By Robert McConnell, Brexit Adviser to NI Chamber
Earlier today, the Prime Minister announced a new Withdrawal Agreement had been reached between UK and EU negotiators. Both Boris Johnson and Michel Barnier, the EU’s chief negotiator, have praised the new deal and urged their respective parliaments to support it. Amidst the media frenzy surrounding the deal, it is less clear what they reached an agreement on. This email aims to provide an overview of what exactly was agreed this morning.
The new deal is based on an alternative plan to the backstop, something the Prime Minister has repeatedly stated his opposition to. To create a solution to the controversial backstop, the new deal breaks down into four distinct areas, with each outlined below;
Northern Ireland will remain in the UK’s customs territory and retain access to the EU’s single market
Under the new deal, the UK as a whole, will leave the EU’s customs union allowing the UK to make its own trade agreements with other countries in the future. There will however be a legal customs border between Northern Ireland and the Republic of Ireland, with the checks for this occurring on goods at the point of entry in Northern Ireland from the rest of the UK. This creates a border in the Irish sea and avoids the requirement of any physical border or checks at the Irish border.
Customs duties will not necessarily need to be paid on goods entering Northern Ireland from the rest of the UK. Although, for any goods that would or could later be moved to the Republic of Ireland via Northern Ireland, customs duties will be due and collected on behalf of the EU by the UK.
One potential system would see Northern Irish companies pay customs duties on goods entering the country from the rest of the UK, and if they do not move further, these companies would then receive a refund from the UK government.
At present, it has currently not been decided what goods would specifically be affected by this, with a joint committee of UK and EU representatives to create it at a future date.
Northern Ireland will remain aligned to certain EU rules
Although Northern Ireland will remain aligned with the UK’s customs unions, goods imported from the UK will also need to be checked to ensure they are compliant with EU rules, as Northern Ireland will retain access to the EU single market. To ensure these rules are complied with, there will likely be EU officials present at ports alongside their UK counterparts.
VAT and the single market will be protected
The new deal also contains provisions on VAT, with the tax continuing to apply in Northern Ireland on goods and not services. Northern Ireland will also be allowed to have different VAT rates compared to the rest of the UK. This could be used to achieve parity with goods originating in the Republic of Ireland to prevent any unfair advantage being granted to either state.
Stormont gets a say
As Northern Ireland will be subject to EU rules on customs and other areas, separate to the rest of the UK, the Northern Ireland Assembly will be given the opportunity to approve the provisions every four years.
This vote will require a simple majority for deciding whether they should continue to follow EU rules or not. If the Assembly votes against following EU rules, Northern Ireland would continue to adhere to EU rules for a further two years with a joint committee of UK and EU representatives suggesting what needs to be implemented to enable the move.
If the Assembly opts to continue following EU rules, the provisions will remain in place for another four-year period. If this approval is passed with ‘cross-community support’ though it could be extended. This would either be for a period of eight years or until a new deal on a future relationship is achieved, depending on which happens first.
This would either be after receiving 51% support each from both unionist Assembly members and nationalist Assembly members, or, a minimum of 40% of members from each designation in the event of 60% of all members voting for the following of EU rules.
What happens now?
The Prime Minister will present the new deal to the leaders of the EU27 and it is expected that he will gain their support. This would then leave the UK parliament as the main hurdle. Parliament will be called for a special Saturday sitting on 19 October where the deal will be put to a vote, where Boris Johnson aims to get his deal passed.
If the deal is not passed, then the UK will again face a no-deal Brexit. Jean-Claude Juncker, President of the European Commission, has ruled out granting the UK a further extension.
It appears now that Brexit will come down to being a choice between the Prime Minister’s deal, or no-deal.
NI Chamber Brexit Advisory Service gives members access to free bespoke 1-1 advice on Brexit, specific to their business and tools to prepare for Brexit as the UK leaves the EU. To access our Brexit Advisor, please contact Robert McConnell on Robert.McConnell@northernirelandchamber.com