Richard North, 15/11/2018  
 


You will doubtless be pleased to know that the objective of the "withdrawal agreement", the draft of which was published yesterday, is "to ensure an orderly withdrawal of the United Kingdom from the Union and Euratom". Additional link here.

To achieve that vital task, it has used the letter "a" 37,207 times, "k" a mere 2,229 times and "t" 49,159 times in the 585-page draft. I just thought you ought to know that.

By similar token, in all of the 585 pages, the term "customs union" is used exactly twice. This is an area of particular concern and, given such a long and complex document, has to be the main focus of this blogpost.

The first reference to "customs union" is in relation to the Protocol on Ireland and Northern Ireland, where it is agreed in the recital that the protocol should be based on maintaining full alignment with those rules of the Union's 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 (the GFA).

These rules are to apply unless and until an alternative arrangement implementing another scenario is agreed. The second reference, also in the recital to the Protocol, notes that the rights and obligations of Ireland under the rules of the Union's internal market and customs union must be fully respected.

One can more or less disregard the second reference and take it that the first requires Northern Ireland to conform with the rules of the EU's Single Market and Customs Union, until "an alternative arrangement" is agreed.

On the face of it, that would seem to be creating a separate administrative zone for Northern Ireland but, of course, that is not the case. In what is a complex sleight of hand, worthy of any senior member of The Magic Circle, multiple separate provisions have to be tied together. When they are, they transform the situation.

The first is Article 6 to the Protocol which states that, until the future relationship becomes applicable, a single customs territory between the Union and the United Kingdom shall be established. Thus, as before we supposedly left the EU, the UK is part of a "single customs territory". Furthermore, Northern Ireland is in the same customs territory as Great Britain.

Now, that alone does not tell the whole story – not by any means. If there is to be a "single customs territory", rules must apply to it. But these rules are not to be found in the Article. It refers you to Annex 2 to the Protocol, which apply in respect of all trade in goods between the territories.

Referring then to Annex 2, we find an interesting omission – it does not bear any title. It is only as you go through all six articles do you realise what it is. This sets out in clear concise language the provisions of a customs union, thereby abolishing tariffs and like measures through the territory, and setting what amounts to a common external tariff.

For the duration – i.e., until alternative arrangements apply – the UK is told that "under no circumstances" can it apply to its customs territory "a customs tariff which is lower than the Common Customs Tariff for any good or import from any third country".

Not indeed does it stop there, as the Annex also requires the UK to "harmonise the commercial policy applicable to its customs territory with the common commercial policy of the Union". For the duration, we are thus in lock-step with the Union.

As to the "detailed rules relating to trade in goods" between the two parts of the single customs territory, we are in effect than bound by yet another provision. This is Annex 3 which imposes a raft of detailed requirements (formalities) relating to the production of movement certificates and the validation of the status of the goods.

From a study of the text here, the bureaucratic style of which does not make comprehension easy, we see also that customs authorities which issue certificates have to take "any steps necessary to verify the status of the products and the fulfilment of the other requirements of the Protocol and of this Annex". This, as far as I can see, requires checks to be carried out, some of which will doubtless involve cross border checks.

To pull the whole picture together, one then has to cross-read with Annex 4, which requires "cooperation" on taxation, extending to a commitment to continue to apply substantial provisions of Union law, "as applicable at the end of the transition period".

The UK must also commit to "non-regression in the level of environmental protection", whereby the United Kingdom "shall ensure that the level of environmental protection provided by law, regulations and practices is not reduced below the level provided by the common standards applicable within the Union and the United Kingdom at the end of the transition period".

It its own environmental legislation, the UK is required to "respect" key EU principles , which include: the precautionary principle; the principle that preventive action should be taken; the principle that environmental damage should as a priority be rectified at source; and the "polluter pays" principle.

We are also required to take the necessary measures to meet our commitments to international agreements to address climate change, including those which implement the United Nations Framework Conventions on Climate Change, such as the Paris Agreement of 2015.

Additionally, we have to implement a system of carbon pricing of at least the same effectiveness and scope as that provided by Directive 2003/87/EC. Provisions relating to the monitoring and enforcement related to environmental protection must also be maintained.

Non-regression must also apply to labour and social standards. With the aim of ensuring the proper functioning of the single customs territory, the UK has to ensure that the level of protection provided for by law, regulations and practices is not reduced below the level provided by the common standards applicable within the Union and the United Kingdom at the end of the transition period.

And not content with that, "with a view to preserving a robust and comprehensive framework for State aid control that prevents undue distortions of trade and competition", the Union State aid law provisions listed in yet another Annex – this one Annex 8 - must apply to the UK. Furthermore, competition provisions set out in Union law still apply.

Throughout the protocol, there is a constantly repeating phrase, where provisions of Union law apply "to and in the United Kingdom in respect of Northern Ireland". The meaning of this, no doubt, is clear to its authors but to my mind holds a level of ambiguity. Does the law apply to the UK as a whole, or just Northern Ireland?

Ostensibly in an attempt to clarify issues, there is a technical explanatory note and the Commission has published some additional fact sheets, with one on the protocol. These seem to confirm (unless I am very much mistaken) that the protocol reaches past the transition period and stays unless in force until it is superseded, in whole or in part, by a subsequent agreement.

This, effectively, is the "backstop", and the fact sheet makes it clear that the single EU-UK customs territory is established "from the end of the transition period until the future relationship becomes applicable". That effectively means the whole of the UK is locked into a customs union, after the end of the transition period, until a permanent solution to the border problem is agreed.

Yet, getting rid of these provisions is not going to be easy. The way it works, apparently, is that at any time after the transition period, the EU or the UK may consider that the Protocol, in whole or in part, is no longer necessary.

That party must then notify the other, setting out its reasons. This kicks in a "Joint Committee" - established in Article 164 of the Withdrawal Agreement – which considers the notification and may seek an opinion from institutions created by the Good Friday (Belfast) Agreement 1998.

Following discussions in the Joint Committee, the EU and the UK may decide jointly that the Protocol, in whole or in part, is no longer necessary to achieve its objectives.

The way this Joint Committee is set up, it is required to adopt its decisions and make its recommendations "by mutual consent", which means that the EU has a veto on when (or if) the UK can drop out of the customs union, with a final appeal to an arbitration panel. On matters of Union law, however, the ECJ has jurisdiction to make rulings, which are binding on the arbitration panel.

Any which way you look at it, this accumulation of issues raises many important questions. It is hard to see that the UK has secured the ability unilaterally to remove the "backstop" and, as the agreement stands, it is possible to see a scenario where the UK is locked in perpetuity into a customs union with the EU.

The issues relating to the single market, and regulatory checks is by no means clear and, it seems, are still not fully resolved, leaving areas for future dispute.

But, just from what we have seen, there is ample material to support an assertion that this is Brexit in Name Only (BRINO). If the ERG and the DUP buy into this, their credibility will be shot to Hell. This is exactly the fudge that should never have been accepted by Mrs May. She is now in the line of fire.






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