Exploring solutions to the Brexit deadlock

A reminder of the current situation

The UK Parliament’s rejection of the EU Withdrawal Agreement last month has led to an urgent search for alternative ways of avoiding a “no deal” Brexit when the UK’s withdrawal notice expires at 11pm on 29 March.

For two years the UK has been approaching the negotiations on the basis that it will leave the single market and the customs union, and end freedom of movement. However, at least with currently available technology, the EU 27 (and in particular the Republic of Ireland) does not believe a hard border in Ireland can be avoided unless Northern Ireland remains closely aligned with the single market for goods.

That has led to the so-called Irish backstop, which in its current form would keep the whole of the UK in a new single customs territory with the EU, with some additional single market rules applying in Northern Ireland.  This would only apply if a permanent solution cannot be found to the border conundrum as part of a new trade deal between the UK and the EU – hence the name “backstop”.

It was the Irish backstop which led to the overwhelming rejection of the withdrawal agreement by the UK Parliament on 15 January.  Since then, there have been a number of other votes in the House of Commons, which have established that there is currently a narrow majority in favour of exploring “alternative arrangements” to address the Irish border issue in order to save the deal.

Can the backstop be changed?

The Government’s efforts are currently concentrated on securing some further concessions from the EU27 on the backstop arrangements.

Proposals being explored on the UK side include introducing a firm time limit on how long the backstop arrangements could last, or giving the citizens of Northern Ireland the right to vote on the backstop, should it ever come into effect.  

Another suggestion, put forward by Mills & Reeve’s Brexit legal experts, is to build a termination procedure into the backstop which mirrors Article 50 of the EU Treaty.  Given that Article 50 allowed the UK to give two years’ notice to leave the EU without any preconditions, there is an argument that it should be difficult to resist a similar arrangement applying in the case of the Irish backstop.

A further argument in support of this proposed solution is that Article 50 requires the EU to negotiate a withdrawal agreement and if the EU is insisting on a “backstop” which is more onerous to exit from than Article 50 itself, the EU is not actually negotiating a “withdrawal arrangement”.  This is because it does not enable the UK to withdraw from the confines of the EU’s control, and is therefore arguably in breach of the EU Treaty.

At the time of writing, the EU has resisted any significant changes to the deal that was originally negotiated.  It has said publically that the legal wording of the withdrawal agreement cannot be changed, though it would be prepared to look at the wording of the accompanying political declaration on the future UK/EU relationship.

What about re-drawing the red lines?

If it is accepted that some kind of border infrastructure cannot be avoided unless there is regulatory alignment, at least for goods, on the island of Ireland, then some of the other red lines might need to be moved to make continued regulatory alignment politically acceptable on the UK side.

For example, if the UK were to concede that it could not have an independent trade policy for goods and on the EU side some restrictions on freedom of movement were acceptable, it would be possible to devise an EU customs association. This could be a tailor-made arrangement where the UK would not be merely a rule taker; it would not be an asymmetrical relationship like the current customs union between the EU and Turkey.  This idea is explored in more detail in a new paper published by the European Network for Economic and Fiscal Policy Research.

Can we get more time?

A vote that would have bound the Government to ask the EU for an extension of the Article 50 notice period to the end of 2019 if a deal could not be reached by the end of February was narrowly defeated in the House of Commons. However, the Government is under great pressure from all quarters to ask for an extension of time in any event.

The EU has indicated that any request for additional time would be considered favourably, but one suspects that such a request would need to accompanied by a credible plan about how a new deal could be reached by the end of the extension period sought, as otherwise it may simply replay the last few months of negotiations. Any extension of the notice period would need to be approved by all EU27 member states.

Preparations for hard Brexit continue apace

In the meantime preparations for a no deal Brexit continue on both sides of the channel.  We have explained what can be done to mitigate some key no deal risks on the Mills & Reeve Brexit hub.  No deal guidance is being published by the Government on a daily basis and the production of Brexit statutory instruments is accelerating.

However most individuals and almost all the business community continue to hope that a no deal Brexit can be avoided, while doing their best to prepare for that eventuality.