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Political Declarations & Future Relationships

Kitty Miv, Editor
23 October, 2019

This week in Brexit (Bo-rxit? Berck-sit? Maybe we'll stick with Broke-sit...) has been a particularly interesting one. (And there are, it must be said, less polite alternatives to describe the current situation, but as this is a family-friendly publication with standards of decency to uphold, we'll side-step those for the moment. Perhaps next week!)

At the time of writing, Prime Minister Johnson's slight variation on his predecessor's plan had passed the House of Commons, but MPs had rejected the government's moves to force the plan through in just three days. The deal, which had previously secured the agreement of the European Union, would involve a hard Brexit for the UK but ensure that a hard border does not materialize between Northern Ireland and the Republic of Ireland to its south.

According to the EU, the deal provides that Northern Ireland would remain aligned to a limited set of rules related to the EU's Single Market in order to avoid a hard border. Specifically, it would be bound by EU legislation on goods, sanitary rules for veterinary controls (SPS rules), rules on agricultural production/marketing, VAT and excise in respect of goods, and state aid rules.

It was explained that: "EU and UK negotiators have now found a new way to achieve the goal of avoiding a customs border on the island of Ireland, while at the same time ensuring Northern Ireland remains part of the UK's customs territory. This agreement fully protects the integrity of the EU's Single Market and Customs Union, and avoids any regulatory and customs checks at the border between Ireland and Northern Ireland."

The EU further explained that the main change in the Political Declaration relates to the future EU-UK economic relationship, with the current UK government opting for a model based on a Free Trade Agreement (FTA). The EU stated that: "The Political Declaration provides for an ambitious FTA with zero tariffs and quotas between the EU and the UK. It states that robust commitments on a level playing field should ensure open and fair competition. The precise nature of commitments will be commensurate with the ambition of the future relationship and take into account the economic connectedness and geographic proximity of the UK."

Jean-Claude Juncker, President of the European Commission, suggested at the time that the agreement was announced that it represented "a fair compromise between the EU and the UK. It is testament to the commitment and willingness of both sides to do what is best for EU and UK citizens. We now have a newly agreed Protocol that protects peace and stability on the island of Ireland and fully protects our Single Market. I hope that we can now bring this over the line and provide the certainty our citizens and businesses so deserve."

Michel Barnier, the European Commission's Chief Negotiator, went on to explain that "We had difficult discussions over the past days. We have managed to find solutions that fully respect the integrity of the Single Market. We created a new and legally operative solution to avoid a hard border, and protect peace and stability on the island of Ireland. It is a solution that works for the EU, for the UK, and for people and businesses in Northern Ireland."

All other elements of the Withdrawal Agreement remained unchanged in substance, as per the agreement reached on November 14, 2018, the EU confirmed, adding that the Withdrawal Agreement aimed to bring legal certainty where the UK's withdrawal from the EU created uncertainty: citizens' rights, the financial settlement, a transition period at least until the end of 2020, governance, Protocols on Gibraltar and Cyprus, as well as a range of other separation issues.

However, the Conservative Party was setting itself up for a significant task this week in seeking to secure the support of the Labour Party, the Liberal Democrats, and the various national interestparties (including the notoriously prickly Democratic Unionist Party) all of which have vastly different agendas, but are generally united in their distaste for the Johnson deal as it currently stands. In an additional complication, the Conservative Party will need to shore up support from within its own ranks, with many having dissented in the recent past.

At the time of writing, threatening noises are being made regarding the possibility of elections, no elections, Brexit with a deal, Brexit with no deal, extensions, and lack thereof, and so, as is by now traditional in this column, I'm forced to concede once again that what happens next is anyone's guess.

Until next week!

About the Author

Kitty Miv, Editor

Kitty was born in Argentina in 1960 to a Scottish cattle rancher and his Argentine wife. Educated in Edinburgh and at Princeton, Kitty worked for the World Bank as an economist, where she met and married an emigre Iranian banker. During her time with the Bank, Kitty worked in a number of emerging markets, including a spell in the ex-USSR as a Transition Economies Team Leader. Kitty is now a consultant in Brussels and has free-lance writing relationships with a number of prominent economic publications. kitty@lowtax.net


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