UK and EU agree ‘decisive step’ with 21-month Brexit transition

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The UK and the EU have agreed terms for a 21-month transition after Brexit, providing business with much stronger assurances that a cliff-edge exit will be avoided next year. The conditional agreement reached by Michel Barnier, the EU’s chief negotiator, and David Davis, the UK’s Brexit secretary, represents one of the most valuable economic guarantees secured by the UK since Brexit talks began. Markets welcomed the news, with sterling climbing above $1.40 against the dollar to reach its highest level in three weeks. Speaking in Brussels on Monday, Mr Barnier said the deal was a “decisive step”. “We were able to agree this morning . . . on a large part of what will make up an international agreement for the ordered withdrawal of the UK,” Mr Barnier said. Under the time-limited period, the UK will have to abide by all existing EU rules but will lose its say in the decision-making process. The negotiators published a colour-coded draft text of Britain’s withdrawal agreement, showing areas of agreement and dispute. The two most difficult political issues — governance and the Northern Ireland border — were left in “white”, noting further negations were required. The two sides were able to reach comprehensive agreements on a financial settlement and the rights of about 4m citizens affected by Brexit. While progress was made in other parts of the divorce treaty, disagreement remains over judicial co-operation, data protection and intellectual property. Mr Barnier said he was confident the EU could agree on an “ambitious” framework for future UK-EU foreign and security policy during the transition period. “The intention is to move as fast as possible on all aspects of the future relationship”, said Mr Barnier. On Ireland, the UK has agreed to include a “legal” backstop that would keep Northern Ireland in key parts of the single market and the EU’s customs union. “The backstop will apply unless, or until, another solution is found,” said Mr Barnier. Talks concerning the border will continue over the next weeks. Mr Davis said the legal language on the Irish backstop had to be “acceptable to both sides”. He said it was still the aim of the UK to achieve a future trade deal that was deep and close so as “not to require specific measures for Northern Ireland”. The two sides have also reached “complete agreement” on the terms agreed on citizens’ rights after Brexit and the UK’s financial settlement, Mr Barnier added. “Citizens who arrive in the UK during the transition period will have the same rights as those arriving before the Brexit period,” said Mr Barnier. However, the transition relies on a final agreement on the complete withdrawal agreement later this year. “It’s a good landing spot,” said one EU diplomat briefed on the terms. Simon Coveney, Ireland’s foreign minister, met Mr Barnier earlier on Monday and said negotiations were “moving forward”. “Progress on Irish issues remains a key priority for both negotiating teams and solidarity with our EU partners remains strong,” Mr Coveney tweeted this morning. The text agreed by the two sides lays out the precise terms for how Britain would continue to apply EU law after Brexit on March 29 2019, while losing its formal say on the way rules are developed and applied. In practice it would provide for the free movement of goods, services, capital and people between the UK and EU until December 31 2020. The end date is earlier than the UK requested and the EU has included no explicit clause allowing for a limited extension. However, some EU diplomats still expect one to be included in the final withdrawal agreement. The effective extension of Britain’s participation in the EU single market and customs union provides businesses with at least an extra 21 months to make preparations. It also gives governments longer to plan for Brexit-related changes to Britain’s customs, immigration and regulatory systems. Businesses made clear to Downing Street that a March deal was essential in order to avoid them having to immediately take investment decisions preparing for a possible hard exit on March 29 next year. Guarantees over the arrangements in place immediately after Brexit are particularly important for manufacturing supply chains, banks and airlines, which sell tickets up to a year in advance.


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