proposals and listen to feedback. The Belfast launch of the Commission’s report was held at Ulster University on 3 July.

Following these visits and further consultation, Prosperity UK will publish a Final Report on 18 July 2019 including a draft Alternative Arrangements Protocol that will explain what needs to happen to render the backstop obsolete.

 

PRIME MINISTER’S STATEMENT FOLLOWING EUROPEAN COUNCIL MEETING

On 24 June, the Prime Minister made a statement to the House of Commons following the meeting of the European Council on 21-22 June.

“President Tusk and President Juncker updated the remaining 27 member states on Brexit. This scheduled update was part of the agreement I reached in April to extend the article 50 deadline for our departure from the EU to 31 October. The Council repeated its desire to avoid a disorderly Brexit and committed to work constructively with my successor as Prime Minister.”

 

IMPACT OF A NO DEAL BREXIT ON IRELAND

Delivering his summer economic statement to Dáil Eireann on 25 June, Irish Government Minister for Finance, Public Expenditure and Reform Paschal Donohoe said that a no-deal Brexit could lead to 50,000 to 55,000 jobs being lost within two years of the UK exiting the EU without a deal, with another 30,000 at risk in the medium term.

His report states that a ‘disorderly Brexit’ would have a severe impact on the Irish economy with output and employment adversely affected, especially in the short-term. 

GDP (Gross Domestic Product) would be reduced by almost 3 ½ per after 5 years compared to what it would otherwise be (and 5% over the longer term), with the impacts substantially front-loaded.  In the first year following a disorderly Brexit, the growth rate would be almost 3% lower than currently projected.

Should the UK leave the EU with a deal, and therefore a transition or implementation period through to the end of 2020, the Irish economy is projected to expand by 3.3% next year.

 

EESC VISIT TO NORTHERN IRELAND TO TALK BREXIT

The President of the European Economic and Social Committee (EESC) Luca Jahier visited Northern Ireland on 25-26 June to discuss the future of Northern Ireland beyond Brexit.  The EESC is a consultative body of the European Union, working as an assembly of various civil society interests to advise the EU institutions on matters of policy and law.

The visit was described as having a ‘particular focus on peace-building and the role of civil society’.  Mr Jahier met beneficiaries of the EU PEACE Programme and the Lord Mayor of Belfast.

During his visit, he stressed the need to push forward the EESC proposal for a European Centre of Peace and Reconciliation in Northern Ireland and raised the issue of the Northern Ireland Civic Forum.

“We must make sure that Brexit does not re-ignite tensions in Northern Ireland. Civil Society has a role to play to ensure continuous exchange, understanding, and joint cooperation and future-oriented solution making,"

“As President of one of the consultative EU body which advises decision-makers, I am committed to regular and structured dialogue with all parts of civil society from farmers, to business, to consumers to women, to youth. I am convinced that Northern Ireland, particularly in the absence of an Assembly, would benefit greatly from the insight and expertise of people who have every day experience at the very grass roots of society as we do in Brussels.”

President Jahier was accompanied by an EESC delegation, including Stefano Mallia (EESC Brexit group chair), Judy McKnight, Michael Smyth and Jane Morrice.

 

NI AFFAIRS COMMITTEE HEARS FROM THE ALTERNATIVE ARRANGEMENTS COMMISSION

Representatives from the Alternative Arrangements Commission Shanker Singham, Frank Dunsmuir and Bertrand Rager gave evidence to the Northern Ireland Affairs Committee on 26 June on recommendations for an alternative to the backstop following publication of the Commission’s interim report.

Mr Singham said:

“The two core areas that are difficult to deal with in the island of Ireland are SAPS [sanitary and phytosanitary measures] and small traders. When we look at special areas, we need to think about how that works for SAPS and small traders. The special economic zone that we suggested in Derry, Donegal and that broad economic unit came out of a discussion that we had with the Federation of Small Businesses Northern Ireland, whose idea was to have a special economic zone for the whole of Northern Ireland. We do not necessarily think that solves the problem, but we spent time in Londonderry and Donegal, and we recognise that there is a single economic unit there. There are people going back and forth to work, and it is presented and marketed to the outside world as the north-western region. We think it makes sense to have a special economic zone in that region. We also think the Newry-Dundalk corridor operates in a similar way.

These special areas are overlaid on top of WTO exemptions that already exist. The frontier traffic exemption allows for borders that are like the land border on the island of Ireland, where the border goes through people’s gardens. It is not easy to put a physical border there. The frontier traffic exemption is designed for that case; it allows you 20 miles or so on either side in which no customs procedures are necessary at all. We have overlaid the special zone on top of that frontier traffic exemption.”

On timescales:

“…..there are things you can do in the short, medium and long term, and you can get a lot of quick wins.

For example, in the short term, which is six to nine months, you can get derogation on the barcode in the Common Transit Convention. You can get a derogation on designated roads, which you would need for SAPS. These rely on good will and an agreement with the European Union. I cannot tell you how long that will take—it depends on the negotiation—but there is no technology delay there or anything. The same is true of trusted traders. You could have a full trusted trader programme of the kind that Lars Karlsson talked to you about, we estimate, within 12 to 15 months. There are a lot of things you can do within the three-year limit. We are just saying that, within two to three years, we think you can do pretty much all of this.”

