Brexit talks

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Withdrawal agreement and political declaration

November 25, 2018

The European Council approved a withdrawal agreement and a political declaration on future trading arrangements with the UK. The agreement is legally binding, the political declaration is not. The agreement bears some relationship to the UK cabinet’s so called Chequers plan. In summary:

From March 30, 2019 to December 31, 2020 there will be a transition from the UK’s departure from the EU to a new trading relationship with the bloc. There is provision for the transition period to be extended once only to allow more time for the trading arrangements to be negotiated.

During that transition the UK will remain within the EU customs union and the Single Market. The UK will have no say in any new trading legislation, it will continue to be subject to the European Court of Justice in relation to EU law and it will have no freedom to enter into any new trading agreeements with third countries.

Freedom of movement to and from the EU will continue. But citizens rights for British nationals in the EU and EU nationals in the UK will be safeguarded. EU nationals will be subject to immigration laws in the same way as nationals from other countries.

There will be an exit bill of around £40 billion.

There will be no hard border between Northern Ireland and the Irish Republic though there will be more stringent trading arrangements. The UK will have no unilateral freedom to leave the customs union without a permanent mechanism in place to avoid a hard Irish border. If no alternatives are agreed during the transition, when the transition ends there will be a ‘back stop’ that will see the province bound into a deeper regulatory relationship with the EU than the rest of the UK.

EU member states will continue to have access to British fisheries. As far as financial services are concerned the UK and the EU member states would continue to have access to each other’s markets provided both sides’ regulations remain essentially aligned. The UK must set up an independent authority to police state aid which must take the advice of the European Commission on all decisions.

There is general agreement among British economists that the proposed form of Brexit will be damaging to the UK economy in the short and longer terms.

The deal has still to be approved by the British parliament. It was heavily defeated on January 15, 2019 largely due to opposition to the Irish backstop.