Public Affairs Ireland | Training and Development | Conferences

Tuesday 12 December 2017

Tom Ferris is a Consultant Economist specialising in Better Regulation. He lectures on a number of PAI courses and contributes blogs regularly to PAI. He was formerly the Department of Transport’s Senior Economist.

The first stage of Brexit has been agreed. After months of tough talking and a major hitch on 4 December 2017, the European Commission and the United Kingdom finally agreed a joint report on 8 December 2017. That joint report will now allow work to commence on the all-important future trade deal and on the orderly withdrawal of the UK from the European Union. But there is still a long way to go before an orderly Brexit can be agreed.

The joint report is 15 pages long, has 96 paragraphs, and is split into five sections. In this blog I draw attention to some highlights of the report. All of the paragraphs quoted can be seen here.

The report is presented in the following five sections:

  1. Preamble
  2. Citizens’ Rights
  3. Ireland and Northern Ireland
  4. Financial Settlement
  5. Other separation issues

Section 1: Preamble

There are 5 paragraphs in the preamble. Importantly, Paragraph 5 points out that:

“under the caveat that nothing is agreed until everything is agreed, the joint commitments set out in this joint report shall be reflected in the Withdrawal Agreement in full detail”.

This means that a lot could change before the Withdrawal Agreement is finally agreed.

 Section 2: Citizens’ Rights

There are 36 paragraphs in Section 2. Citizens’ rights was one of the big issues that required agreement. And now the 3 million EU citizens living in the UK have been given an assurance that they will have the right to bring their families to the UK after Brexit. As Paragraph 12 puts it:

“irrespective of their nationality… categories of family members who were not residing in the host State on the specified date will be entitled to join a Union citizen or UK national right holder after the specified date for the life time of the right holder, on the same conditions as under current Union law”.

Paragraph 40 deals with the monitoring arrangements for the implementation and application of the citizens’ rights after Brexit. Specifically, that section states that arrangements will be

“… monitored in the Union by the Commission acting in conformity with the Union Treaties. In the UK, this role will be fulfilled by an independent national authority; its scope and functions, including its role in acting on citizens’ complaints, will be discussed between the parties in the next phase of the negotiations and reflected in the Withdrawal Agreement”.

Irish citizens’ rights are dealt with in Paragraph 54. The existing preferential entitlements are enshrined in this agreement between the EU and the UK.

Section 3: Ireland and Northern Ireland

There are 15 paragraphs dealing with Ireland and Northern Ireland. They are critical to the preservation of the Good Friday Agreement and the avoidance of a hard border. In this regard, it should be noted that in Paragraph 43 the UK specifically recalls,

“… its commitment to the avoidance of a hard border, including any physical infrastructure or related checks and controls”.

Further, in Paragraph 48, the UK acknowledges the importance of continuing not just North-South but also East-West cooperation across a range of sectors. Specifically, the section states that the UK

“… remains committed to protecting and supporting continued North-South and East-West cooperation across the full range of political, economic, security, societal and agricultural contexts and frameworks of cooperation, including the continued operation of the North-South implementation bodies”.

Paragraph 49 is one of the most important paragraphs from Ireland’s perspective. It deals with the question of North-South cooperation and the means for preventing a hard border. Moreover, it provides for a diplomatic backstop which promises to keep Northern Ireland in “full alignment” with the EU, if all else fails. It also refers to “the all-Ireland economy” that is very important from an Irish perspective. The consequences and implications of this paragraph are quite profound, and it is worth quoting it in full:

“The United Kingdom remains committed to protecting North-South cooperation and to its guarantee of avoiding a hard border. Any future arrangements must be compatible with these overarching requirements. The United Kingdom’s intention is to achieve these objectives through the overall EU-UK relationship. Should this not be possible, the United Kingdom will propose specific solutions to address the unique circumstances of the island of Ireland. In the absence of agreed solutions, the United Kingdom will maintain full alignment with those rules of the Internal Market and the Customs Union which, now or in the future, support North-South cooperation, the all-island economy and the protection of the 1998 Agreement”.

This paragraph raises some interesting questions. If Northern Ireland is fully aligned and there is no border with the UK, then will the UK be fully aligned? And if so, what does “full alignment” mean other than the UK continuing to be part of the single market and customs union? Notwithstanding these questions, it is important to recognise the very clear commitment of the UK in the final sentence of Paragraph 49, namely:

“In the absence of agreed solutions, the United Kingdom will maintain full alignment with those rules of the Internal Market and the Customs Union which, now or in the future, support North-South cooperation, the all-island economy and the protection of the 1998 Agreement”.

