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The Clock Continues To Tick- Brexit Update

Aug 21, 2017

by Emma Kerins, International Affairs Executive, Chambers Ireland

Following announcements earlier this month that the UK would release a series of position papers outlining their key policies, last week saw the first two papers launched by the Department for Exiting the European Union. While the EU has published more than a dozen such position papers over the course of June and July, the UK has been slow to respond. Many commentators have questioned the UK’s preparedness for the exit negotiations. Indeed, the detail provided in their White Paper, published earlier this year, was viewed as underwhelming. News that the first of their position papers on the kind of exit deal they are hoping to obtain was initially welcomed by all stakeholders, particularly the business community. Five months following the triggering of Article 50, it is clear that whatever kind of exit the UK seeks from the EU, navigating a future trading relationship will be complex and will require businesses to prepare, up-skill, invest in technology and even find new markets.

The first paper, published on Tuesday afternoon indicated a desire for a future customs arrangement with the EU and proposals for a temporary transitional period that would allow the UK to retain its current customs arrangement with the EU. On an initial reading of the position paper, indications that the UK may be willing to enter into a transitional arrangement with the EU, following Brexit, will be cautiously welcomed by business. Nobody, particularly businesses in the EU and the UK, wants to see the “cliff-edge scenario” of “no deal” so it is positive to see that the UK Government has moved away from that language.

However, the old adage of the “devil being in the detail” is very true in this case. Although the UK Government noted that they would like to see a transition arrangement in place following April 2019, what they actually proposed was a new type of customs union, similar to what currently exists, that allows the UK to negotiate trade deals with third countries, something that is not currently allowed under EU law. Further, even if the EU was willing to negotiate a new Customs Union with the UK, the probability of such an arrangement to be agreed within what remains of the two year negotiating period is unlikely.

Following on from Tuesday’s publication on customs, the UK published a second paper, their much-anticipated position on how they propose to deal with the border between Ireland and the Northern Ireland, i.e. the new land border with the European Union. While sensitively drafted, taking into consideration the necessity of protecting the Common Travel Area and the Good Friday Agreement, the paper was sorely lacking in substance and amounted to the UK Government declaring that they would be content to allow an open border at their end. Responding to the publication of this paper, Chambers Ireland acknowledged that Ireland and the UK are on the same page when it comes to wanting no physical border and prioritising the need for efficient cross-border trade, making maximum use of available technology and SME friendly arrangements. However, the problem with the British proposals in that it remains unclear how they intend to execute these plans. Since the UK have committed to leaving the Single Market and the Customs Union, and have also declined to maintain the status quo during a transition period, there will be no alternative other than the border with Northern Ireland becoming a new land border with the EU in 2019. Suggesting anything otherwise is counter-productive.

A member state leaving the EU is uncharted territory. Whatever the outcome of the exit negotiations, businesses will need time to adapt. The Irish business community is particularly sensitive to this, given the complexity of our border with Northern Ireland, the high levels of cross border movement of people and goods and the high interdependency of our supply chains. Chambers Ireland re-iterated that an implementation period would be required following the UK’s exit from the EU, and this transition period must be a commitment to allow the status quo to remain in place for a realistic amount of time.

As Michel Barnier noted, the clock continues to tick and the UK now has only nineteen months remaining in the European Union. Going forward, both sides must be willing to make significant compromises to find a workable arrangement that includes an implementation period that allows businesses and governments to adequately prepare for what lies ahead.

The next round of negotiations is due to begin in Brussels on the 28th August and will focus on the Irish border.

For further updates, follow @ChambersIreland on Twitter 

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