Brexit Update 15th March 2019

By March 30, 2019 Brexit Updates

Top 3 developments 

  • UK Parliament defeated May’s Withdrawal Agreement by 149 votes.
  • UK Parliament voted against a no deal Brexit.
  • UK Parliament voted for an extension of Article 50, either to June 30th if a deal can be agreed, or longer in the event of no deal.

UK Update

Cheers Geoff

The PM spent the weekend in intense negotiations with the EU to secure last minute legal changes to the backstop in order to gain support for her deal. The changes that were agreed were substantive, but were ultimately not enough to satisfy Brexiteers in Parliament. The Attorney General’s legal advice on the changes was instrumental in deciding whether MPs would support the changes. Contrary to claims that the Attorney General would be a ‘yes man’ in order to get May’s deal over the line, his legal advice ended up sealing the fate of the PM’s deal.

Cox’s legal advice suggested that the risk of being trapped in the backstop involuntarily and indefinitely was reduced, but that the UK could not leave the backstop unilaterally unless there was an agreement or evidence that the EU had acted in bad faith. Interestingly, in a statement to Parliament, Cox suggested that if the UK did have the right to unilaterally leave the backstop while the EU was acting in good faith, it would be breaking its international legal obligations, for example the Good Friday Agreement. However, this was not reflected in the legal advice.

Although the changes directly addressed the Brexiteers’ claim that the backstop would be used as a weapon by the EU to trap us in the customs union, the ERG and DUP were adamant that the UK must have the ability to unilaterally exit the backstop, so they were unable to support the changes.

Three is the Magic Number

Parliament held a meaningful vote on the Withdrawal Agreement on Tuesday and the Government was defeated by 149 votes. Following the defeat, the Prime Minister reemphasised that her deal was the only and best available option, but confirmed that the Government would go ahead with offering two subsequent votes.

Wednesday saw Parliament vote on a motion on leaving the EU without a deal. Before the debate, the Government published information on essential no deal policies, including tariffs and the Northern Irish Border. Under the temporary tariff, 87% of total imports to the UK would be eligible for free access in the event of a no deal.  MPs sent a clear message against a no deal as they removed the second half of the Government’s motion which would have emphasised that no deal remains the default option in the absence of a negotiated agreement. Conservative MPs were then whipped to vote against the amended motion, but several Conservative MPs, including ministers, defied the whip and the Government lost the vote. It is important to note that the motion is not legally binding and without a deal, or revoking or extending Article 50, no deal remains the legal default position.

Parliament voted on a motion to approve a short extension (until 30th June) if there is a deal and warns Parliament that a no deal scenario would lead to a longer extension and require the UK to take part in the European election. May has stressed that EU27 will not grant a short extension to Article 50 without a deal in place. Parliament passed this motion by 412 to 212, allowing for another meaningful vote next week which could result in an extension to June 30th if it passed.

Third Time’s the Charm

Following these events, it is now looking like May will bring her deal back for a third meaningful vote by early next week before she heads to Brussels for the EU Council Summit. May’s decision to hold a third vote on the Brexit deal could trigger a constitutional crisis, as Parliamentary rules states that the same motion cannot be voted on in the same Parliamentary session if the motion has previously been defeated. If the Speaker of the House John Bercow decides to block another vote, the PM would be left with no choice but to ask the EU27 for an even longer extension.

Whilst many Tories in the ERG, including Steve Baker, have remained firm that they will reject the deal “come what may”, the emerging split in the group is becoming increasingly apparent with many Tory Eurosceptics and even the DUP indicating that they could vote in favour of May’s deal should further legal assurances be given. Government has begun holding private meetings since the meaningful vote’s defeat in order to secure the much needed support. If successful, the talks could result in May’s deal being supported by the majority of the Tory rebels and DUP.

