24 August 2018
With seven months until exit day, the UK Government has increased its preparations for a ‘no deal scenario’ by publishing the first batch of 25 technical notices on how to prepare for Brexit if the UK leaves the EU without a deal. It is expected that more of these notices, intended to help businesses and citizens to plan and prepare for such a scenario, will be published in September. According to the first notice, the UK Government considers that a no-deal Brexit scenario “remains unlikely” but believes it should “prepare for all eventualities” until the outcome of the negotiations with the EU is known.
Some of the technical notices published by the UK Government and likely to be of most interest to Wales include guidance on:
- Trading with the EU if there’s no Brexit deal including implications for businesses importing from, or exporting to, the EU;
- How to classify goods in the UK Trade Tariff if the UK fails to negotiate a future economic partnership with the EU which provides for a Free Trade Area for goods. In a ‘no deal scenario’ goods traded between the UK and the EU after Brexit will be subject to the same requirements as third country goods, including the payment of customs duty;
- Producing and processing organic food including changing logos on packaging from the EU organic logo and exporting from the UK to the EU. To export to the EU in a no deal scenario, UK businesses would need to be certified by an organic control body recognised and approved by the EU to operate in the UK but UK control bodies would have to wait until the UK becomes a third country in order to apply to the European Commission for recognition; and
- The UK Government’s guarantee for EU funded programmes and how this will operate for specific programmes such as Erasmus+ and Horizon 2020 until the end of 2020 if there’s no deal.
- Some of these technical notices will be explored in further detail in future blog posts.
What is a ‘no deal’ scenario?
A ‘no deal’ Brexit means that the UK would leave the EU at 11pm on 29 March 2019 and become a third country without a formal agreement in place between the UK and the EU.
The UK Government is currently working with the EU Commission to agree the arrangements for the UK’s withdrawal from the EU as well as the terms of the future UK-EU relationship. The majority of the draft Withdrawal Agreement has now been agreed and the UK Government published a White Paper setting out its proposals for the UK-EU future relationship on 12 July. A communication from the Commission to the other EU institutions published on 19 July said:
It is currently planned that the Withdrawal Agreement would be agreed by the European Union and the United Kingdom in October 2018, accompanied by the political declaration on their future relationship.
Once the Withdrawal Agreement has been agreed, it must be ratified by the UK Parliament and the European Parliament before exit day. As set out in Article 50 of the Treaty of the EU, the UK has two years to negotiate a Withdrawal Agreement and future relationship framework before its membership of the EU comes to an end on 29 March 2019. However, in the event that no agreement is reached and/or it is not ratified in time by both parties, and no extension to Article 50 is secured, the elements of the draft Withdrawal Agreement agreed thus far would not apply.
How is the EU preparing for ‘no deal’?
On 2 August Michel Barnier, the European Commission’s Chief Negotiator for the negotiations with the UK, has said that he remains confident that “the negotiations can reach a good outcome”. Nonetheless on 19 July the European Commission adopted a Communication on preparing for the UK’s withdrawal from the EU which called on stakeholders and national and EU administrations to prepare for all Brexit scenarios. In addition, the European Commission has also prepared a series of preparedness notices setting out the legal and practical implications of the UK’s withdrawal from the EU.
How is the Welsh Government preparing for ‘no deal’?
During the External Affairs and Additional Legislation Committee’s inquiry into the Welsh Government’s administrative and financial response to Brexit a number of stakeholders raised the importance of preparing for various Brexit scenarios. In its report, How is the Welsh Government preparing for Brexit? (PDF, 744KB), the Committee recommended that the Welsh Government should undertake urgent examination of the likely parameters of various Brexit scenarios, including a “no deal scenario”. In the First Minister’s formal response to the report (PDF 218KB) he said:
[…]we have continuously emphasised that this would be catastrophic for Wales. We therefore do not want to normalise such a disastrous outcome, but we recognise that should the UK Government fail to reach a deal with the EU27, the Welsh Government has a responsibility, in devolved areas, for ensuring that necessary arrangements would be in place. Work is intensifying across Welsh Government departments in relation to potential operational arrangements needed to ensure we are prepared for our exit from the EU, based on different scenarios.
However, the response also stressed that the Welsh Government does not believe that it is possible to completely mitigate the impacts of a no deal outcome on Wales, and in such a scenario, it would be the responsibility of the UK Government to make arrangements and supply resource.
More recently, on 10 July, in response to a question in plenary from Leanne Wood AM on developing a ‘no deal’ plan, the First Minister said:
There is no mitigation against no deal. It would not be right to say that. The reality is that, if we have a ‘no deal’ Brexit, we will lose jobs, and we will lose investment. There is no question about that, which is why I have fought tooth and nail against a ‘no deal’ Brexit. That does not mean, of course, that we are not doing anything in terms of preparing for Brexit. […] But surely nobody can pretend that a ‘no deal’ Brexit can be fully mitigated, because it can’t.
On 23 August, in response to the UK Government’s ‘no deal’ plans, the First Minister said:
It is hugely frustrating, because if the UK Government had adopted the blueprint to negotiations we set out over 18 months ago, they could have made substantial progress on the future partnership with the EU […] ‘No deal’ is not an option and the UK Government’s bluff is fooling no-one. It is time the Prime Minister dropped the poker face and worked constructively with the EU-27 to secure a Brexit deal that protects our citizens, services and economy.
Article by Manon George, National Assembly for Wales Research Service