Last week represented another very eventful week in the Brexit process with Theresa May setting out her vision for the ongoing Brexit process (her 3rd key note speech) at the Mansion House in London.  Within her vision she responded to issues as set out within the EU’s draft legislation on Wednesday 28th (see detail below) which addressed option 3 of the Joint Report between the EU and UK in December. 

May’s Speech

• Calls for the world’s most comprehensive free trade deals

• UK will never agree to the EU’s draft proposals 

• Northern Ireland concerns can be resolved, if Brussels acts rationally

• UK intends to stay in key European agencies

Theresa May’s speech was the most forthright to date, setting out more of the challenges there would be within the negotiation process and future relationship with the EU. She also set out her aims for a positive relationship & comprehensive global trade deal for the UK.   On the Irish border, she re–affirmed the UK’s commitment to a frictionless border but stated the solution must be a joint one.

She warned that “no–one will get everything they want” out of Brexit negotiations but was confident a deal can be done. Setting out UK hopes for a future EU economic partnership, Mrs May warned both sides had to accept “hard facts”. Single market access would be “less than it is now” and the UK would have to pay into some EU agencies.

The Border

Mrs May again said that a hard border would be “unacceptable” and that it was for the UK and EU to “work together” on a solution, stating the UK could not ‘do it on our own’. She also affirmed that it would be unacceptable to break up the UK’s common market ‘Just as it would be unacceptable to go back to a hard border between Ireland and Northern Ireland, it would also be unacceptable to break up the United Kingdom’s own common market by making a customs and regulatory border down the Irish sea.’ 

Mrs May also said that if the EU forces Ireland to implement a hard border that is ‘down to them’.  The Prime Minister broadly referenced solutions including a customs partnership, where the UK “mirrors” EU requirements on goods from around the world, or a streamlined customs arrangement, using technology and “trusted trader” schemes to remove the need for customs checks.  These solutions relate to option 1 and option 2 within the December Joint report which Wednesday’s draft text by the EU brought so sharply into focus.  As per Donald’s Tusk challenge to the PM yesterday, on a better way forward on the Irish border, there was no further detail from her on how this would be achieved.  Her focus remained on a joint EU / UK solution.

Trade Agreement

The Prime Minister called for a free trade agreement covering most sectors of the economy, going further than the deal signed between Canada and the EU but stopping short of Norway which is a member of the European Economic Area. ‘We need to strike a new balance. but we will not accept the rights of Canada and the obligations of Norway,’ Regarding criticism the UK was attempting to ‘cherry–pick’ the best parts of the bloc’s rules, she said: “The fact is that every free trade agreement has varying market access depending on the respective interests of the countries involved. ‘If this is cherry–picking, then every trade arrangement is cherry–picking.’

Trading Relationship

The speech contained a lot of detail on the kind of trading relationship Mrs May wants with the EU after Brexit.

• Associate membership of EU medicines, chemical and aviation agencies, accepting their rules and making “appropriate” financial contributions

• Parliament would reserve the right to pass its own regulations in these areas but in the knowledge it could threaten co–operation with those bodies

• Continued participation in EU science, education and cultural programmes, close relationship with Euratom

• UK to explore continued participation in EU’s internal energy market while protecting single energy market on the island of Ireland

• Independent arbitration mechanism for trade disputes to replace role currently played the European Court of Justice

• Fairer deal for UK fishermen based on reciprocal access to waters and shared stocks management

• Mutual recognition of broadcasting rules to allow UK channels to continue to be seen in Europe

• Ensure continuity of rail, maritime and aviation services and of hauliers’ access to European markets

• Keeping UK regulatory standards “as high as the EU’s” to ensure smooth trade and while UK law may not be “identical” to EU law “it should achieve the same outcomes”

Reaction

EU chief negotiator Michel Barnier welcomed Mrs May’s speech stating she brought clarity to leaving Single Market & Customs Union and her recognition of the need for trade offs.

Irish Tánaiste Simon Coveney welcomed commitments in the speech in his statement of response but said that this must be ‘translated into concrete proposals’ on a hard border

DUP Leader Arlene Foster said the speech ‘has set forward the basis upon which it would be possible to move forward’

Sinn Fein President Mary Lou McDonald stated the UK PM, ‘fails to grasp hard truths’

EU Draft text Wednesday 28th February

Background & reaction

The EU’s draft text on option 3 stated that, barring a viable alternative, Northern Ireland would remain in a customs union with the rest of the EU so as to achieve the ‘regulatory alignment’ between the two regions as agreed in the negotiations last December. It stated simply, “A common regulatory area comprising the union and the United Kingdom in respect of Northern Ireland is hereby established” and that “The common regulatory area shall constitute an area without internal borders in which the free movement of goods is ensured and north–south cooperation protected.”

In response to the draft Theresa May described the suggestions in it as “unacceptable” and that “no UK prime minister could ever agree” while Foreign Secretary, Boris Johnson accused the EU of attempting to Annex a part of the United Kingdom. Despite this response EU chief negotiator Michel Barnier called on the UK to come up with alternatives. He said the text should have been “no surprise” and was simply a legally–worded assessment of what had been agreed in the negotiations so far. It is important to note that the draft legislation released on Wednesday is not a definitive text and will be open to negotiation in the months ahead. It does however put into sharp perspective the difficulties surrounding the Irish border and the realities that will soon need to be addressed.

Reaction to EU text

Academic analysis on EU text  – Dr. Katie Haywood –  Political sociologist from Queen’s University, Belfast

“The protocol relates to Scenario 3, i.e. what needs to occur ‘in the absence of agreed solutions’. Any proposal for an ‘agreed’ solution will have to engage seriously with what the EU has interpreted here to be the bare essentials for meeting commitments of the Joint Report. The Protocol is not a political act of provocation but is based on realities of NI/IRL coop & economy as currently exist.”

“It offers a minimalist interpretation of which areas/rules need to be aligned to adhere to Joint Report. This is why it addresses IRL/NI alone not all–UK. If UK government is to meet its Joint Report commitments (i.e. to people of NI & 1998 Agreement), then its ‘counter’ proposals will have to cover much of the same ground as is here.”

“Though necessarily light on detail, we now have the broad architecture of potential flexibility from the EU. UK proposals relating to NI/IRL challenges will either be UK–wide or specific to NI. Bespoke arrangements would in no way undermine the integrity, constitution or sovereignty of UK (ref. 20 years of Devolution). UK government must be unambiguous on this not least for sake of unionists.

The extent to which something along the lines of draft Protocol would produce new NI/GB barriers would depend on the choices of the UK government:

(a) whether in a CU,

(b) ambition of future trade deal,

(c) management of potential regulatory divergence,

(d) post–Brexit powers of devolveds.