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[...]Turning to Brexit, let me begin with the progress we have made on both the withdrawal agreement and the political declaration on our future relationship. As I reported to the House last Monday, the shape of the deal across the vast majority of the withdrawal agreement is now clear. Since Salzburg, we have agreed the broad scope of provisions that set out the governance and dispute resolution arrangements for our withdrawal agreement, and we have developed a protocol relating to the UK sovereign base areas in Cyprus. Following discussions with Spain, and in close co-operation with the Government of Gibraltar, we have developed a protocol and a set of underlying memoranda relating to Gibraltar, heralding a new era in our relations. We also have broad agreement on the structure and scope of the future relationship, with important progress made on issues such as security, transport and services.
This progress in the last three weeks builds on the areas where we have already reached agreement: citizens’ rights, the financial settlement and the implementation period; and, in Northern Ireland, agreement on the preservation of the particular rights of UK and Irish citizens, and on the special arrangements between us such as the common travel area, which has existed since before either the UK or Ireland ever became members of the European Economic Community.
Taking all of that together, 95% of the withdrawal agreement and its protocols are now settled. There is one real sticking point left, but a considerable one, which is how we guarantee that, in the unlikely event that our future relationship is not in place by the end of the implementation period, there is no return to a hard border between Northern Ireland and Ireland. The commitment to avoiding a hard border is one that this House emphatically endorsed and enshrined in law in the European Union (Withdrawal) Act 2018. As I set out last week, the original backstop proposal from the EU was one we could not accept, as it would mean creating a customs border down the Irish sea and breaking up the integrity of our United Kingdom. I do not believe that any UK Prime Minister could ever accept this, and I certainly will not.
As I said in my Mansion House speech, we chose to leave and we have a responsibility to help find a solution, so earlier this year we put forward a counterproposal for a temporary UK-EU joint customs territory for the backstop. In a substantial shift in its position since Salzburg, the EU is now actively working with us on this proposal, but a number of issues remain.
The EU argues that it cannot give a legally binding commitment to a UK-wide customs arrangement in the withdrawal agreement, so its original proposal must remain a possibility. Furthermore, people are understandably worried that we could get stuck in a backstop that is designed to be only temporary. There are also concerns that Northern Ireland could be cut off from accessing its most important market, Great Britain.
During last week’s council I had good discussions with Presidents Juncker, Tusk and Macron, Chancellor Merkel and Taoiseach Varadkar, and others, about how to break this impasse. I believe there are four steps we need to take.
First, we must make the commitment to a temporary UK-EU joint customs territory legally binding so that the Northern Ireland-only proposal is no longer needed. This would protect relations not only north-south but, vitally, east-west. This is critical. The relationship between Northern Ireland and the rest of the UK is an integral strand of the Belfast Good Friday agreement, so to protect that agreement we need to preserve the totality of relationships it sets out. Nothing we agree with the EU under article 50 should risk a return to a hard border or threaten the delicate constitutional and political arrangements underpinned by the Belfast Good Friday agreement.
The second step is to create an option to extend the implementation period as an alternative to the backstop. I have not committed to extending the implementation period. I do not want to extend the implementation period, and I do not believe that extending it will be necessary. I see any extension or being in any form of backstop as undesirable. By far the best outcome for the UK, for Ireland and for the EU is that our future relationship is agreed and in place by 1 January 2021. I have every confidence that it will be, and the European Union has said it will show equal commitment to this timetable, but the impasse we are trying to resolve is about the insurance policy if this does not happen.
What I am saying is that if, at the end of 2020, our future relationship is not quite ready, the proposal is that the UK would be able to make a sovereign choice between the UK-wide customs backstop or a short extension of the implementation period. There are some limited circumstances in which it could be argued that an extension to the implementation period might be preferable if we were certain it was for only a short time. For example, a short extension to the implementation period would mean only one set of changes for businesses at the point we move to the future relationship, but in any such scenario we would have to be out of the implementation period well before the end of this Parliament.
The third step is to ensure that, were we to need either of these insurance policies, whether the backstop or a short extension to the implementation period, we could not be kept in either arrangement indefinitely. We would not accept a position in which the UK, having negotiated in good faith an agreement that prevents a hard border in Northern Ireland, none the less finds itself locked into an alternative inferior arrangement against its will.
The fourth step is for the Government to deliver the commitments we have made to ensure full continued access for Northern Ireland’s businesses to the whole of the UK internal market. Northern Ireland’s businesses rely heavily on trade with their largest market, Great Britain, and we must protect this in any scenario.
Let us remember that all these steps are about insurance policies that no one in the UK or the EU wants or expects to use, so we cannot let this become the barrier to reaching the future partnership we all want to see. We have to explore every possible option to break the impasse, and that is what I am doing. [...]