The 585-page draft agreement between Brussels and London will become the legal basis for Britain’s departure from the European Union — if it is agreed by EU27 leaders, then ratified by the U.K. parliament and the European Parliament.
Alongside the Withdrawal Agreement, the U.K. and the EU have also published a non-legally binding outline political agreement on their future relationship.
Together the documents are the result of a year and a half of intense negotiation covering nearly every aspect of the U.K.-EU relationship. But will they be enough to persuade key players to back them?
Here’s what the deal says — and what it means — in 10 key areas.
1. The transition period
Quote: “Notwithstanding Article 126, the Joint Committee may, before 1 July 2020, adopt a single decision extending the transition period up to [31 December 20XX].”
What does it mean? On the face of it, a potentially never-ending transition. But U.K. officials insist there will be a later agreement setting a limit on how long this stand-still period could be extended for — and that it could be only a matter of months.
The transition period, during which time all EU rules still apply to the U.K. even though it won’t have a say in setting them, is currently set to last until December 2020. May first floated the idea of extending it at October’s European Council. U.K. officials see that as a way to avoid the “backstop” to prevent a hard Irish border ever having to come into force. We now know that if they want to exercise this option, they’d have to alert the EU by July 2020.
How will it land? Not very well with Brexiteers, who consider the transition period to be a form of “vassalage.” Businesses will be pleased, however. A transition period — however long it ends up lasting — essentially keeps things the same and gives them time to prepare for whatever comes next. Confederation of British Industry director-general Carolyn Fairbairn said the transition had “long been firms’ top priority.” “Time is now up. This deal is a compromise, including for business, but it offers that essential transitional period as a step back from the cliff-edge,” she said.
2. The backstop (customs)
Quote: “A single customs territory between the [EU] and the [U.K.] shall be established.”
What does it mean? Theresa May persuaded the EU to base the backstop on her proposal of a de facto customs union that will apply until negotiators have come up with a permanent alternative.
How will it land? Pretty dreadfully with Brexiteers, who will fear that, if the backstop comes into force, it could bind the U.K. indefinitely to the EU’s external tariff and other aspects of the customs union, which effectively neuter the U.K.’s ability to be a flexible negotiator of trade agreements with non-EU countries — for many Brexiteers the key upside of leaving.
3. The backstop (rules)
Quote: “This Protocol is based on … maintaining full alignment with those rules of the [EU’s] internal market and the customs union which, now or in the future, support North-South cooperation, the all-island economy and the protection of the 1998 Agreement, to apply unless and until an alternative arrangement implementing another scenario is agreed.”
What does it mean? Apart from the single customs territory, other aspects of the backstop remain similar to those proposed by the EU back in March. Northern Ireland will be under different regulations in many areas to the rest of the U.K. What this means in practical terms is spelled out in the European Commission’s factsheet on the backstop: more checks at ports on trade between Northern Ireland and the rest of the U.K. While checks on industrial goods “can mostly take place in the market or at traders’ premises by the relevant authorities,” the factsheet says, those on agricultural products and livestock have to happen at ports. “Already existing checks at ports and airports will need to continue, but will be increased in scale in order to protect the EU’s Single Market, its consumers and animal health,” the factsheet says.
How will it land? Awfully, at least with Northern Ireland’s Democratic Unionist Party (DUP), who prop up May’s government. Ensuring that Northern Ireland could never be treated differently to the rest of the U.K. — even if it is only a backstop proposal — has been their key demand throughout this process.
4. The backstop review mechanism
Quote: “If … [the EU] and [the U.K.] decide jointly within the Joint Committee that the Protocol, in whole or in part, is no longer necessary to achieve its objectives, the [backstop] shall cease to apply, in whole or in part.”
What does it mean? The question of whether the U.K. would have the right to unilaterally escape from the backstop (referred to here as the “Protocol”) arrangement (if it comes into force) became a major bone of contention in the closing weeks of the talks. At the October European Council, May conceded that the backstop could not have a hard time limit, and since then the U.K. government has pursued a “mechanism” by which it can prove to Brexiteers and unionists in Northern Ireland that there is nevertheless a way out of the backstop. This is that mechanism.
