Withdrawal Bill passes, focus turns to trade deal negotiations

The Bill had passed its second reading on 19 December 2019 by 358 to 234 votes. Before the election, MPs had thwarted Theresa May’s Brexit bill and threatened to do the same to Boris Johnson’s revised deal. But the make-up of the new parliament is now strongly pro-Brexit, with Johnson’s sizeable Conservative majority.

This Tuesday (Jan 7), there were three votes on new clauses to the Bill. All three proposed new clauses were voted down. The new clauses were:

New Clause 5, which would have allowed all EU citizens resident before exit day to have a right to permanent residence in the UK. NC5 was defeated by 342 votes to 252.
New Clause 18, which would have ensured that those who benefit from citizens' rights protections do not miss out on registering as UK citizens due to the cost of the fee. NC18 was defeated by 341 votes to 255.
New Clause 34, which would have established a right to appeal settled status decisions. NC34 was defeated by 343 votes to 251.

On Wednesday (Jan 8) there were seven votes on five new clauses and two amendments to clauses in the Bill. All amendments and new clauses were voted down.

New Clause 55, which relates to Northern Ireland's place in the UK internal market calling for unfettered access to the Great Britain market. NC55 was defeated by 337 votes to 262.
New Clause 6, which would have ensured that MPs had a guaranteed vote with an amendable motion on the EU-UK Future Relationship and negotiating objectives. NC6 was defeated by 347 votes to 251.
Amendment 10 to Clause 21, which would have applied restrictions on Ministers' delegated power to make regulations under the proposed new section 8C of the EU (Withdrawal) Act 2018. This was defeated by 340 votes to 262.
Amendment 4 to Clause 37, which would have protected the right for unaccompanied child refugees to be reunited with their family after Brexit. This was defeated by 348 votes to 252.
New Clause 2, which would have required the Government to negotiate a comprehensive agreement with the EU protecting workers’ rights. This was defeated by 344 votes to 255.
New Clause 10, which would have required the Government to seek to negotiate continuing full membership of the EU’s Erasmus+ education and youth programme. This was defeated by 344 votes to 254.
New Clause 29, which would have required the Government to seek close alignment with the EU single market on key level playing-field provisions. This was defeated by 345 votes to 250.

The Bill had its Third Reading on Thursday (Jan 9). It now goes to the House of Lords for its second reading on Monday (Jan 13) which will be a general debate on all aspects of the Bill. Peers are expected to subject the bill to greater challenge but are still unlikely to block its passage.

Three weeks till Brexit

The UK will leave the EU on January 31. We will then enter a transition period, in which all existing EU rules remain in place, until the end of December 2020.

The Institute of Export and International Trade notes that January 31 is the deadline for businesses to apply for grant funding towards training in ‘the Customs skills you will need in a post-Brexit Britain’. They say ‘it is now almost certain that you’ll need this training to ensure a smooth continuation of trade into the EU for the years ahead’.

Trade negotiations

Downing Street stressed on Thursday that it was ready to begin the next stage of the Brexit process - negotiating a trade deal by the end of the year - on 1 February 2020. The biggest fault line between UK and EU negotiators is widely expected to be ‘alignment versus access’ – in other words that if the UK wants full access to EU markets it will need to agree to continue following many EU rules.

Foreshadowing this the EU’s chief Brexit negotiator Michel Barnier this week warned the UK’s market access to the EU could be limited unless it agreed to conditions on state subsidies. “If the UK wants an open link with us for the products – zero tariffs, zero quotas – we need to be careful about zero dumping at the same time,” he told a conference in Sweden.

If the UK is unable to secure a free trade agreement with the EU it faces the imposition of substantial tariffs, quotas and other restrictions on trade. There is an option to extend the trade transition period for up to two further years, but the withdrawal agreement sets the deadline for agreeing this at 1 July 2020.

Writing in Accountancy Age this week, Richard Asquith, VP of Global Indirect Tax at Avalara, predicts “a modest first-round FTA deal is likely for 2020, with drawn-out negotiations for several years afterwards around more complex and sensitive sectors such as agriculture and fishing. The big loser will be services, particularly financial services, where politicians have been slow to grasp the impact of the loss of EU Single Market access and the ‘passporting’ rights Brexit will entail for UK.”

He adds that, given the tight negotiating timetable, “the achievable and least-disruptive terms for a 2020 FTA should likely include the following:

• Continuing tariff and quota-free trade on all goods. Challenges will include the UK wanting to protect some sectors such as agriculture.
• Minimised border checks and paperwork to prevent trade friction via recognition of standards and assessment bodies.
• A basic Canada-style services deal.
• Mutual recognition of professional and trade qualifications.
• Creation of a regulatory legislative communications forum to avoid any unnecessary divergence and therefore trade barriers.
• Non-regression clause to ensure UK does not reverse existing commitments on state-aid, competition and environmental rules.
• Industry-specific side agreements on energy, aviation, security and defence.
• Migration and movement of people agreements, including business VISA waivers."