Summary
The deferment of the UK Parliamentary vote on the EU/UK Withdrawal Agreement and Prime Minister May’s ongoing efforts to secure further assurances from the EU on the improbability of the activation of the Irish border safeguard so as to address UK Parliamentary concerns adds to the uncertainty as to whether a ‘no-deal’ Brexit can be avoided. While Prime Minster May survived the Conservative Party vote of no-confidence in her leadership, with 117 Conservative MPs voting they had no confidence in her leadership largely around the Brexit issue this does not bode well for the ratification of the Withdrawal Agreement. This gives added urgency to the contingency planning underway in both the EU and the UK. ACP governments and private sector exporters will need to engage with these contingency planning processes to ensure that the needs and interests of ACP exporters are accommodate within the emergency measures set in place. Early targeted action in this regard to help minimise the trade disruptions arising from a ‘no-deal’ outcome to the current Brexit negotiations.
On Sunday 26th November after only 30 minutes discussion the EU Council approved the EU/UK Withdrawal Agreement and associated political declaration. However EU leaders stressed there was now only one thing that mattered namely, that the UK Parliament ratifies the Withdrawal Agreement. Commission President Juncker argued ‘this is the best deal possible for Britain, the best deal possible for Europe,’ and ‘the only deal possible’ (1).
Three days into the Parliamentary debate on the Withdrawal Agreement, with a major defeat in the House of Commons looming, Prime Minister May suspended the debate and postponed the vote on the agreement. The Prime Minister then launched a whistle stop tour for consultations with EU leaders to try and secure sufficient reassurances on the Irish border back stop to secure the necessary Parliamentary majority for the ratification of the agreement (2). This it is felt could take the form of ‘an exchange of letters or side-declarations pledging that the backstop in the withdrawal agreement, which could keep the UK in an indefinite customs union, would be temporary and unlikely to come into force’ (3). In a tweet EU Council President Donald Trump indicated that while the EU was not willing to reopen negotiations it was ‘ready to discuss how to facilitate UK ratification’ (3).
It is unclear whether sufficient reassurances will be forthcoming to ensure UK Parliamentary approval for the Withdrawal Agreement. As 2018 draws to a close there is no certainty over when the UK Parliamentary vote will take place, with the only deadline apparently being the 21st January 2019, by which time the UK Parliament will need to have had its say.
Initially Prime Minister May had intended to hold a first Parliamentary vote on 11 December, with the aim being to return to Parliament in January 2019 for a second vote, in the hope that having formerly notified their opposition to the Withdrawal Agreement enough MPs would respond to growing business concerns over the disastrous short term economic consequences of a ‘no deal’ Brexit to ensure the Withdrawal Agreement is ratified on the second reading. This strategy has now been abandoned since it was felt the scale of the defeat on the first vote could well have put the Prime Ministers Premiership in jeopardy.
Despite these tactics following the deferment of the Parliamentary vote Conservative MPs ‘triggered a vote of no confidence in Theresa May’ as Party leader, indicating ‘they no longer had faith in the prime minister to deliver the deal’. Following the announcement of the ‘no-confidence motion by the required 48 MPs ‘ministers warned that such a successful challenge would mean that article 50 might have to be suspended’ (4). This needs to be seen in the context of the ruling by the European Court of Justice that the UK could unilaterally withdraw their Article 50 notification to leave the EU. An option which prime Minister has however ruled out (5).
Prime Minister May survived the Conservative Party vote of no-confidence, with 200 votes in favour of her leadership and 117 Conservative MPs voting they no longer had confidence in her leadership, largely as a result of the nature of the Withdrawal Agreement the Prime Minister had concluded with the EU. This does not bode well for the ratification of the Withdrawal Agreement by the whole of the House of Commons given the Conservative Party already depends on the Democratic Unionist Party for a Parliamentary majority.
Against this uncertain background the UK government is now stepping up contingency planning and the EU is beginning to move towards the implementation of its contingency plans.