How will it land? Many Brexiteers and the DUP will be disappointed that any semblance of unilateral U.K. power to get out of the backstop arrangement is gone. But the Irish government would not have countenanced a backstop that the U.K. could have blown up at any moment. They wanted firmer guarantees. It’s their win.
5. Governance
Quote: “A Joint Committee, comprising representatives of the [EU] and of the [U.K.], is hereby established. … The Joint Committee shall … establish a list of 25 persons who are willing and able to serve as members of an arbitration panel.”
What does it mean? This is a complicated bit, relating to how disputes between the U.K. and the EU will be settled. First, the Withdrawal Agreement sets up a joint committee to oversee its implementation. This joint committee will put forward 25 people — 10 proposed by the U.K., 10 by the EU and five by both sides to serve on arbitration panels to deal with disputes. They will be people “whose independence is beyond doubt, who possess the qualifications required for appointment to the highest judicial office in their respective countries.” However, the European Court of Justice could still have a role if the dispute involved an aspect of EU law that needed interpreting. That would be the ECJ’s job.
How will it land? Brexiteer MPs will probably be disappointed by the continuing, indirect link to the ECJ, but other government critics might be impressed by the innovative solution to a thorny problem.
6. Citizens’ rights
Quote: “As part of the future relationship with the EU, the UK will also seek to secure onward movement opportunities for UK nationals in the EU who are covered by the citizens’ rights agreement.”
What does it mean? Kicking the can down the road. Granting the right to “onward movement” for British citizens residing in EU27 countries has been a loose end in negotiations about citizens’ rights and a bone of contention for Brits living across Europe. As things stand, Brussels is not allowing Brits who remain in an EU country after Brexit to retain the right to move to another EU country. The U.K. said it would fight their corner, but appears to have given up on that battle — or at least postponed it until later.
How will it land? Not very well with U.K. citizens living across the EU27 or the European Parliament. The Parliament’s Brexit coordinator Guy Verhofstadt has backed the U.K. on this issue.
7. Financial services
Quote: “Commitments to preserving financial stability, market integrity, investor protection and fair competition, while respecting the Parties’ regulatory and decision-making autonomy, and their ability to take equivalence decisions in their own interest.”
What does it mean? Not a lot. After Brexit, access for financial service companies to the single market will be via the EU’s equivalence framework — which allows access to certain services on the basis that rules in a country outside the bloc are similar enough to those inside. The U.K. government has said the framework is inadequate, because it is limited in scope — for example, commercial banking isn’t covered — and the EU can withdraw access with just 30 days’ notice. London suggested in its Brexit white paper a bilateral deal on top of the equivalence framework that would require a consultation process if either party wanted to withdraw an access decision. The outline political declaration, which sets a direction of travel for future negotiations, goes nowhere near that far — it only vaguely suggests a plan to have a “close and structured” cooperation.
How will it land? Probably not very well with the U.K. financial sector. The EU clearly won out on the wording, of which there isn’t much in this “outline” document. A sector that in 2017 contributed £119 billion to the U.K. economy, or 6.5 percent of total economic output, got a total of 115 words. There is a huge emphasis on autonomy to make decisions regarding access — it’s mentioned in four different ways in just three paragraphs. Meanwhile, in return the U.K. got very little — this agreement in no way provides clarity on whether the EU is game for the kind of bilateral deal the U.K. government called for in its white paper.
8. Geographical indicators
Quote: “[T]hose persons who are entitled to use the geographical indication, the designation of origin, the traditional speciality guaranteed or the traditional term … shall be entitled, as from the end of the transition period, without any re-examination, to use the geographical indication, the designation of origin, the traditional speciality guaranteed or the traditional term … in the United Kingdom, which shall be granted at least the same level of protection under the law of the United Kingdom as under … provisions of Union law.”
What does it mean? The deal essentially buys food producers whose names are protected under EU law more time. The likes of Italy’s Parmigiano-Reggiano, France’s Roquefort cheese and Britain’s Welsh lamb, will all be recognized in both the U.K. and the EU27 beyond the end of the stand-still transition period and until the future economic relationship comes into effect (however long that ends up being).
