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EU Withdrawal Agreement published, but uncertainty continues

Businesses must continue to plan for a range of possible outcomes around the UK's withdrawal from the EU despite the publication of a detailed draft withdrawal agreement, an expert has warned.15 Nov 2018

A number of UK ministerial resignations, including that of Brexit secretary Dominic Raab, means that there is political uncertainty about whether the UK parliament will approve the 585 page technical document, according to Brexit advisory expert Guy Lougher of Pinsent Masons, the law firm behind Out-Law.com.

"It's going to take a significant amount of time to work carefully through the document, to identify its implications for business generally, and for individual sectors of the economy," Lougher said. "This is truly one of those situations where the devil is in the detail."

"Much of the document concerns technical issues and institutional arrangements, but in terms of potentially contentious political areas, the Court of Justice of the EU maintains a significant role during the transitional period, and potentially for a period of up to eight years after the end of the transitional period. The European Commission will also play an important role in some areas, for example having what amounts to a supervisory role during the transitional period in the area of UK state aid policy," he said.

"Given the political uncertainty surrounding the potential ratification of the withdrawal agreement, businesses need to continue planning for a range of possible outcomes, including a potential 'no-deal' outcome. Structured scenario planning can be a useful framework in which to consider that range of possible outcomes, including the potential implications of the withdrawal agreement," he said.

The draft withdrawal agreement (585-page / 1.37MB PDF), which has been agreed in principle between negotiating teams for both the EU and UK, sets out the terms governing the UK's departure from the EU over a transitional period running until 31 December 2020. Both sides have also published an outline political declaration (7-page / 108KB PDF) on a future trading relationship after the transitional period has ended, although formal negotiations on the terms of that relationship are yet to begin.

Both parties will "use their best endeavours, in good faith and in full respect of their respective legal orders" to reach agreement on the future trading relationship before the end of the transitional period, according to the draft withdrawal agreement. However, should this not be possible, both parties can jointly choose to extend the transition period for an unspecified length of time provided that they do so before 1 July 2020.

The agreement provides for the creation of a new joint committee, consisting of representatives of and co-chaired by the EU and the UK and responsible for the "implementation and application" of the withdrawal agreement. The committee would also be responsible for resolving disputes arising out of the withdrawal agreement, with disputes that cannot be resolved through negotiation referred to an arbitration panel.

The document incorporates lengthy protocols on rights for EU citizens living and working in the UK and UK citizens living and working in the EU once the UK leaves the trading bloc; the financial settlement between the UK and EU; and the so-called 'backstop' that will kick in to avoid a physical border between Northern Ireland and the Republic of Ireland should the UK and EU be unable to agree a better solution before the end of the transitional period.

The Northern Ireland protocol sets out plans for a temporary "single customs territory" between the EU and UK, which will operate on a temporary basis until both parties agree to the terms of their future trading relationship. This means that no separate customs arrangements would operate between Northern Ireland and the island of Great Britain, although there may be additional non-customs checks on some types of goods. A joint committee would be responsible for deciding when the backstop was "no longer necessary to achieve its objectives".

While the backstop applies, the UK would be required to maintain "full alignment with those roles 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 Good Friday Agreement] … unless and until an alternative arrangement implementing another scenario is agreed".

Speaking last night, after senior ministers agreed to support the draft withdrawal agreement, prime minister Theresa May described the document as "a decisive step which enables us to move on and finalise the deal in the days ahead".

"When you strip away the detail, the choice before us is clear: this deal which delivers on the vote of the referendum, which brings back control of our money, laws and borders; ends free movement; protects jobs, security and our union; or leave with no deal; or no Brexit at all," she said.