According to UK Transport Secretary Chris Grayling ‘trade on the key Dover-Calais route could be cut by up to 87% in the event of a disorderly exit’. This it is held would largely arise as a result of the introduction of ‘checks and customs controls’ on the French side. Transport Secretary Grayling called for plans to be drawn up to ‘ration space on ferries carrying vital supplies to Britain’ and is reported to be seeking Cabinet approval for ‘the chartering of ships, or space on ships, to operate on alternative routes, bypassing likely blockages in the Strait of Dover’. Three ports in particular are being targeted for increased handling of cargoes coming from the EU27: Ramsgate, Sheerness and Immingham, although these all have ‘considerably longer journey times’ (6). These longer journey times would then disrupt existing ferry schedules which operate on a 24/7/365 schedule, with very little scope for delays.
It had been anticipated that more detailed contingency planning arrangements would be announced following the 11th December vote in the House of Commons. However with the deferment of this vote is now unclear when UK contingency plans will be made public.
While the Prime Minister May has been campaigning in favour of the Withdrawal Agreement on the basis there is no ‘Plan B’, various caucuses have emerged in Parliament and indeed in the Cabinet around alternative deals.
According to the Guardian ‘five remain-backing ministers, including the de facto deputy prime minister, David Lidington, and the chancellor, Philip Hammond, are understood to have discussed staying in a customs union permanently’. Since staying in the customs union permanently is the Labour Party’s current position, it is felt this option could secure a Parliamentary majority, given the desire of the House of Commons to avoid a ‘no-deal’ outcome to the Brexit negotiations (7).
Meanwhile ‘a further four ministers have held one-on-one talks on a Norway plus option with Tory MP Nick Boles’ (6). This would involve the UK joining the European Free Trade Association (EFTA) which already has in place a customs arrangement with the EU. This option appears to be gathering momentum with both the SNP leader, Nicola Sturgeon, and the DUP’s Arlene Foster indicating ‘they would consider the option’ (7). This would not be straight forward however since EFTA also includes free movement of labour commitments. This could prove politically controversial given the centrality of the migration issue in the referendum vote.
In addition according to reports in the Guardian, ‘senior Norwegian politicians and business figures have rejected Norway-plus’, arguing the proposal is ‘neither in Norway nor the UK’s interest’. ‘Heidi Nordby Lunde, an MP in Norway’s governing Conservative party, and leader of Norway’s European movement claimed her views ‘reflected those of the governing party even though the Norwegian prime minister, Erna Solberg, has been more diplomatic by saying Norway would examine a UK application’ (8).
It is against this background that current EU and pending UK contingency planning is likely to take on real significance.
In its 13th November contingency plan communication the EC committed the EU to taking unilateral action wherever necessary, but with these measures being temporary, limited in scope and falling short of replicating the benefits of UK membership of the EU for UK enterprises. Specifically the EC is ‘envisaging a limited number of contingency measures to mitigate significant disruptions in some narrowly defined areas’ (9).
As part of the preparations to date the EC ‘has tabled eight legislative preparedness proposals’ with the two most important from an ACP perspective relating to the future of WTO TRQs and the ‘new maritime route to link Ireland with the continental part of the North Sea-Mediterranean corridor’ (9).
Another area relevant to ACP exporters is the ongoing efforts of the EC to support the UK in ‘securing its accession to the Common Transit Convention as a non-EU transit country’, and the UK’s accession to ‘the Convention on the simplification of formalities in trade in goods’ (8). These EU initiatives are important for ACP exporters using triangular supply chains to serve the UK market (e.g. cut flower exports from East Africa to the UK via the Dutch flower auctions).
A number of policy areas requiring specific attention have also been identified including: citizens’ rights; financial services; air transport; road transport, customs; sanitary/phytosanitary requirements; personnel data; EU climate policy. The important of these areas from an ACP perspective are those related to:
- future customs controls on EU/UK borders;
- future sanitary/phytosanitary requirements on UK/EU trade which have important trade diversion implications particularly for animal products such as poultry meat and dairy products;
- future arrangements for EU/UK road freight hauliers, for without a withdrawal agreement in place only a limited number of road haulage permits for cross border freight movements would be available, with this potentially leading to ‘shortages’ of licensed road transport operators along some routes.