How will it land? Gourmet food producers on both sides of the Channel have worried they would lose lucrative protections after the U.K. left the EU. This deal will be praised by the industry as it ensures the status quo remains in place for potentially years longer than the existing 21-month transition period. Indeed, British so-called Geographical Indications (GIs) such as Scotch Whisky benefit from the numerous trade deals in which EU GIs are protected to sell all over the globe. This will still have to be renegotiated in the future should the U.K. make new deals with other countries. This result is a long way from what the U.K. had proposed in its Brexit white paper in July. It had suggested that the U.K. set up its own system of GIs to which EU food names could apply to join. The EU hated that idea and the U.K. has backed down.
The U.K.’s Food and Drink Federation said Wednesday that food and drink manufacturers “will have to continue planning for a variety of scenarios until our politicians have cast their judgement on the suitability of this deal.” A no-deal Brexit would mean GI protections no longer apply in each others’ markets from March next year.
9. Gibraltar
Quotes: “The Protocol on Gibraltar, with the exception of Article 1 thereof, shall cease to apply at the end of the transition period.”
“Union law on air transport which did not apply to the Gibraltar airport before 30 March 2019 shall only become applicable to the Gibraltar airport … upon notification by the United Kingdom and Spain that they have reached a satisfactory agreement on the use of the Gibraltar airport.”
“The international standards of the Group of Twenty (G20) and of the Organisation for Economic Co-operation and Development (OECD) relating to good fiscal governance … shall be complied with in Gibraltar.”
“The United Kingdom shall ensure that its ratification of the Framework Convention on Tobacco Control … is extended to Gibraltar by 30 June 2020.”
What does it mean? Contrary to the protocols on Northern Ireland and Cyprus — designed to be implemented after the transition period — the one on Gibraltar is designed to apply only during the transition period, meaning that Madrid is aiming for a better deal on the Rock afterwards. Gibraltar airport will be banned from enjoying air transport agreements negotiated between the EU and the U.K. unless Madrid agrees to it, which gives Spain increased leverage for pushing for joint operation of the airport during the transition period. The protocol also forces Gibraltar into international mechanisms for tax transparency and tobacco control and guarantees citizens’ rights in line with those granted between the EU and the U.K.
How will it land? Madrid can’t claim to have obtained many concessions from the British, but it looks that it will be in a stronger position in the future. The protocol is good news for Gibraltarian and Spanish citizens living in the area. Their daily lives will go on as usual as regards the frontier — and Spanish citizens inside Gibraltar are granted equal rights to locals.
10. Fish
Quote: “Fishery and aquaculture products, as set out in Annex I to Regulation (EU) 1379/2013 (“fishery and aquaculture products”), shall not be covered by the rules set out in Annexes 2 and 4, as well as the rules referred to in the fourth subparagraph, unless an agreement on access to waters and fishing opportunities is applicable between the Union and the United Kingdom. In accordance with Article 184 of the Withdrawal Agreement, the Union and the United Kingdom shall use their best endeavours to conclude and ratify such an agreement before 1 July 2020.”
What does it mean? Fisheries have been left out of the backstop. While current rules and privileges will remain in place during the transition, fisheries will not form a part of the Single Customs Territory — an arrangement that will apply from the end of the transition period if a new arrangement is not ready to come into force. That means that while that backstop customs arrangement is in place the U.K. will not have the right to sell fish free of quotas and tariffs into the EU. Likewise, EU-flagged vessels will not have the right to fish in U.K. waters. The intention is to work out an agreement on access to waters and access to markets during the transition.
How will it land? There had been reports in recent weeks that the EU wanted access to waters for its fishermen as a price for a temporary customs arrangement. With an exit from the Common Fisheries Policy such a key red line for Scottish Tories, fending off that EU demand is a key short-term win for the U.K. But by kicking the can down the road, it will have a tricky trade-off to make in future talks — blocking access to U.K. waters may mean not being able to sell fish to the EU27.