Government Affairs

EU and UK Reach Brexit Deal, Though Fate Uncertain

Negotiators for the European Union (EU) and United Kingdom (UK) have reached an agreement on a Brexit plan.  

On Wednesday, 14 November 2018, Prime Minister Theresa May published the 585-page draft plan outlining the UK’s exit from the EU. Despite the cabinet signing off on the deal Wednesday night, Thursday morning, the plan and PM May began facing some severe backlash. EU negotiators have already agreed to this draft plan and are making it clear that they don’t intend to re-open negotiations.

Though negotiators have reached an agreement, Prime Minister May faces an uphill climb getting the deal approved by parliament. At this point, it seems as if the plan proposed this week is the last chance to strike a deal before the looming deadline. The alternative to a deal is a hard exit in which the UK simply withdrawals from the EU. Both sides are looking to avoid such a scenario.

Related: Mobilizing Your Brexit Strategy

How This Impacts Mobility

As part of the plan, the UK would end the free movement of people but would create a mobility framework for EU and UK citizens move between the two jurisdictions for travel, studies and work. This would have a direct impact on the ability to transfer employees between the UK and much of the rest of Europe. There are also broader implications regarding Brexit which could result in businesses relocating offices and employees between the UK and EU.

Thursday morning, two prominent cabinet ministers resigned, including Dominic Raab, the Prime Minister’s primary Brexit negotiator. Raab becomes the second person in this position to resign this year. Esther McVey, the cabinet minister who oversees work and pensions also announced her resignation shortly after Raab.

Raab’s resignation comes as a surprise and is deeply troublesome to May as she attempts to move her deal through the British Parliament. Not only could Raab’s exit threaten a Brexit deal, but it could also lead to the ouster of May as Prime Minister as she faces increased rebellion from within her own Conservative party. The turmoil has already had an economic impact with the Pound Sterling falling over 1% yesterday compared with the US dollar.

The draft withdrawal agreement tackles many of the outstanding issues that have long been roadblocks in reaching a deal. Negotiators have devised what they are calling a “swimming pool” solution to address the issue of the border between Ireland and Northern Ireland. Under this solution, there would be no hard border between Ireland and Northern Ireland. Northern Ireland however, would continue to be bound by stricter EU levels of regulation in order to ensure trade between Ireland is “frictionless”. Northern Ireland remaining subject to EU regulation is something that many Conservatives disagree with.

In order to ensure a smooth transition without a hard border, all of the UK would remain in the EU’s customs union until separate trade deals are reached. Northern Ireland would likely have to remain in the EU’s customs union for an extended period after that. An arbitrator would eventually decide when border concerns have been addressed and it is safe to remove the backstop. As May will have to rely on the votes of Northern Irish Members of Parliament, this may become a sticking point.

The proposal keeps the free movement of people in place during the transition period ending in 2020. The UK would be able to ask for an extension of this at any time prior to July 1, 2020. The proposal also gives guidance regarding EU citizens in the UK and those UK citizens in the EU. Citizens of either the EU/UK and their families will be able to apply for permanent residency where they are living if they are in county prior to the end of 2020 and once they accumulate five years of residency.

At this point, it seems as if the plan proposed this week is the last chance to strike a deal before the looming deadline. The alternative to a deal is a hard exit in which the UK simply withdrawals from the EU. Both sides are looking to avoid such a scenario.

Time continues to run out for negotiators for the European Union (EU) and United Kingdom (UK) who have yet to reach an agreement, with the transition phase of Brexit slated to being in March of 2019.

Once any deal is reached, it will take several months to initiate. Negotiators initially had given themselves until October, but since have provided more flexibility.

Are you prepared for Brexit? Consider attending the Frankfurt Mobility Summit to discuss the implications of Brexit with noted government affairs experts. Register today for February's event. And in the meantime, join the conversation during our upcoming Brexit webinars: Worldwide ERC® Government Affairs Update on 27 November and How Do You Want Your Brexit: Hard, Soft or Scrambled? on 4 December.

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