GP Insights # 169, 19 October 2019
After weeks of negotiations between the European Union and the British government, Prime Minister Boris Johnson has struck a new deal detailing the nature of the UK's relationship with the EU after its scheduled departure from the bloc on 31 October. The British members of Parliament are expected to vote on the proposals of the new deal in a special parliamentary session on 19 October giving Johnson the last opportunity to pass a deal before the Brexit deadline or walk Britain out of the bloc without a deal.
What is the background?
The new Brexit deal followed two significant events. First, before the EU-UK summit on 17 October, Johnson met the Irish leader Leo Varadhkar to gain his consensus on an exclusive deal with Northern Ireland and the backstop agreement. Secondly, as the Parliament resumed session this week, the mandatory Queen's speech at the beginning set the tone by putting the Brexit deal on the top of the priority list for the parliamentarians. Criticized for being a Tory driven agenda, the speech and the convention to look up to the Royal family created a favourable ground for Johnson to negotiate with the EU for a deal.
The new Brexit deal significantly removes the Irish border bottlenecks. The EU and the Irish government wants to ensure that the border remains open and unobstructed, in line with the 1998 Good Friday peace settlement. As post-Brexit customs and tariffs come into effect between the UK and the EU, Northern Ireland would act as a border check for goods entering EU member Ireland. Northern Ireland would not only remain in the single market of the EU but also within the customs of the UK. Additionally, the backstop agreement will be further removed paving the way for Ireland to remain within the EU economic structure.
What does it mean?
The impact of the new Brexit deal for UK and Northern Ireland are several.
First, very little distinguishes Johnson's new deal from that of his predecessor Theresa May. Most of the exit agreement is the same as May to what Boris Johnson is proposing. The terms on the financial settlement, treatment of EU citizens in the UK and the British citizens in the EU remains the same. This has invited sharp criticism again from the Labour leader Jeremy Corbyn. What differs substantially is the economic status of Northern Ireland post-Brexit and, specifically, how to manage the border between Northern Ireland and the Republic of Ireland would be managed.
Second, with the changed status of Northern Ireland, the position of Johnson's current Conservative-led government with the Northern Irish Democratic Unionist Party (DUP) has been complicated. The ten votes in the House of Commons that is needed to pass legislation by Johnson comes from the support of the DUP. If DUP adamantly remains opposed to the new deal then passing the new deal in the special parliamentary session will fail. Despite being a pro-Brexit party, DUP has historically opposed to any attempt by the UK to treat Northern Ireland differently from the rest of the UK. The new Brexit deal does just that.
Third, the deal aimed to remove the backstop. The EU initially proposed a Northern Ireland-only backstop in February 2018 that was rejected by May and offered the UK-wide backstop as an alternative. This was in turn rejected by pro-Brexit members of Parliament three times, including Johnson himself. However, the new deal seems to go back to the EU's initial offers and mirrors a Northern Ireland only backstop with few adjusts like keeping Northern Ireland with the UK economic framework to appease the DUP. At the DUP conference in 2018, Johnson was adamant in saying no British prime minister could ever accept a customs and administrative borders in the Irish Sea. The new deal a year later seems to do the opposite.
Last, in all the stages of Brexit negotiations, the focus has been on the withdrawal and not on the importance of a free trade agreement. The long term economic impact of the withdrawal has been less discussed. The government's long-term economic analysis in November 2018 identifies a potential scenario akin to Johnson's as costing the UK 6.7% of its GDP by 2034. This would be one of the major deterrents and topic of discussion in the parliamentary debate.
Will the new Brexit deal pass the floor test in Parliament? The struggles of convincing an orthodox DUP remains and if the deal is rejected, the attention will turn to whether Johnson will ask the EU for a Brexit delay. The Benn Act blocks Britain leaving the EU without a deal on 31 October but Johnson and the EU remain fixed on exiting on 31 October date, deal or no deal.