This week a 585-page document, and an accompanying 7-page note, unleashed a political storm. The odds on this being ratified may seem long (see my earlier thoughts) but what would the draft EU Withdrawal Agreement and accompanying declaration mean for business if it is approved by parliament? You can read the full document here: Here is a dry but very short summary of what it means.  

The Withdrawal Agreement is the legal agreement that deals with the exit from the EU

This addresses three main things that matter to businesses and employers:

-  a guaranteed right to remain for EU citizens currently working and living in the U.K.

-  a transition period, from 29 March 2019 to December 2020 during which access to markets, programmes and regulatory regimes will remain unchanged

 -  a guarantee of a permanent open border between Ireland and Northern Ireland, if need be through the whole of the U.K. staying in the EU customs union after the end of the transition period. The UK Government is stressing that the Customs union is a backstop and that to avoid having to use this the EU and UK would be focused on creating a new solution as part of the future trading agreement that delivered the desired outcomes. This is not only important for the Good Friday peace agreement; our work on Brexit planning with businesses in the U.K. and Ireland has shown that it is essential for maintaining highly inter connected supply chains.

The Withdrawal Agreement includes another point that is new and should provide further confidence for business: the U.K. and EU both agree that if they have not completed negotiation of a future trade relationship by December 2020 they will extend the transition period. In other words, if the project over-runs they will agree an extension. 

This agreement does create what has been called a “blind Brexit” because the detailed future trade relationship between the U.K. and EU will not be agreed before we leave the EU on 29 March next year. So business don’t know what our final destination will be however the political declaration sets out clear direction as to the frame for the development of that agreement.

The political declaration on our future trading relationship, is the non-binding agreement that sets direction for the negotiators to agree our future trading relationship

The principles include:

- Tariff-free trade between the EU and U.K. and very close regulatory alignment to avoid barriers to trade.

- It does not offer the same level of frictionless trade for services, however they have agreed ‘close cooperation’ including some specifics around financial services

- Subject to the 'backstop', it implies leaving the customs union which does mean businesses will face significant administrative costs associated with customs declarations and documentation. 

- On skills and people, it provides for inter firm secondments and assignments but not automatic rights to long term or permanent residency (so we can expect U.K. restrictions on lower skilled EU immigration). All of this detail will be open for negotiation after March 2019.

Perhaps the most important element of the withdrawal agreement is that it avoids a ‘cliff edge’ No Deal and it would usher in a transition period to enable more time to adjust. The detail of our future trading relationship after the transition period would remain up for grabs….

If you would like help with working out in detail what this would mean for your business, or planning for other Brexit eventualities, we can help. Do get in touch: Brexit Room planning