Brexit Update 18th May 2018

By May 30, 2018Brexit Updates

Top 3 developments  

  • Customs Conundrum Continues
  • Holyrood rejects Withdrawal Bill
  • Commons to debate Lords Brexit amendments

UK Update

Customs Conundrum Continues

The confusion over the Government’s future customs arrangement with the EU continued this week as Theresa May was forced to reiterate that the UK would leave the Customs Union after Brexit. The Prime Minister made her comments at the West Balkans Summit after reports in the Telegraph that the Government was considering a plan to continue to apply the EU’s external tariffs beyond December 2020.

The reports suggested that Cabinet agreed on Tuesday to a ‘backstop proposal’ which would see Britain remain in a customs arrangement, aligned to EU regulations, until it has put in place the necessary technological infrastructure to implement a new customs policy. The ‘backstop proposal’ would only be deployed if none of the UK’s other preferred options for a future customs arrangement are ready by the end of the transition period. The Government maintains that the EU’s proposed backstop solution, which would keep Northern Ireland in the Customs Union, is unacceptable and the DUP have confirmed they would not accept such a solution. The pressure remains on the Government to produce workable customs proposals by the EU Council Summit in late June – a date which both sides want to see mark another important milestone in the negotiations.

Will WTO make May’s Customs Decision for her?

Government lawyers are said to be looking into the legality of the Customs Partnership option being considered by the Brexit Subcommittee as a possible solution to keep trade ‘as frictionless as possible’ between the UK and EU after it leaves the bloc. World Trade Organisation rules dictate that states must ensure adequate provisions are put in place to protect trade borders and stop discrimination between states. For example, if the EU allowed such a partnership to emerge for the UK, it should offer it as an option to other states, provided they meet the criteria set out.

Holyrood rejects EU Withdrawal Bill

In a widely expected move, the Scottish Parliament has voted to reject the UK Government’s Brexit Bill, paving the way for a constitutional battle as the Bill makes its way back into the House of Commons to be passed into law. Without Scotland’s support, the Government has failed to achieve one of its core objectives for the Brexit process, risking future retaliatory measures as the SNP and others seek to question the UK Parliament’s supremacy over devolved powers. Whilst Westminster has the power to introduce legislation without receiving the consent of Holyrood, the situation would be without precedent. Reacting to the news, Scotland’s Brexit Secretary Mike Russell, stated that the UK Government ‘cannot ignore the reality of devolution or try to drown out what this Parliament says’. The Scottish Conservatives meanwhile criticised the Scottish Government as not being willing to compromise, unlike the Labour Government in Wales.

Lords leave May thunderstruck

The Government has the gargantuan task of facing up to a rugby-team sized set of amendments to its flagship EU Withdrawal Bill as it returns from the House of Lords. All 15 amendments will need to be voted on in the Commons to decide whether they should pass or not, with the Government likely to offer concessions to Conservative backbenchers thinking of voting in line with the opposition. Brexiteers have lined up to criticise what it calls the Lords ‘wrecking amendments’ which counter agreed Government policy, including on Single Market and future Customs Union membership. The Conservative Whips office, headed by Julian Smith MP will have responsibility for turning dissenters around, with a three-line whip due to come into force for the votes.

Rice to see you, to see you rice

Conservative MP Nicky Morgan has joined forces with former Labour foreign secretary David Miliband and former deputy prime minister Sir Nick Clegg, to launch a cross-party campaign against a ‘hard Brexit’. The campaign is seeking to encourage parliamentarians to support some of the amendments made to the Brexit Bill by the House of Lords regarding the single market and customs union when the Bill returns to the House of Commons.

The trio launched their campaign at the Tilda Rice mill in Essex earlier this week, where they warned that a hard Brexit could threaten jobs, living standards and the UK’s political influence.

Nicky Morgan criticised the language used in the Brexit debate and revealed that the abuse and death treats she had received over her position was one of the factors behind her determination to work across party lines to find a deal that was “best for the country, for the economy”. Meanwhile, Miliband warned that the country should not be “held to ransom by the demand for hard Brexit”, but denied that he himself would be returning to British politics while Mr Clegg refuted claims that the campaign would be the start of a new centrist party.

Stakes rise as May goes all in

In a move designed to steal the initiative from Brussels, Theresa May has announced a 100 page white paper covering the UK’s vision for a future UK-EU relationship to be published before the next EU Council meeting in June. Government sources have said the paper will be “detailed, ambitious and precise” and will include a plan for how to avoid re-establishing a hard border, a key sticking point of the May Government. Risks associated with the move do remain, however, with the European Commission likely to accuse the UK of cherry-picking as the UK sets out its plans which are likely to include sector-by-sector cooperation and regulatory alignment. If May fails to progress trade talks with the EU before Parliament votes on the final deal, there is unlikely to be enough support from either side of the House, leading to questions about what a vote against the deal will ultimately mean.

No(r) way Jeremy!

Confusion over the Labour party’s stance on Customs Union membership threatens to overshadow Labour’s moves to exploit the Conservatives’ own splits on Brexit. MPs will vote on a Lords amendment requiring the Government to negotiate for EEA membership next week. There are a reported 70 Labour MPs who are prepared to defy the leadership if they are ordered to vote against this amendment.

Whilst Corbyn has never directly ruled out the Norway option, Shadow Brexit Secretary Keir Starmer has ruled the option out in the past. Meanwhile, Paul Blomfield, a Shadow Brexit Minister said this week that: “We are ruling nothing off the table”. Labour’s ambiguous Brexit stance will surely come to an end next week.


Let’s talk Turkey

Turkey’s economy minister, Nihat Zeybekci, has signalled that Turkey is keen to agree a comprehensive Free-Trade Agreement with the UK after Brexit, with a third round of trade talks set to take place in June. Pointing to construction projects and its influence across the MENA region, Zeybekci went on to say that Turkey could be a ‘trade gateway’ for British companies if such a deal was agreed. The comments follow a trip by Turkish President, Recep Tayyip Erdogan, to the UK, with both countries seeking to take advantage of the UK’s exit from the EU to satisfy domestic economic concerns.

Turkey has a customs union with the EU, applying a common external tariff on a range of goods imported from third states under the agreement. EU FTAs agreed with third states do not apply to Turkey, meaning goods can be exported to Turkey tariff free, whereas additional tariffs can be applied by third states to the import of Turkish goods. Any future FTA between the UK and Turkey would therefore be subject to both countries customs arrangements with the EU.