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The UK and EU agree a transition deal - but what does it mean?

Who's walking away happiest?

The UK and EU agree a transition deal - but what does it mean?
19 March 2018

Gather round guys: it’s that time again.

Yet another stage of the seemingly never-ending Brexit negotiations has been completed, with the latest deal being an agreement on the terms of the ‘transition period’ which will begin when the UK officially leaves the EU on 29 March 2019.

Following several days of intensive talks, David Davis, the Brexit secretary, negotiating on the UK’s behalf and his EU counterpart Michel Barnier, said that the deal, on what the UK calls the implementation period, was a ‘decisive step’.

As ever though, let’s break down what this actually means.

What was agreed before?

The last big breakthrough in talks was the end of the ‘first phase’, which was triumphantly announced by Theresa May and which allowed talks to move on to negotiating a new trade deal in the following months.

The first phase agreements featuring three components: 1) the financial settlement from the UK to the EU, estimated to be between €40-€55 billion, 2) the enshrinement of rights for EU citizens living in the UK and 3) the issue of the post-Brexit border in Ireland.

Elements one and two were fairly straightforward but element three was anything but. We said at the time that the issue had not been resolved but merely kicked into the future in order for things to move on, so perhaps the new agreement will finally bring a solution?

What’s been agreed now?

A transition period has been agreed which will last 21 months, from 29 March 2019 through to 31 December 2020.

It will see the UK stay in the single market and customs union, but lose its role in any decision-making relating to them. However, this will buy the UK government time to be able to negotiate new trade deals elsewhere and to sort out the myriad other issues that will need untangling.

On what issues has the UK ‘won’?

It has received “near enough [to] the two years we asked for”, said Davis.

The UK will also be able to negotiate and sign trade deals during the transition period.

Davis and Barnier: a picture paints a thousand words…

On what issues has the EU ‘won’?

Well, pretty much everything. Again.

Despite Theresa May’s public insistence that EU citizens arriving during the transition period would be treated differently to those here before that time, Barnier announced that “British citizens and European citizens of the 27 who arrive during the transition period will receive the same rights and guarantees as those who arrived before the day of Brexit”.

Despite Theresa May’s insistence that no British prime minister could sign up to a solution to Ireland that would involve Northern Ireland staying in regulatory alignment with the Republic of Ireland, in order to avoid a hard border and the end of the Good Friday Agreement - that is, Northern Ireland effectively remaining in the customs union and parts of the single market - the new agreement, termed a ‘back stop’ plan, means that exactly that will happen, in the absence of any other solution.

In other words, we’re still in exactly the same situation that we were in December.

However, the UK insists that, despite accepting that a back stop on maintaining regulatory alignment between Northern Ireland and the Republic of Ireland will be included in the final withdrawal agreement, it has not accepted the current wording proposed by the EU.

Meanwhile, the agreement will include safeguards for annual fishing negotiations during the transition period - a move that has angered Scotland’s First Minister Nicola Sturgeon:

Bertie Armstrong, chief executive of the Scottish Fishermen’s Federation, said: “We will leave the EU and leave the Common Fisheries Policy, but hand back sovereignty over our seas a few seconds later. Our fishing communities’ fortunes will still be subject to the whim and largesse of the EU for another two years.”

So what does this mean?

Ireland has been kicked into the long grass, again, but it will still need solving at some point. And there is no way of avoiding a hard border that does not include Northern Ireland remaining in the customs union at the very least. However, having Northern Ireland differ from mainland UK will not be countenanced by the DUP, who are currently keeping Theresa May in power. So, under the current system, it’s a stark choice: stay in the customs union and/or single market or rip up the Good Friday Agreement.

The UK has bought itself time but, equally the EU has allowed it: it could easily have forced the UK to make a decision on it, but has chosen not to. The EU retains all the power and yet again Theresa May has lost credibility - if she has any left - by backtracking on things she said were red lines.

It will be paraded as a victory of sorts - and, to be fair, talks will now be able to continue and ‘progress’ can be made. David Davis hailed it as a ‘significant’ moment, which is not really true but it could give business some much-needed confidence that a final deal will actually happen and that they won’t need to jump ship to mainland Europe just yet.

But, really, the big rock in the middle of the road has simply been pushed further away - and it’s still very much there.

(Images: Getty)