The 80-seat Conservative majority, now virtually-guarantees ratification of the Withdrawal Agreement Bill– the deal agreed between the UK and EU back in October – but discussions on the terms of future UK-EU trading arrangements have barely got started.
The current direction of travel is towards a free-trade agreement (FTA) between the UK and EU – but exactly what form that will take, and the length of time it will take to negotiate, are both still subject to change.
As government officials return to Westminster after their Christmas recess, we are now expecting to see a flurry of activity this week and throughout the month, as we approach the withdrawal agreement deadline of 31st January.
The UK may be set to leave the EU this month, but the uncertainty is unlikely to end there. Once the Withdrawal Agreement Bill is passed and the UK formally leaves the EU, a new race will begin to secure a trade agreement and new partnership with the EU by the end of the standstill transition period.
With the prospect of a second referendum now firmly cast aside, CILT has put together a timeline of key Brexit milestones in 2020.
• THIS WEEK (6th January)
Before Parliament closed for the Christmas recess, MPs gave initial approval to Mr Johnson’s Withdrawal Agreement Bill by 358 votes to 234.
The Bill now moves on to the next phase of the parliamentary process, what is known as the committee stage. It is expected to completely pass its remaining stages by Thursday before it moves to the House of Lords. MPs will debate the 11-month transition period that commences after 31st January. It will be analysed in detail over the next few days covering the “divorce” payment to EU, citizens’ rights and the customs arrangements for Northern Ireland before moving to the House of Lords.
During the proposed transition period, the UK will cease to be an EU member but will continue to follow EU rules and contribute to the EU's budget. The purpose of the period is to give time for the UK and EU to negotiate their future relationship.
There remains a lot of important tactical detail essential for the smooth running of supply chains and to avoid border transport friction that needs to be agreed within the Transition period, such as the availability of transit permits for UK trucks crossing EU member states to access onward destinations.
The UK has said this can be done by the end of 2020 and the Brexit Bill rules out extending the transition period beyond that point - even if a free trade deal with the EU has not been agreed.
Prime Minister Boris Johnson is expected to meet European Commission President Ursula von der Leyen in London on Wednesday 8th January.
The government hopes to get its bill through its Commons stages by the end of the week, something that should be eminently doable with its freshly won majority.
Elsewhere this week, MPs will be able to question Brexit Secretary Stephen Barclay in the Commons on Thursday 9th January - the final time Exiting the European Union questions will be held as the Department for Exiting the European Union (DExEU) is due to be closed down on 31st January.
• AND THEN?
In the run-up to Brexit Day (31st January), both the UK and EU will be engaged in intensive work to define their opening positions in the negotiations to come on their future relationship.
The first priority will be to negotiate a trade deal with the EU. The UK wants as much access as possible for its goods and services to the EU.
But the government has made clear that the UK must leave the customs union and single market and end the overall jurisdiction of the European Court of Justice BY 31 December 2020.
• BREXIT DAY (31st January)
Assuming the European Parliament also gives the green light, the UK will formally leave the EU on 31st January with a withdrawal deal.
After Brexit Day, the UK will go into a transition period that is scheduled to end on 31st December 2020. During this period the UK will effectively remain in the EU's customs union and single market.
• 25TH FEBRUARY
The EU is aiming to have its negotiating mandate agreed for 1st March. Brussels hopes that ministers from the EU27 will be able to sign it off at a meeting on 25th February. This would give the European Commission the legal authorisation to open talks with the UK.
The EU could take weeks to agree a formal negotiating mandate - all the remaining 27 member states and the European Parliament have to be in agreement. That means formal talks might only begin in March.
• 1st March
With the clock ticking down to the end of 2020, when Britain’s post-Brexit transition period will expire, both sides want the future-relationship negotiations to begin swiftly after Britain leaves the EU.
Both sides agree that a priority in the talks will be to hammer out a free trade agreement that will be the core of their new future economic relationship. The EU and UK have said that the objective should be quota-free, tariff-free trade in goods.
But the key issue of the timetable is that with a start of negotiations at the beginning of March and needing an agreed result translated and presented to the EU Parliament by 26 November to ensure ratification that is really only seven months’ actual negotiation time, not counting the break for summer holidays.
• 30TH JUNE
June is the final month for Britain to request an extension of its transition period beyond 2020, however this is something the Prime Minister has pledged not to do.
Also, an EU-UK political declaration, agreed as part of Mr Johnson’s Brexit deal, says a summit should take place in June so Britain and the EU27 can assess the progress of the talks.
• 26TH NOVEMBER
EU officials say that a trade deal must be negotiated, checked, translated and presented to the European Parliament by November 26th if it is to be ratified by the end of the year.
MEPs will be in Strasbourg in the final week of November for their penultimate plenary session of 2020. The final one, in mid-December, would come too late to sign off on any deal with the UK.
• DECEMBER 31ST 2020
The transition period ends, provided a withdrawal agreement has been reached that has been approved by the EU member states, the European Parliament and the UK parliament.
If a trade deal is not in place, then Britain will fall back on to basic World Trade Organization terms, meaning tariffs on goods and little practical co-operation to smooth border checks. This outcome would effectively be the same as a no-deal Brexit and both sides would need to make preparations for how they cope with the economic fallout in 2021.
CILT’S ADVICE TO MEMBERS
We know that there are changes due to be made in various government departments’ structures with regards to future Brexit negotiations. Dominic Cumming’s call for ‘weirdos and misfits’ to apply for Downing Street jobs clearly sets the scene for these developments, but we have no clarity about what that looks like.
We understand too, that focus has moved away from considering no-deal options and that terminology has been taken off the table by HMRC. Government is now planning for a smooth ratification of the Withdrawal Agreement. However, CILT warns its members to tread with caution and keep the door open to the possibility of a no-deal decision. As ever, continue to hope for the best, but plan for the worst.
Messages coming from Westminster suggest that there is now a strong focus on the Free Trade Agreement (FTA) and that we are now to speak of the opportunity for leaving on WTO rules. The UK currently works on WTO rules today for all shipments other than to and from the EU.
FTA is defined by the World Trade Organisation as an agreement between countries that removes tariffs and other restrictions on “substantially all” goods traded between them. These agreements differ from customs unions in that countries remove tariffs on goods traded between them but do not adopt the same tariffs on goods imported from other countries.
Because FTA partners charge different external tariffs, FTAs require complex rules that define whether a good produced in one FTA partner is eligible for tariff-free treatment in another. These “rules of origin” prevent valuable parts such as engines and high-tech components that are made outside an FTA from being slipped into a high external tariff FTA partner from a low external tariff FTA partner.
So far, there are no FTA’s that remove the need for customs work – they may remove import duty on some products and agree common standards in some areas but all of them still require a customs entry.
Elsewhere, CILT has continually emphasised the importance of frictionless borders and Authorised Economic Operator (AEO) status to its members, professional stakeholders and government officials, and will continue to do so throughout the year.
The current thinking on progressing AEO is that the UK might develop a tiered scheme to encourage companies to gradually become compliant and get full accreditation. CILT recommends that its members consider AEO accreditation today. The emphasis needs to continue to be to prepare to undertake customs work for all shipments to and from the EU. This includes understanding the different procedures and the tremendous opportunities they offer to reduce costs and in some cases bureaucracy.
The Institute will be reporting regularly on the progress of Brexit and its communications with government through the Weekly News Bulletin and Focus magazine, during this vital period for UK supply chains.
Boris Johnson’s win in the December 2019 election has finally set the UK on a course to end its stalemate over Brexit and leave the EU next year.