British Marine looks at the UK-EU Withdrawal Agreement

By | November 30, 2018

British Marine’s Head of External Relations, Andrew Harries, outlines what the Withdrawal Agreement and Political Declaration mean and looks at the challenging timetable ahead for the UK.

But before setting out more of the detail, it is worth noting that on Wednesday (28 November) the UK Government published its economic analysis of what the various Brexit scenarios could mean for the UK, versus remaining in the EU.

In each scenario, the UK economy is estimated to be worse off than if the UK remained a member of the EU. Official figures say the UK economy could be up to 3.9% smaller after 15 years under Mrs May’s Brexit plan. But a no-deal Brexit could deliver a negative impact of 9.3%. While the HM Treasury estimates do not put a cash figure on the potential impact on the economy, independent experts have suggested that 3.9% of GDP would equate to around £100bn a year by the 2030s.

The Chancellor of the Exchequer, Phillip Hammond MP, was reported as saying that Mrs May’s deal was about more than the economic arguments, it delivered important political benefits too.

The Withdrawal Agreement and Joint Political Declaration on the Future Relationship

At a special meeting of the European Council on 25 November, the 27 EU leaders endorsed the UK-EU Withdrawal Agreement and signed off on an expanded Political Declaration on the Future Relationship. UK MPs will vote on 11 December and the Prime Minister, Mrs May, is on a two week tour of the country to sell her deal to the public, Parliament and the Devolved Administrations.

The UK-EU Withdrawal Agreement

The Withdrawal Agreement formally sets out the terms on which the UK will leave the European Union and answers the key issues such as citizens’ rights, the financial settlement and the Northern Irish border. The Agreement does:

  • safeguard the rights for over 3 million EU citizens in the UK & over 1 million UK nationals in EU countries to stay and continue their current activities
  • make clear that the UK will pay at least £39bn to the EU to cover all its financial obligations in the exit bill
  • set out the legal basis for a 21 month transition period until December 2020. The UK would remain under European Court of Justice jurisdiction and will follow EU rules during this period. There would be an option for the UK to extend the transition if both sides agree via an arbitration mechanism
  • create a legal plan that is intended to be a temporary insurance mechanism for the Northern Irish border if a future trade agreement with the EU is not agreed by the end of transition

Unfortunately, the Withdrawal Agreement does not:

  • provide any information on the VAT status of goods (in particular vessels) already placed on the market#

The certainty on the rights of citizens and the transition period are extremely welcome and provide considerable security to businesses while the future relationship is formally negotiated. Both the Confederation of British Industry (CBI) and the EEF (The Manufacturer’s Organisation) have welcomed this, as it is significant progress against the threat of the UK leaving the EU under a ‘No Deal’ scenario.

The joint Political Declaration

The Political Declaration is the high-level plan that the EU and UK have agreed the future trade talks will be based on. However, this is not a binding agreement and it lacks detail that is needed to really give businesses confidence. The UK and EU will use the transition period to negotiate on all of this. However, as mentioned, the detail is required. Businesses need commitment from both sides, with dates and details for future talks, to know much more on the proposals for mobility framework and that migration is on the table of the future trade talks.

But what can be taken away as positives?

  • Recognition of the importance of services
  • Commitments to a free trade area combining a regulatory and customs relationship
  • Zero tariffs across all goods sectors
  • Inclusion of reciprocal mobility framework

The Withdrawal Agreement and outline by the UK and EU on the future relationship, are available on GOV.UK (click on the links below):

The current timetable

MPs will vote on the deal on Tuesday 11 December. If you have been following the news, you will know that Mrs May’s deal has received an extremely mixed response (and that’s probably putting it lightly). Many of her own party have outwardly expressed their positions against it, while some have acknowledged the difficult role she has had and that this deal is the least objectionable, delivering on Brexit while maintaining a strong tie with Europe.

The BBC has published a very handy diagram (reproduced below), which clearly sets out the timeframe for the vote, and what may/may not happen, depending on how that vote goes. British Marine is monitoring the situation closely and will provide further updates in due course.

brexit diagram

What else is going on?

Some of the policy areas important to the Brexit process are already being investigated fully by the UK Government and its agencies. Earlier this year, the Migration Advisory Committee published a review and proposals for the UK’s future immigration policy. This proposed a focus on high to mid-level skills, removing a route for low-skilled workers. It also proposed to keep the £30k salary threshold.

These proposals raise concerns for the marine industry, which has a range of skills gaps and faces plenty of competition from other sectors for some of the hardest to fill roles. The CBI has called on the Government to move its focus on migration away from the numbers game and look at the skills that industries and businesses really need.

On the plus side, a review of the UK’s Shortage Occupation List is underway, with a call for evidence published recently. British Marine urges all members with an interest in securing the industry’s access to skills and talent to respond to this.

In addition, on Monday (26 November) the government signed new arrangements with each of the Crown Dependencies (the Bailiwick of Jersey, the Bailiwick of Guernsey and the Isle of Man) to maintain and reaffirm the close customs relationships. This ensures that, when the UK leaves the EU, traders moving goods between the UK and Crown Dependencies (and vice versa) will continue to pay no customs duty and the UK and the Crown Dependencies will maintain a common external tariff. The new arrangements will come into force when the UK, alongside the Crown Dependencies, leaves the EU Customs Union.

Next steps

British Marine continues to push Ministers, Department officials and MPs for answers and clarification on the industry’s questions and concerns. Members are encouraged to contact their own constituency MPs too, to ensure that they understand your business needs. You can find your MP’s contact details on the Parliament website.

British Marine members can read all British Marine’s Brexit updates on the British Marine website. Members may also contact Andrew Harries, Head of External Relations, with any questions at aharries@britishmarine.co.uk.