On discussions with the Irish Government and businesses:

“Our conversations about the border on the island of Ireland, particularly our conversations in Dublin, have suggested that one of the problems and reasons we are not able to make progress on this issue is because of the view in Ireland that it is alternative arrangements or the backstop. If that is the choice that you have, you would pick the backstop in all cases. If the choice is a no-deal situation, which means a border in Ireland or between Ireland and the EU 26—if the choice is no deal versus alternative arrangements—the Irish Government would be much more constructive in this process and try to come up with and agree alternative arrangements for the border. ……

…. we found it difficult to engage even Irish businesses. We have had some conversations with small businesses in Ireland, and the commission’s report launch on Monday had a representative from Irish small businesses speak. We have had some reasonable engagement there, but it has been quite hard to engage any sector in Ireland, largely because the view from the Government is that it is the backstop versus alternative arrangements: “Why would we discuss alternative arrangements? Merely discussing it makes it possible”.”

 

DExEU DEPARTMENTAL PLAN UPDATED

The Department for Exiting the EU updated its departmental plan on 27 June.  The Department’s objectives state that:

‘We will:

  1. Achieve the best possible outcome for the UK’s departure from the EU; and build a new ambitious, deep and special future partnership between the UK and the EU
  2. Coordinate delivery and legislation across government, to ensure the UK is prepared for all scenarios, including a smooth transition to our future relationship with the European Union
  3. Engage with Parliament, Member States and interested parties at home and abroad to shape a successful exit from the EU and to help build an ambitious future relationship
  4. Attract, develop and retain diverse and great people to organise ourselves flexibly and to deliver our objectives effectively and efficiently’

 

BRITISH IRISH COUNCIL MEETS IN MANCHESTER

The British-Irish Council held its 32nd meeting on 28 June 2019 in Manchester, hosted by Cabinet Office Minister David Lidington.

The main focus of the meeting was energy - particularly around the transition to smart energy systems and combating climate change.  The UK’s exit from the EU was also discussed.

Prior to the meeting, the First Ministers of Scotland and Wales issued a joint statmenet calling on the future Prime Minister to rule out a ‘no deal’ Brexit;

 “We are becoming increasingly alarmed by the increase in hard-line rhetoric about a ‘no deal’ Brexit and a debate focussed on policy proposals for leaving the EU which have no basis in reality.

“Severe economic damage is already being done as a result of Brexit uncertainty impacting economic opportunities as companies will be making decisions on their future on long-term competitiveness -  as workers at British Steel, Ford, Honda, and elsewhere can witness.

“We believe leaving the EU without a deal would be disastrous for the economies within these islands and for the livelihoods of hundreds of thousands of people.

“A ‘no deal’ Brexit would deeply damage the reputation of the UK as a reliable international partner and undermine the Good Friday Agreement and the peace process on the island of Ireland.

“The next Prime Minister must pull back from the brink of a ‘no deal’ Brexit and be honest with the public. If they continue on their current path, the UK looks increasingly likely to crash-out of the EU in just four months’ time.

“The EU will not simply cave in to demands to re-open the Withdrawal Agreement, and claims that we could both leave without a deal and still benefit from tariff-free trade with the EU have been disproved.

“The new Prime Minister must change course and rule out ‘no deal’ under any circumstances.

“It is now clear that, due to the deadlock at Westminster, there should be a new referendum on EU membership and both our governments would support remain. We will work together and with others who share that aim.”

 

JOINT MINISTERIAL COMMITTEE (EUROPEAN NEGOTIATIONS) MEETS

The Joint Ministerial Committee (European Negotiations) held its 18th meeting on 28 June in Manchester.

The meeting was chaired by David Lidington, Chancellor of the Duchy of Lancaster and Minister for the Cabinet Office. A senior official from the Northern Ireland Civil Service attended the meeting due to the continued absence of a Northern Ireland Executive.

The Chair provided an update on the UK’s exit from the EU. The Committee also discussed domestic issues, including the ongoing joint review of intergovernmental relations. The Committee also noted the good joint progress being made on common frameworks.

 

BREXIT LEGISLATION

Of the 528 Statutory Instruments (SIs) laid by the Government before Parliament to prepare the statute book for exit day, 475 (90%) have completed their passage through Parliament.

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
  • Healthcare (European Economic Area and Switzerland Arrangements) Act 2019
  • Nuclear Safeguards Act 2018
  • Sanctions and Anti-Money Laundering Act 2018
  • Taxation (Cross-border Trade) Act 2018

 

SO WHAT’S NEXT?

July 2: European Parliament’s first session of new term begins

July 15: European Parliament votes on the EU Council’s proposed next President of the European Commission

July 23: New leader of Conservative Party announced

July 25: Parliamentary recess begins

July: Election of new President of the European Parliament

September 3: Beginning of new Parliamentary term

Mid Sept – early Oct: Recess for party conference session (dates tbc)

September – October: Appointment of new College of Commissioners at the European Commission

October 17-18: European Council meeting

October 31: UK leaves the EU (if the Withdrawal Agreement isn’t ratified before this date)

November 1: New President of the European Commission takes up office

December 1: New President of EU Council takes up office