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What does the EU Withdrawal Agreement mean for Wales?

On 4 December, the Assembly will debate the draft EU Withdrawal Agreement (the Withdrawal Agreement) and Political Declaration. This is in line with the First Minister’s intention that the Assembly will hold a vote on the agreement and political declaration before the ‘meaningful vote’ on the agreement in the House of Commons, which is scheduled for 11 December following five days of debate. The ‘meaningful vote’ is required to ratify the Withdrawal Agreement, as a result of the European Union (Withdrawal) Act 2018. This article focusses on the key issues for Wales from the Withdrawal Agreement. We’ll be publishing further blogs on themes emerging from the Political Declaration, and the potential economic impacts

30 November 2018

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On 4 December, the Assembly will debate the draft EU Withdrawal Agreement (the Withdrawal Agreement) and Political Declaration.  This is in line with the First Minister’s intention that the Assembly will hold a vote on the agreement and political declaration before the ‘meaningful vote’ on the agreement in the House of Commons, which is scheduled for 11 December following five days of debate.  The ‘meaningful vote’ is required to ratify the Withdrawal Agreement, as a result of the European Union (Withdrawal) Act 2018.

This article focusses on the key issues for Wales from the Withdrawal Agreement.  We’ll be publishing further blogs on themes emerging from the Political Declaration, and the potential economic impacts.

What is the Withdrawal Agreement, and what are the headline messages from it?

The Withdrawal Agreement sets out the terms of the UK’s departure from the EU on 29 March 2019.  It has been agreed under the terms of Article 50 of the Treaty on European Union, which was triggered by the Prime Minister writing to the European Council President on 29 March 2017 to inform him of the UK’s intention to leave the EU.  In summary, the Withdrawal Agreement contains the following key provisions:

  • A deal on citizens’ rights that allows EU citizens lawfully living in the UK and UK citizens lawfully living in an EU country at the end of the transition period to continue to do so on a permanent basis, once they have done so for five years.
  • Separation provisions that make arrangements for the UK’s exit from the EU in areas such as goods that are on the market at the end of the transition period, customs procedures, intellectual property including geographical indicators for foods, and police and judicial co-operation.
  • Creation of a transition period until 31 December 2020 where the UK will follow EU law unless set out in the withdrawal agreement, and will follow the ‘four freedoms’ of the EU giving freedom of movement to goods, services, people and capital. However, it will not participate in EU decision-making. The EU and the UK can agree to extend the transition period for 1 or 2 years, but only if the UK requests this before 1 July 2020.
  • Arrangements for a financial settlement that covers the UK’s rights and obligations as a departing member of the EU. The UK Government considers that it will be required to pay between £35 billion and £39 billion, although this estimate is dependent on future events.
  • Institutional arrangements which set out how the agreement will be managed, implemented and enforced, including dispute settlement mechanisms.
  • A ‘backstop’ solution for Ireland and Northern Ireland, which will come into force if there is not a trade agreement between the UK and EU by 31 December 2020 (or the end of the transition period, if extended).

How does the Welsh Government consider that the Withdrawal Agreement addresses the key Brexit-related issues facing Wales?

The Welsh Government published its assessment of the Withdrawal Agreement and Political Declaration in a written statement by the First Minister on 27 November.  It highlighted the view of the Welsh Government that, while it recognises the importance of the building blocks of the Withdrawal Agreement, some elements of it are problematic.  In its view, some of these difficulties are caused by the UK Government’s position, and how this has shaped the Political Declaration.

The specific concerns that the Welsh Government has about the Withdrawal Agreement are set out in the assessment, and also by the First Minister in his statement to the Assembly on 20 November. These include:

  • The lack of permanence of the arrangements in the Withdrawal Agreement – the First Minister stated that “the agreement kicks the can down the road”, and that there are questions around whether the UK will be in the same position as it is now in 2020 without a permanent agreement on its relationship with the EU.
  • Limitations on extending the transition period – the Welsh Government states that while the Withdrawal Agreement includes a mechanism to extend the transition period, this should not just apply to circumstances where the UK Government wishes to avoid initiating the ‘backstop solution’ set out in the Ireland-Northern Ireland protocol. It believes that there is likely to be a number of areas where the negotiations may require additional time to ensure the right deal is agreed beyond matters affecting trade, and that there should not be a time restriction to extending the transition period.
  • Environmental and labour protections – the Withdrawal Agreement commits that, during any backstop period, the UK and EU will not reduce the levels of environment and labour protections as they stand at the end of transition. However, the Welsh Government supports an alternative approach whereby the UK would continue to align with future EU environmental and labour standards, to continue what it sees as the high levels of protections for the environment and workers’ rights that have been in place while the UK has been a member of the EU.  Some other commentators, such as the Institute for Public Policy Research and Thompsons Solicitors, have also expressed concerns about individuals’ ability to enforce the ‘non-regression obligations’, such as those contained in  the backstop clauses, post-Brexit.

The Welsh Government’s assessment concludes that:

The UK Government must embrace the future relationship with the EU set out in Securing Wales’ Future.  If this is adopted then the Withdrawal Agreement, which the EU is reluctant to reopen, could remain largely unchanged.

What impact will the Withdrawal Agreement have on specific policy areas in Wales?

The Assembly’s External Affairs and Additional Legislation Committee published its analysis of the impact of the Withdrawal Agreement and Political Declaration on Wales on 29 November.  This highlighted the following key points in respect of the Withdrawal Agreement:

  • In relation to the Welsh economy, during the transition period the UK will continue to be part of the single market and customs union, with arrangements for a free trade area for goods and co-operation on trade in services beyond this still to be determined beyond the potential ‘backstop’. The vast majority of the evidence the Committee has heard states that ensuring frictionless access to the single market without tariffs or non-tariff barriers is of crucial importance to the Welsh economy.
  • In respect of Welsh ports, the arrangements set out in the ‘backstop’ solution for Ireland and Northern Ireland will be of interest. If this comes into force, there will be a UK-EU customs territory, but with Northern Ireland additionally remaining aligned to most EU rules concerning trade in goods and animals. As a result, there will be no new checks or controls on goods crossing the border between Ireland and Northern Ireland, however there will be checks on goods coming from the rest of the UK to Northern Ireland.
  • Welsh food and drink products protected by geographical indicators, such as Welsh lamb, will automatically obtain both equivalent protection within the UK and maintain the existing protection in the EU as set out in Article 54 of the Withdrawal Agreement.
  • The Committee has also heard concerns about the impact of Brexit on NHS Wales’ workforce planning. The proposals set out in the Withdrawal Agreement state that all EU citizens lawfully residing in the UK at the end of the implementation period will be able to stay in the UK and will be guaranteed broadly the same rights as they currently have, including the right to work or be self-employed.
  • In terms of continued availability of medicines for NHS Wales, medicines and medical devices placed on the market before 31 December 2020 will continue to circulate freely between the UK and the EU and will not require product modifications or relabelling. Any compliance activity already undertaken for these goods, such as conformity assessments, will continue to be recognised in both the UK and the EU.

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Article by Gareth Thomas, National Assembly for Wales Research Service