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Wednesday, December 11, 2019

Brexit: New deal and old jam

The UK is days away from its scheduled October 31 exit from the European Union. But there are still too many balls up in the air; the road ahead still unknown. PM Johnson got a deal from Europe, but has been thwarted by UK MPs.

By: Express News Service | New Delhi | Updated: October 22, 2019 8:08:13 am
Brexit, Brexit news, Brexit postponed, Brexit vote UK parliament, Boris Johnson Brexit, Brexit voting Parliament, Indian Express world news Anti-Brexit protesters outside Parliament in London on Monday. (Reuters Photo)

Late on Monday evening India time, the Speaker of the House of Commons of the United Kingdom, John Bercow, refused to allow a second vote on Prime Minister Boris Johnson’s Brexit deal with the European Union (EU), denying him another shot at persuading MPs who had defeated a similar motion on Saturday.

The UK is scheduled to leave the EU in 10 days. Johnson’s deal will come into force only after it is approved by parliaments of the UK and EU. The government attempted a ‘yes-no’ vote on Saturday, but was humiliated after a majority of MPs approved an amendment that said the deal would not have effect before it was written into UK law by the passage of a Withdrawal Agreement Bill (WAB).

The government will now introduce the WAB, and the first vote will likely come Tuesday. But MPs will push for amendments, some of which can be expected to attempt to change some fundamentals of the deal. It is not clear the process can meet the October 31 deadline.

The current sequence of events in the complex and deeply divisive Brexit process began with Johnson working out a new deal with the EU, which differed in some key aspects from the one proposed by his predecessor Theresa May.

What was Boris Johnson’s new deal?

Late Thursday (October 17) evening, the UK and EU reached an agreement over a new version of the Brexit deal, which replaced the contentious “Irish backstop” plan in May’s deal with new arrangements that would prevent the return of the ‘hard’ border between Northern Ireland (which is a chunk of UK territory in the northeast of the island of Ireland) and the Republic of Ireland (or simply Ireland, which is a separate country comprising the rest of the island, and which remains a member of the EU). This was a key breakthrough; no party wants a ‘hard’ border with elaborate checking infrastructure that could become a target for militants.

It was agreed that as the UK leaves the EU Customs Union, a legal Customs border would exist between Northern Ireland and Ireland, but the actual Customs border would be between Great Britain and the island of Ireland — and that goods would be checked at the “points of entry” in Northern Ireland.

At the points of entry, duty will be payable on only those goods flowing into Northern Ireland from Great Britain, which are “at risk” of being sent onward into Ireland, which is part of the EU Customs Union. The list of these “at risk” goods will be drawn up by a joint UK-EU panel. In case a firm ends up paying duty on goods that stay in Northern Ireland and are not transported to the EU, the UK will issue a refund.

On regulation of goods, Northern Ireland will follow rules of the EU single market. There will, thus, be no need for standards and safety checks at the Ireland-Northern Ireland border, both sides of which will be under an “all-island regulatory zone”. The checks will instead be between Northern Ireland and the rest of the UK (which will no longer follow EU rules).

The EU law on Value-Added Tax will apply in Northern Ireland on goods, but not services. Northern Ireland can have VAT rates different from those in the rest of the UK — which means it may have the same rates as in Ireland, so that neither side has an unfair advantage.

The rules will be enforced by the UK at points of entry into Northern Ireland, but EU officials will be present, and be able to intervene. The deal gives the Northern Ireland Assembly a say in Customs and other EU-related matters — but it will not be able to exercise this vote until four years after the transition period ends in December 2020 (that is, until January 2025) and, in case it rejects these provisions, they would still be in force for another two years.

The transition period (during which current rules will apply as the UK and EU negotiate their future relationship) was until the end of 2020 in May’s deal as well. It can be extended by one or two years if both parties agree. UK citizens in EU, and vice versa, will retain their rights of residency and social security post-Brexit. UK and EU nationals will be able to live and work on either side, and continue to move freely during the transition period. The UK will settle its financial obligations to the EU — the bulk of this “divorce bill” will be contributions to the 2019 and 2020 EU budgets.

How did MPs react to Johnson’s deal?

On October 19, the House of Commons cleared an amendment which said that even if MPs supported the Brexit deal, it would not have effect until Parliament passed legislation — the WAB — to implement it.

The passage of this amendment triggered the so-called Benn Act, a law that Parliament passed last month. The Benn Act made it incumbent upon the PM to ask the EU for an extension of the Brexit deadline until January 31, 2020 in case MPs failed to approve in a “meaningful vote” by October 19, either the deal or leaving the EU without a deal. The Act was intended to stop Johnson from pulling the UK out of the EU without a deal on October 31.

After the amendment was passed, Johnson was compelled to write to the EU asking for the three-month extension to the original deadline. He did so late on Saturday night — but he did not sign the letter. And he sent a follow-up personal letter — with his signature — to European Council president Donald Tusk saying that “(his) view, and the government’s position, (was) that a further extension would damage the interests of the UK and our EU partners”.

How has the EU reacted?

The EU has accepted the first letter as valid, and Tusk is consulting with EU states on the way to respond to the request. On Monday, Peter Altmaier, Minister for Economic Affairs of Germany, the most powerful of EU states, said that in his view, “it goes without saying” that the extension should be given so that the UK has time to explore all options before it, including “new elections or a new referendum”.

All 27 member nations of the EU must agree to an extension. While that theoretically provides an opportunity for Johnson’s government to try to get any one member state to break the consensus and force an October 31 Brexit, it seems unlikely that such an outlier will readily emerge.

What will happen now?

The legislative process on the WAB will begin immediately. If the bill passes with no major amendments by October 31, the UK will have a Brexit with a deal — this is what Johnson wants. If it passes with no major amendments after October 31, there will still be a Brexit with a deal, but with a delay. However, both these options seem unlikely.

An early election is widely expected — both the Conservatives and Labour want it. However, Labour leader Jeremy Corbyn has said that he will not support the holding of elections until it is clear that the UK is not having a no-deal Brexit.

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