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The EU and the U.K. Reach a New Brexit Deal. What’s Next?

The EU and the U.K. Reach a New Brexit Deal. What’s Next?

Article Courtesy of Stratfor

The Big Picture

After weeks of negotiations, the European Union and the United Kingdom have reached a deal for an orderly Brexit, but the agreement includes some provisions (particularly over the Irish border) that many British lawmakers will find hard to digest. Attention will now turn to the House of Commons, which will vote on the plan on Oct. 19.

Courtesy of Stratfor is a diagram of the options/scenarios possible now.

British Prime Minister Boris Johnson (L) and European Commission President Jean-Claude Juncker converse ahead of the European Council summit in Brussels on Oct. 17, 2019.

(STEFAN ROUSSEAU/PA Images via Getty Images)

British Prime Minister Boris Johnson (L) and European Commission President Jean-Claude Juncker meet in Brussels ahead of the Oct. 17 European Council summit. Now that Brussels and London have reached a deal, the hard part begins: gaining the House of Commons’ approval for the agreement.Stratfor’s geopolitical guidance provides insight on what we’re watching out for in the week ahead.

At long last, there’s been a breakthrough in the interminable negotiations between London and Brussels over terms of the Brexit. On Oct. 17, the United Kingdom and the European Union reached an agreement that increases the chances of an orderly Brexit on Oct. 31. The deal with Brussels, however, is not the end of the story for the British government, which will now have to persuade legislators in the House of Commons to approve the document in an extraordinary session on Oct. 19 — a task that could prove difficult given that Prime Minister Boris Johnson does not control a majority of seats.The Big Picture

What’s in the Deal? 

Johnson’s withdrawal agreement is similar to the one that his predecessor, Theresa May, signed with the European Union in November 2018. According to the deal, the United Kingdom will remain a full member of the EU single market during a transition period ending in December 2020 during which London and Brussels are expected to negotiate their future trade relationship. The agreement also establishes that the United Kingdom will respect the residency rights of all EU citizens currently living in the country and vice versa; at the same time, London will honor roughly 45 billion euros in financial commitments to the bloc.

What’s different is that Johnson’s deal includes provisions to maintain the open border between Northern Ireland and the Republic of Ireland after Brexit. According to the document, Northern Ireland will follow EU norms and standards for goods. More importantly, British authorities will apply British tariffs to products entering Northern Ireland from third countries as long as they do not enter the EU single market. If a good is destined for the EU single market, then EU tariffs will apply. Brussels and London will also form a joint committee establishing the criteria that will be used to determine whether a product brought into Northern Ireland is at risk of subsequently being sent into the single market.

Ultimately, the provisions on Ireland represent a complex compromise. The European Union insists on keeping the Irish border open while also ensuring that Northern Ireland does not become a backdoor for products to enter the single market without paying EU tariffs. The United Kingdom, however, insists on leaving the EU Customs Union so that it can sign free trade agreements with other countries. The new deal includes a concession from the bloc, because Brussels will allow a nonmember state to collect tariffs on its behalf. But it also contains a concession from London, as goods moving from the island of Great Britain to any part of the island of Ireland (and vice versa) will be subject to controls at ports and airports. This irritates Northern Ireland’s Democratic Unionist Party (DUP), whose support Johnson needs to pass the deal. The party opposes any customs controls between the two islands. Ironically, a group of “remain” campaigners have challenged Johnson’s deal in a Scottish court, arguing that it violates a law prohibiting Northern Ireland from entering any customs arrangement separate from the rest of the United Kingdom.

Finally, the agreement stipulates that after four years, Northern Ireland’s legislative assembly will decide in a simple majority vote whether it wants the arrangements to remain in place. If the assembly scraps them, the European Union and the United Kingdom will have two additional years to find a new solution to keep the Irish border open. This angers the DUP, too, as an earlier draft of the deal would have granted the Northern Irish assembly a vote before the agreement entered force and would have required unanimous ratifications every four years — a provision that would have effectively given the DUP veto power over the deal. The European Union, however, rejected these ideas, arguing that they would lead to uncertainty. 

What Happens Now?

For Johnson’s government, the hardest step now awaits — getting the Commons to approve the deal. (The European Union must also ratify the deal, but that would almost certainly be a formality if the British Parliament approves the agreement.) Johnson’s Conservative Party does not control a majority in the Commons, which means that he will have to convince around 30 parliamentarians, including the DUP, hard-line members of his own party and potentially even some Labour Party lawmakers who hail from constituencies who voted “leave,” to ratify the deal. After London and Brussels announced the agreement, the DUP said its objections remain unchanged. In the coming hours, Johnson’s team will offer sweeteners to the party (including the promise of more public investment in Northern Ireland) to try to persuade it to back the deal. While the DUP possesses only 10 of the 650 seats in the Commons, its decision could sway the votes of several hard-line Tories, who have said they would back the deal only if the Northern Irish party supports it.

For Johnson’s government, the hardest step now awaits — getting the House of Commons to approve the deal. 

The precedent is not very promising: In early 2019, May failed to win enough support in Parliament for her deal, precisely because of skepticism among hard-line lawmakers about the provisions to keep the Irish border open. However, the stakes are much higher now. When the Commons rejected May’s deal earlier this year, they knew the Brexit deadline was still months away. But with just two weeks left before Brexit must happen, pressure on lawmakers to approve the deal and avoid a disorderly exit will be much higher. 

Should lawmakers reject the deal on Oct. 19, Johnson would be forced by law to ask the European Union for a deadline extension. But the government has been ambiguous about whether or not it will enforce the law, which opens the door to dramatic scenarios in which Johnson could resign or the Commons could trigger a no-confidence motion against him in order to appoint a new prime minister who would ask Brussels for more time. This means that Johnson’s rivals still have a few options to both reject his deal and avoid a hard Brexit, but they are running out of time to act.

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