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Uncertainty still remains over future UK-EU relationship
After 20 months of negotiations, we only know the terms of the UK's departure but not the nature of the future relationship with the EU. The Prime Minister’s deal fails to offer sufficient clarity or certainty about the future.
The Political Declaration is neither detailed nor substantive. It only sets out a series of options, and people and businesses will continue to face significant uncertainty about the terms of our trade with the EU after the transitional period ends.
There is insufficient detail in the Political Declaration for us to judge whether the fifteen tests the Committee previously set have been met, except for the one relating to tariffs (“In respect of trade in goods, there must be no tariffs on trade between the UK and the EU 27”). What is clear from the Political Declaration is that the extent of our access to EU markets will depend on the degree to which we adhere to its rules.
Long-term, realistic proposals needed to maintain open border
There are no realistic, long-term proposals from the Government to reconcile maintaining an open border on the island of Ireland with leaving the Single Market and Customs Union.
The backstop will be the default relationship between the UK and the EU after the end of the transitional period, unless and until a future economic relationship is agreed that can maintain an open Northern Ireland/Ireland border and protect all parts of the Belfast (Good Friday) Agreement.
Activating the backstop would result in immediate barriers to UK-EU trade in goods and services. By July 2020 if the future relationship is not in place, or one/two years later if the transition/implementation period is extended, the UK could face the threat of significant economic disruption which would reduce its leverage in the negotiations.
Choices must be made on following EU rules
The proposals put forward by the Government to maintain both frictionless trade and an open border – the ‘Chequers’ proposals – have been rejected by the EU as unacceptable.
A looser CETA-style free trade agreement with the EU is not seen as a viable option as it would not ensure the type of friction-free trade with the EU that many UK companies with just-in-time supply chains need.
Negotiations will be further complicated, and could take significantly longer, because the Government has yet to set out clear objectives for the future relationship that are realistic, workable and have the support of Parliament. And each of the 27 individual EU member states, their national and where applicable regional Parliaments, will be able to exercise a veto on the overall outcome.
If the Government’s main priority is to secure EU-UK trade that is as frictionless as possible, it must decide how far it is willing to follow EU rules. This is not a choice the Government has so far been willing to make.
Future relationship negotiations will continue beyond March 2019
It would be unacceptable for the Government not to publish the White Paper on immigration before the vote on 11 December 2018.
Because of the large number of issues crucial to the future of the EU-UK relationship which are still to be decided, the Brexit process will not be concluded by March 2019. Indeed, negotiations on the future relationship are likely to go on for a number of years.
There is probably no majority in Parliament for leaving with no deal and as Parliament has now given itself the opportunity to consider and vote on other options, these may include the extension of Article 50.