In other words, the UK government intends to keep the UK effectively in the single market with the use of parallel rules and regulations, so even if, technically, it is outside the single market, there will be no need for a hard border in Northern Ireland.

Paragraph 50 has clearly been included to meet the concerns raised by the Democratic Unionist Party (DUP). It points out that whatever Brexit solution emerges, no barriers to trade can be created between Northern Ireland and the United Kingdom. In essence, the text appears to broadly satisfy the Irish and EU negotiating requirements, while leaving the UK some room to manoeuvre in the next phase of negotiations – and all without alienating any particular community in Northern Ireland. The full paragraph reads:

“In the absence of agreed solutions … the United Kingdom will ensure that no new regulatory barriers develop between Northern Ireland and the rest of the United Kingdom, unless, consistent with the 1998 Agreement, the Northern Ireland Executive and Assembly agree that distinct arrangements are appropriate for Northern Ireland. In all circumstances, the United Kingdom will continue to ensure the same unfettered access for Northern Ireland’s businesses to the whole of the United Kingdom internal market.”

The Institute of International and European Affairs (IIEA), in commenting on this particular paragraph, notes an important point, namely that “… this all but rules out the option of Northern Ireland alone remaining in the Customs Union and/or Single Market after Brexit, which many commentators and some of the Northern Irish parties had proposed”.[i]

Paragraph 52 acknowledges that the 1998 Agreement recognises the birth right of all the people of Northern Ireland to choose to be Irish or British or both and be accepted as such. That means that people of Northern Ireland who are Irish citizens will continue to enjoy rights as EU citizens, including while residing in Northern Ireland.

Paragraph 54 deals with the Common Travel Area. It acknowledges that existing rights and conditions will not change following Brexit. Specifically, the paragraph states that,

“Both Parties recognise that the United Kingdom and Ireland may continue to make arrangements between themselves relating to the movement of persons between their territories (Common Travel Area), while fully respecting the rights of natural persons conferred by Union law”.

This paragraph goes on to confirm and accept that the Common Travel Area and associated rights and privileges can continue to operate without affecting Ireland’s obligations under Union law, in particular with respect to free movement for EU citizens. From an Irish perspective, these are very important acknowledgements.

Section 4: Financial settlement

The 30 paragraphs dealing with the financial settlement between the EU and the UK give no specific figure on the actual size of the financial settlement. Instead, this section sets out in detail the parameters by which the financial agreement will be reached. Each party to the Agreement will refer to where they made gains. For instance, the UK will laud Paragraph 60 as it agrees that the UK will continue to receive its rebate during the transition period.

“The normal process of annual revenue adjustment in respect of the year 2020 will be completed in accordance with the Own Resources Decision and the other relevant Union provisions. Amounts to be returned to, or returned by, the UK will be calculated as if the UK had remained in the Union”.

On the other hand, the EU can claim that, as far as Paragraph 61 is concerned, it succeeded in getting the UK to agree to contribute its share of the financing of the budgetary commitments that will be outstanding at 31 December 2020;

“The UK will contribute its share of the financing of the budgetary commitments outstanding at 31 December 2020 (RAL)”.

It should be noted that RAL stands for “reste à liquider”, and it refers to the sum of outstanding commitments, commitments agreed to but that have not yet translated into payments; long-term budgetary commitments lead to the existence of amounts of commitments remaining to be paid out.

Section 5: Other separation issues

The fifth and final section has 10 paragraphs and deals with other separation issues. They include:

  • Cooperation in civil and commercial matters; police and judicial cooperation in criminal matters;
  • Ongoing Union administrative proceedings;
  • Ongoing Union administrative proceedings;
  • Issues relating to the functioning of the Union institutions, agencies and bodies, and
  • Euratom-related (nuclear specific) issues

But it is the final paragraph – Paragraph 96 – that is the most significant in going forward. It states that everything is conditional on a final deal being achieved under Article 50 on the UK’s withdrawal, taking into account the framework for the future relationship, including an agreement as early as possible in 2018 on transitional arrangements.

The delivery of Brexit under this report and subsequent agreements will be challenging and laborious. Sectoral interests must be addressed under the overall agreed terms of reference. Moreover, the work must be monitored closely and this blogger will be returning to the issues as the way forward emerges.

Notes


[i] IIEA Press Release, available here.

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