| Comment and Analysis It is against this background that ACP governments and ACP exporters will need to look closely at what current contingency plans being drawn up in the EU and UK could mean for current patterns of ACP agro-food sector exports to the UK and EU27 markets.The first priority for ACP governments needs to be to clearly define areas where EU unilateral action is needed to prevent any disruption of existing ACP exports. More specifically ACP governments need to build on the EC’s recognition that issues related to customs and border procedures, SPS measures and cross border road transport will require special attention, by ensuring this extends to addressing ACP concerns, including establishing special handling and customs clearance arrangements for the movement of ACP goods between the EU27 and UK where duty free-quota free access is enjoyed to both the UK and EU27 markets with common SPS and food safety standards being applied (e.g. for exports of Ethiopian cut flowers to the UK market via the Dutch flower auction houses).This will require close monitoring of on-going UK/EU discussions on the licensing of road hauliers in the post-Brexit period since this could severely impact on onward trade into the UK. ACP governments and exporters will also need to closely monitor and engage with discussions on the EU’s future treatment of bilaterally negotiated TRQs, to ensure the EC limits TRQ access to EU27 markets to established levels of trade for products such as Bananas and Sugar, where the UK is currently a major market for extra-EU imports form non-ACP countries; In addition ACP governments will need to initiate a dialogue with the UK government on preserving their current terms and conditions of access to the UK market. Two option exist in this regard, requiring either: a) the UK government to make a binding commitment to unilaterally applying Article 129 of the concluded Withdrawal Agreement regardless of the state of play in the ratification process, so as to provide certainty for UK and 3rd country commercial operators in the run up to the UK’s withdrawal from the EU, thereby averting disruption of UK imports from ACP countries and other 3rd country trade partners; or b) ACP EPA signatory governments to expedite domestic preparations to ensure they are in a position to sign a ‘rolled over’ ‘UK-only’ reciprocal trade agreement based on a revised EPA text by 29th March 2019. There is also a need for the initiation of a process of dialogue with the UK government on how wider ACP concerns can be integrated into and addressed within current UK government planning for a ‘no-deal’ Brexit. |
Source:
(1) Guardian, ‘EU signs off on ‘the only deal possible’, 27 November 2018
https://www.theguardian.com/politics/2018/nov/27/brexit-weekly-briefing-eu-signs-off-on-the-only-deal-possible#img-1
(2) Guardian, ‘May delays and dashes off to save the deal’, 11 Dec 2018
https://www.theguardian.com/politics/2018/dec/11/brexit-weekly-briefing-theresa-may-delays-and-dashes-off-to-save-the-deal
(3) Guardian, ‘Desperate May dashes to continent in search for concessions’, 10 Dec 2018
https://www.theguardian.com/politics/2018/dec/10/theresa-may-brexit-plan-b-buy-more-time
(4) Guardian, ‘Brexit in chaos as Tory MPs trigger vote of no confidence in Theresa May’, 12 December 12, 2018
https://www.theguardian.com/politics/2018/dec/12/brexit-chaos-conservative-mps-trigger-vote-of-no-confidence-theresa-may
(5) Guardian, ‘May rules out revoking article 50 after ECJ ruling’, 10 December 2018
https://www.theguardian.com/politics/2018/dec/10/uk-can-unilaterally-stop-brexit-process-eu-court-rules
(6) freshplaza.com, ‘UK government to ration ferry space under no-deal Brexit’, 6 December 2018
https://www.freshplaza.com/article/9050790/uk-government-to-ration-ferry-space-under-no-deal-brexit/
(7) Guardian, ‘Ministers consider backing ‘Norway plus’ as Brexit plan B’, 26 Nov 2018
https://www.theguardian.com/politics/2018/nov/26/ministers-consider-backing-norway-plus-as-brexit-plan-b
(8) Guardian, ‘Norwegian politicians reject UK’s Norway-plus Brexit plan’, 7 Dec 2018
https://www.theguardian.com/politics/2018/dec/07/norwegian-politicians-reject-uks-norway-plus-brexit-plan
(9) EC, ‘Preparing for the withdrawal of the United Kingdom from the European Union on 30 March 2019: a Contingency Action Plan’, COM (2018) 880 final, Strasbourg, 13.11.2018
https://ec.europa.eu/info/sites/info/files/brexit_files/info_site/communication-preparing-withdrawal-brexit-preparedness-13-11-2018.pdf