Brexit Update 20th July 2018

By July 31, 2018Brexit Updates

Top 3 developments  

  • No-deal planning stepped up
  • Government wins crunch votes on trade and customs
  • EU sceptical of May’s White Paper

UK Update

No-deal planning stepped up

Following a series of votes that have entrenched the UK negotiating position, including making a customs border in the Irish Sea illegal, ensuring the UK will not implement a dual tariff regime unless the EU matches it, and rejecting a customs union with the EU if no deal is reached by 31st January 2019, both sides have now stepped up contingency planning in the event of a no-deal scenario.

As a result of the publication of the White Paper, cabinet resignations, and threats of a leadership contest triggered by disgruntled Brexiteers, the UK looks to be standing firm on its position, with additional concessions to the EU beyond those set out in the White paper unlikely. Unlike the Withdrawal Agreement, which is said to be 80% complete, the future framework for the UK-EU relationship only began this week. Parliament has been promised that they will vote on both the agreements at the same time, meaning a failure to agree the second may put the first at risk. If this occurs, the transition period may also be put at risk making an extension to negotiations and the UK’s EU membership or a no-deal Brexit more likely. The response to the White {aper by the EU27 will therefore be critical to the actions of both sides in the coming weeks and months.

May to Stay Another Day

An amendment to the Trade Bill calling for the Government to pursue a customs union with the EU in event no deal is reached by the end of January 2019 was defeated by only 6 votes. The amendment, which was supported by 12 Conservative MPs, runs counter to Government policy with threats being made that a general election would need to be called if it passed. The support of four Labour MPs ensured the amendment did not stand, with the campaign group Momentum criticising the Labour MPs who helped the Government head off an embarrassing defeat.

Many had believed there was support for a customs union in Parliament in the event of a no-deal Brexit, with Labour policy favouring it. However, the defeat of the amendment which was closely followed by Brussels, as well as the passing of additional amendments in the Customs Bill that made it illegal for a customs border to be created in the Irish Sea or for the UK to implement a dual tariff regime unless the EU did too for UK-bound goods, has signalled to EU negotiators that the UK’s position is becoming increasingly entrenched. May lives to fight another day.

No thank EU

In a delayed press conference to the media, Michel Barnier set out the EU’s response to May’s White Paper. Barnier was positive on the FTA, commitments to a level playing field and the convergence and cooperation on security arrangements. However, on the plan put forward on goods aimed at maintaining frictionless borders, Barnier had a series of questions based upon the practicalities of the proposals. He went further in saying it would need to be judged whether the proposals were in the interests of the EU and how EU member states could implement any agreement. The dual-tariff regime was questioned, with Barnier saying that “no additional bureaucracy could be created as a result of Brexit”. The divisibility of the four freedoms, that the white paper was said to encourage, was also ruled out leaving questions over whether the goods proposal could stand.

Barnier’s comments followed a speech by Theresa May in Northern Ireland where she ruled out the EU’s preferred backstop option. Michel Barnier however insisted that the EU would not move on its call for a backstop to be included in the Withdrawal Agreement, ‘whether or not it’s our proposal’. He further stated that the backstop, once agreed, could only be supplanted if a better option came forward, seemingly making it the default option rather than a backup. Negotiations will resume next week on the backstop, however with a need to agree the future framework too, it is still unclear how a final deal can be agreed in only 13 weeks.

“It’s not too late to save Brexit”

Boris Johnson used the time customarily given to cabinet ministers on their resignation to address Parliament and declare that “it is not too late to save Brexit”. Commenting that the Chequers Agreement lacked self-belief and would leave the UK in “miserable limbo”. Johnson made distinctions with May’s Lancaster House speech which he believed set out a “strong independent, self-governing Britain” in comparison to one that followed EU regulations on trade, the environment and social affairs. Boris’s speech, unlike that of Geoffrey Howe in 1990 which helped bring down Margaret Thatcher, included praise for the Prime Minister, highlighting her “courage and resilience” and that she had time to change her approach. In a warning shot however, Johnson said that it would be in MPs’ hands if she didn’t, suggesting a future leadership contest was not ruled out. Johnson will join Davis as part of the European Research Group as they seek to apply greater pressure from the outside for the Prime Minister to change tack.

Labour calls for inquiry into Vote Leave Ministers

Labour has called for an investigation into possible misconduct by Conservative ministers, including Boris Johnson and Michael Gove following a ruling by the Electoral Commission that the Vote Leave campaign had worked together, pooling resources whilst breaking funding rules. The campaign was fined £61,000 and referred to the police. Conservative MP and Chair of the Health Committee and Liaison Committee, Sarah Wollaston, called for a re-run of the referendum as a result of the revelations. Labour is seeking to find out if ministers and former ministers broke the ministerial code which emphasises transparency and honesty. The pressure is likely to mount on the Prime Minister to launch an investigation, however given ongoing police investigations, the issue is likely to be delayed.

Where art thou.. Vince? Tim?

Liberal Democrat party members reacted with fury as their leader Vince Cable MP and former leader, Tim Farron MP missed a crucial vote on a Customs Bill amendment tabled by Conservative Brexiteers. The amendment passed by three votes. Both MPs apologised for missing the vote, stating they were misinformed over how close the vote would be. Both the Customs Bill and Trade Bill have now passed to the House of Lords, where they are likely to receive further amendments, although they will not be able to remove the amendments agreed by the Commons.

Second referendum? No chance says No.10

Former minister, Justine Greening called for a second referendum to resolve the impasse in Parliament that may lead to no final agreement being concluded. The Government responded, saying “under no circumstances” would another referendum be held on the UK’s exit from the EU. Trying to unify people to her cause, Greening stated that MPs on all sides are unhappy with the Government’s position, with Brexiteers thinking that it is not what they voted for. The proposed question for a speculative referendum would ask people whether they wanted to approve the Chequers plan, have a no-deal Brexit or remain in the EU. Labour Shadow Foreign Secretary, Emily Thornberry also categorically rejected the idea of a second referendum in front of activists, saying a Corbyn government would “do as instructed” based on the 2016 referendum result

Upcoming Key Dates

  • 18th October: EU Council Summit, including sign off of the EU Withdrawal Agreement
  • 29th March 2019: UK planned exit from the European Union
  • 30th March 2019: UK planned transition period.
  • 31st December 2020: UK planned exit from the transition agreement.