UK-EU Deal Reached

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Earlier today, Prime Minister Boris Johnson and President of the EU Commission Jean-Claude Juncker announced that a UK-EU deal had been reached.

 

Boris Johnson tweeted that the UK had a deal which “takes back control” and called for Parliament to support it at the special sitting this Saturday.

Similarly, Juncker wrote to EU Council President Donald Tusk underlining that “negotiators reached an agreement on a revised Protocol on Ireland/Northern Ireland and on a revised Political Declaration… both were endorsed by the European Commission.”

The deal is thought to provide for a transition period until the end of 2020, during which trade talks will be conducted.

That period could be extended for another 2 years if there is a joint agreement.

The new deal provides for the entire UK to leave the customs union.

However, to ensure that the border with Northern Ireland will remain open, it provides for a replacement arrangement for the backstop – the insurance policy designed to avoid a hard border in Northern Ireland if no trade deal is agreed at the end of the transition.

This was the element of former Prime Minister Theresa May’s deal upon which it foundered.

It is said to include:

  • EU law on VAT applying in Northern Ireland
  • UK shall be responsible for collecting VAT
  • Exemption for some goods – UK could choose to apply Ireland’s VAT reduced rates and exemptions in NI
  • Regular review of these arrangements by a Joint Committee

 

Stormont will be able to consent for these arrangements to continue by a simple majority vote four years AFTER the arrangements come into place.

This is a change from how things have operated in Stormont on other areas, where a majority of the representatives of both communities is required as a measure of the Good Friday Agreement was that a petition of 30 signatures can veto any policy proposal. With both Nationalists and Unionists having 40 and 39 members respectively, Stormont has remained deadlocked.

What will happen next?

This news comes on the morning of the EU Council Summit and just days before the 19th October deadline provided for by the EU Withdrawal (No.2) Act (the anti-no deal Brexit legislation known as the ‘Benn Act’ after its principal sponsor) for the Prime Minister to get a deal agreed by the House of Commons or request an extension of Article 50.

All eyes will now be on Saturday’s special sitting of Parliament where Boris Johnson will attempt to hold a vote to pass his deal.

Although the DUP, the ERG and at least 19 Labour MPs had indicated earlier this week that they would support a deal, it remains unclear whether they will actually sign up to this particular deal.

It seems likely that MPs are set to take control of the order paper again to ensure the PM cannot leave the EU with no deal in the event that the meaningful vote is passed, but then the legislation to implement it fails to get through in time – plugging an apparent loophole in the EU Withdrawal (No.2) Act.

With this group being led by Yvette Cooper and Sir Oliver Letwin it is likely that they will find a Parliamentary majority.

Letwin has already managed to pass an amendment allowing debates to go on for longer than their allotted 90 minutes on Saturday. Others, such as Labour MPs Peter Kyle, will try to table amendments subjecting Boris Johnson’s deal to a ‘confirmatory referendum.’

Will Parliament back this deal?

It remains highly unlikely that Boris Johnson will be able to find a Parliamentary majority.

The majority (although not all) of the 22 former Conservative MPs now sitting as independents are expected to support a deal; 17 voted in favor of Theresa May’s deal.

On the other end of the spectrum, the DUP hold the key to unlocking much support from backbench Eurosceptic Conservative MPs, who previously cited the DUP’s failure to agree May’s deal as a reason why they also would not support it. Although the ERG will take their own view, if the DUP refuse to endorse this deal it will be a severe blow for the Prime Minister’s hopes of getting this through the Commons.

This morning the DUP stated that they could not support Boris Johnson’s current Brexit deal “as things stand” owing to issues surrounding customs and checks and the lack of clarity over VAT.

The DUP remain fearful that Johnson’s deal will involve some form of regulatory check down the Irish Sea, thus disrupting the Union and the UK’s internal market.

It remains to be seen if this is a negotiating posture (which, for example, could be addressed through further funding for Northern Ireland) or their settled view – a crucial matter for No10. If the DUP fail to support the deal, then it is much more likely that the ERG will whip their members against.

This would be manageable if the opposition were to support the deal. However, Labour Leader Jeremy Corbyn responded that the Prime Minister had “negotiated an even worse deal than Theresa May’s…This sell out deal won’t bring the country together and should be rejected.”

This potentially puts those of his MPs in Labour seats who have said they might vote for a deal in a very difficult position.

They face the potential prospect of being deselected by their party if they vote in favour of the agreement. However, many of them stood on election manifestos pledging to respect the 2016 EU referendum and represent constituencies which voted strongly for leave.

An election is coming, and the Conservatives will ruthlessly use a refusal to agree a withdrawal agreement against those Labour MPs.

The Labour whip broadly held through the previous three votes on Theresa May’s deal; last time only five Labour MPs voted in favour of Theresa May’s deal.

Yet, 19 Labour MPs signed a letter to the EU asking them to agree a deal with Boris Johnson and Caroline Flint suggested as many as 50 could support a deal. Despite this, the expectation must be that they are unlikely to do so if the Government looks unlikely to get the numbers on his own side because of his failure to carry the DUP.

In this context, Jean-Claude Juncker is reported to have said that the EU will not grant an extension to Article 50 beyond the 31st October, creating a no deal cliff edge with MPs forced to choose between a no deal Brexit or Boris Johnson’s deal. The hope in No10 will be that this forces enough Labour MPs to break the Labour whip to get it across the line.

The Liberal Democrats have stated that they would only support Boris Johnson’s deal if it is subject to a confirmatory referendum whilst the SNP have categorically underlined their opposition to it.

In the meantime, there will undoubtedly be a push by Boris Johnson to secure the support of the DUP with the possibility of increased funding for Northern Ireland being raised.

 

What does this mean?

An election is coming.

The Prime Minister has a majority of -45 – it is not sustainable for it to continue when it does not have the numbers to pass a Finance Bill (in which case, it will run out of money).

One of the reasons that Johnson is pushing the ‘People versus Parliament’ rhetoric so hard is to insulate his poll ratings against a possible collapse if he is forced to extend – something which happened to Theresa May after March this year. To this end, if Parliament rejects Johnson’s deal, he will double down on the rhetoric – pushing the point that he has attempted to deliver on the referendum result only to be thwarted by Parliament.

Recent polls suggest this messaging could gain the Conservatives a slim Parliamentary majority against a divided opposition.

On the other hand, if Parliament passes his deal, Boris Johnson almost certainly will go into an election with a huge advantage against a Labour leader now much more unpopular than he was in 2017. Electorally, it is not in Corbyn’s interests to help the Prime Minister over the line on this deal.

Undoubtedly, there will now be intense focus on the technical details of the new Withdrawal Agreement which can be found here.

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