Q&A: The Brexit withdrawal agreement

Jan 03, 2019
Crona Clohisey ACA answers the questions you were embarrassed to ask about the Brexit withdrawal agreement.

What is in the Brexit withdrawal agreement?

There are 600 pages of detail on citizens’ rights, the transition period, the divorce bill and the Irish border. All of these need to be agreed before talks can move on to the future trading relationship. 

What is the Irish border conundrum?

The Irish border has been a sticking point in these negotiations with the UK wanting to avoid a hard border on the island while also being reluctant to detach Northern Ireland from the rest of the UK to facilitate that.  

How does the agreement propose to solve the Irish border problem?

The agreement says that if the Irish border issue is not resolved after a transition period ending on 31 December 2020, the UK in its entirety (rather than just Northern Ireland which had originally been proposed by the EU) will remain in a temporary customs union with the EU until some form of agreement is reached. This is the backstop. 

So will there be no tariffs or checks?

Yes, for most goods traded between the UK and EU. Different rules will apply to fish products. There will be no tariffs, quotas or checks after the transition period ends on 31 December 2020 and until such time as a free trade agreement or other trading mechanism is agreed between the sides. This also means that the UK cannot apply lower customs duties than the EU does on products coming in from outside the EU.

This arrangement will remain intact until a new arrangement can be agreed to enable frictionless trade on the island of Ireland. 

What about North/South trade?

To avoid a hard border on the island of Ireland, Northern Ireland will temporarily sit in a separate regulatory environment to the rest of the UK which will mean it will have to follow EU rules on customs, VAT and sanitary standards, for example. If Northern Ireland wants to put goods on the EU’s single market, it needs approval from the EU. As a result, goods can continue to trade freely north and south of the border.

Can the UK leave the backstop arrangement when it wants?

No. The UK can only leave the backstop arrangement with consent from the EU.  

Can the transition period be extended?

Yes. The UK can apply to the EU by 1 July 2020 if it wishes to extend the transition period beyond the current end date of 31 December 2020.  

What about the Common Travel Area?

Both sides have pledged to maintain the Common Travel Area that exists between Ireland and the UK. This means that citizens from both countries can live, work and travel in both countries. 

What happens now?

The EU Summit took place on 25 November and EU member states formally approved the agreement. The UK government were supposed to hold a vote in the House of Commons on the deal on the 10 December but this was cancelled amid the possibility of it being voted down. Now we are in limbo, with reports that the UK will seek some amendments to the deal from the EU. However, while the EU has said they can offer clarifications, no other deal can be offered. As we wait, both the UK and EU have issued a raft of guidance on how to plan for a no-deal Brexit.   

If the withdrawal agreement is ratified by the UK and EU parliaments, talks on the future relationship can start. 

Is a no deal Brexit still a possibility?

Yes. If the withdrawal agreement is not passed by both the UK and EU Parliaments, there will be no deal and therefore no transition period. The UK will leave on 29 March 2019.

Crona Clohisey is a Manager in Tax and Public Policy at Chartered Accountants Ireland.