Stephen Booth is Acting Director at Open Europe.
The Prime Minister has successfully negotiated a new deal with the EU. It is clear that the UK has secured significant changes to the Withdrawal Agreement in respect of the backstop, which seemed a tall order a few months ago. However, there have been compromises on both sides and, as things stand, the DUP has confirmed it cannot support the new deal. But what’s actually in it and how is it different to Theresa May’s deal?
The important differences are contained within the Protocol on Ireland/Northern Ireland. The rest of the Withdrawal Agreement is unchanged. This means the standstill transition period lasts until December 2020, with the option of extension up to December 2022; the references in the Protocol to transition extension have been deleted, but their legal basis elsewhere in the Withdrawal Agreement remains.
The financial settlement is unchanged, although the extension to Article 50 means that the total payment is likely to be in the region of £33 billion, not the oft-quoted “£39 billion” figure. The provisions for citizens’ rights, Gibraltar and governance are as before. The Protocol text is also unchanged on many issues that were relatively uncontroversial – for example, provisions on the Common Travel Area, the Single Electricity Market, and some of the arrangements for the implementation and governance of the Protocol.
Let’s turn to the differences. Firstly, the “undemocratic” backstop has been replaced with a “frontstop”, which differs in important ways from Theresa May’s deal and the EU’s preference for a Northern Ireland-only backstop. Rather than being a fall back, the new special arrangements for Northern Ireland would come into force immediately after the end of the transition period, either at the end of 2020 or 2022 at the latest. They would ensure that Northern Ireland would leave the EU’s Customs Union along with the rest of the UK, and the region would be in a new hybrid economic zone.
The practical effect would be that Northern Ireland’s consumers would be able to benefit from an independent UK trade policy, potentially in the form of lower UK tariff rates and trade deals with third countries, and businesses there would continue to enjoy unfettered access to the market in Great Britain.
There would be no customs checks North-South, but the UK would have to enforce EU customs procedures at points of entry into Northern Ireland, including imports from Great Britain, to ensure that goods benefitting from lower tariffs do not find their way on to the EU market.
It is on the issue of regulatory alignment that the special arrangements most closely mirror the provisions of the previous backstop. Northern Ireland would align with the EU’s regulatory framework for manufactured and agricultural goods in certain respects. Consequently, depending on the future UK-EU relationship, East-West trade would also be subject to regulatory checks.
Another significant difference is that the economic aspects of the Northern Ireland-specific arrangements would be subject to the consent of the NI Assembly and include an exit mechanism under the authority of Stormont.
The default is that Articles 5-10 of the Protocol (the customs and regulatory arrangements described above, plus provisions on the Single Electricity Market and alignment with EU VAT and State Aid rules) would apply for four years after the end of the transition period. However, two months before the end of the four-year period, Stormont would have the right to opt out of them on the basis of a majority vote.
Alternatively, if consent for the special arrangements is granted they will apply for a further four years or, if there is cross-community consent (i.e. a super majority) to continue the arrangements, a further eight years. Consent would be tested on a rolling basis, with votes every four or eight years.
If the Assembly does vote to opt out of EU alignment, then a two-year “cooling off period” begins, after which the arrangements would cease to apply. The earliest date at which the arrangements could end is 31 December 2026.
The absence of a ‘DUP veto’ – requiring cross-community support for the continuance of the arrangements after 4 years – may explain why the party felt that the consent provisions were not sufficient to secure their support.
Thirdly, whereas the previous backstop provided a future UK-EU customs union by default, the new deal leaves unanswered the question of the future trading relationship between the rest of the UK and the EU.
The potential future UK-EU relationship is only addressed in the non-binding Political Declaration, which points to a free trade agreement rather than a customs union. Ultimately, this is a matter which will remain open to negotiation in the transition period, presumably after a UK General Election.
Consequently, the level playing field obligations, on social and employment standards and the environment, that accompanied the proposed UK-EU customs union under the backstop have been deleted from the revised Withdrawal Agreement.
Instead, they have been moved to the Political Declaration as an issue for further negotiation in the context of the future UK-EU relationship. Both sides will seek to link level-playing field commitments to levels of market access.
In summary, the proposed customs arrangements for Northern Ireland are novel in comparison to the backstop. They would enable the region to be subject to an independent UK trade policy, but would mean customs procedures on goods imported from Great Britain.
Other provisions, notably regulatory alignment on goods, would have the same practical effect as before, but both the customs regime and regulatory arrangements are now subject to the consent of the Northern Ireland Assembly and can be ended by Stormont.
In terms of the wider UK-EU relationship, the absence of a customs union by default, is likely to allow UK negotiators to address the alignment/market access trade-off with more flexibility in the next phase of negotiations.
It is clear that Boris Johnson would prefer a free trade agreement, but an alternative Prime Minister could seek a closer relationship. If the deal is passed, there will be all to play for in a General Election.
Open Europe has published a briefing explaining the proposals in greater detail here