Reports suggest that the success of these talks depend on the Government delivering on three main concessions to the rebel groups. The first would require the Attorney General, Geoffrey Cox, submitting additional legal advice to Parliament stating that the UK has the power to exit the backstop without breaching international law. This would act to reassure MPs that the UK will not become ‘trapped’ in the backstop. The second, rumours suggest, would require the Irish Government to work with the UK in finding technical solutions to the Irish border issue. The argument being used by some suggests that if the Republic of Ireland refused to cooperate in finding a technological solution then this would be in breach of UN resolution 1373. Whilst this is a rather tenuous link to protecting terrorist threats in the event of a no deal and rather unlikely to hold the Republic of Ireland to account, it will be interesting to see the future role that the Irish Government play regarding the backstop. Finally, reports suggest that any deal would involve a sum to help Northern Ireland “cope” with the changed political circumstances.

It will be interesting to discover the success of such meetings next week as it does appear that Tory Brexiteers and the DUP are trying to find a way to support May’s deal. However, there is no guarantee that these discussions will convince all members of the ERG., Members such as John Redwood would easily go against the views of the ERG chairman Jacob Rees-Mogg. Therefore, taking May’s slim working majority into account, even if the Government wins support of half of these members, it is still possible that the Withdrawal Agreement could be defeated. Should a defeat occur then it is extremely likely that an extension of Article 50 would be longer, potentially requiring the UK to participate in the European Parliament elections in May 2019.

EU Update

Come on Manfred make your mind up

The EU reaction to the meaningful vote on Tuesday was unsurprisingly bleak. EU Commission President Jean-Claude Juncker highlighted that there was nothing more the EU could do to break the impasse in the UK Parliament. A spokesman for EU Council President Donald Tusk commented that the EU27 would consider a possible extension, but would expect a credible justification for the extension and its duration. Michel Barnier’s message echoed what has previously been said, that the deal on the table is the “only available treaty” and that no-deal preparations are now more important than ever. Although Parliament voted to reject no deal on Wednesday, it is important to remember that unless the EU27 unanimously agrees to extend Article 50, leaving without a deal is the default option.

The view from the EU Parliament was no different. Manfred Weber, leader of the European People’s Party, called last night’s vote a “disaster” and highlighted that the EU needs to prepare for the worst-case scenario. He also shared Tusk’s position that an extension should not be given if the UK cannot agree what it wants. Similarly, Guy Verhofstadt, the European Parliament’s Brexit spokesman, summarised that the UK had “spiralled out of control.”

Delay all your love on me

Although the vote yesterday was to delay Brexit until the 30th June, there are calls from the EU to delay Article 50 further. If this situation occurs, it is rumoured that the EU would ask for a year long delay. EU Council President Donald Tusk has already stated that he will recommend a “long extension” at next week’s EU summit so that the UK can “rethink its Brexit strategy and build a consensus around it.”

At present the EU27 are reluctant to give the UK a three-month extension because there is little evidence to suggest that a Parliamentary consensus can be achieved around any Brexit deal in that time. A delay of a year or more would be extremely frustrating for the those that voted for Brexit, but it could be the only way to ensure that the UK leaves the EU with a deal. If Brexit was delayed until 2020 or even further, one of the benefits of this is that the time could be used to negotiate a trade deal with the EU, and it would mean that the backstop would not be needed, the main sticking point of these negotiations.

Always Be Prepared

Despite the UK Government’s vote this week to rule out a no deal, the Dutch Government has begun spending millions of euros on no deal preparations. The Dutch Foreign Minister, Stef Blok, has stated that “there is no alternative but to hope for the best but prepare for the worst”.

A no deal would have a significant impact on the Netherlands’ economy as 40 million tonnes of goods travel between Rotterdam and the UK every year. As Wednesday’s vote was not legally binding, if no deal preparations are not in place by March 29 there could be a significant impact on trade with disastrous effects for both economies. The Dutch Government estimates that the Netherlands will take a €2.3 billion economic hit in the event of a no deal. The Netherlands does not want a no deal but has stated that it would rather plan for its eventually and hope that it does not then to be unprepared if it happens.

Upcoming Key Dates

  • W/c 18th March: Third Meaningful Vote
  • 21st March: European Council Leaders’ Summit
  • 30th June 2019: UK exit from the EU if a deal is agreed.
  • 31st December 2020: UK planned exit from the transition agreement

 

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