The Johnson Brexit deal: what it means and what happens next

An updated client note has been published on 25 October - The Johnson Brexit Deal: Three things to note

Seemingly against the odds and after a frantic period of negotiation over the past week, Boris Johnson has agreed a new Withdrawal Agreement with the EU, which was approved by the EU27 leaders at the EU Summit yesterday. Here are three things you need to know.

1. What has been agreed?

The negotiations centred around amendments to the Protocol to the Withdrawal Agreement concerning Northern Ireland and to the (non-binding) Political Declaration on the future relationship, which sets out the direction of travel for the next stage of negotiations once the UK has left the EU.  Importantly, the remainder of the Withdrawal Agreement remains as agreed by Theresa May in November 2018.

This means that, under the new deal struck this week, if the Withdrawal Agreement is ratified by UK and European parliaments and implemented in the UK by legislation before 31 October 2019, the UK will formally leave the EU at 11pm on 31 October 2019 and enter the transitional arrangement set out in the Withdrawal Agreement.  According to the transitional arrangement, the UK will remain bound by most EU law largely as if it were still a Member State of the EU, subject to two important changes:

  • it will no longer participate in the institutions of the EU (no MEPs, no EU Commissioner for the UK, no attendance at EU Council meetings); and
  • while the UK remains bound by any international agreements entered into by the EU with third countries, there will be no reciprocity without the consent of those third countries.  This could prove problematic if any third country that is party to any such agreements refuses to recognise the UK as continuing to participate in such agreements.
The transitional period is due to end on 31 October 2020.  However, there is an option under the Withdrawal Agreement for a single extension of precisely one or two years, if agreed unanimously in advance between the UK and the EU27.
  

The intention of the UK and the EU is to negotiate a long term future relationship during the transitional period.  Almost all qualified commentators consider it highly unlikely that this can be achieved within three years, let alone in the 14 months between 31 October 2019 and the default end of the transitional period.  

If no agreement is reached before the end of the transitional period, the Protocol on Northern Ireland takes effect.  The new version of the Protocol, which replaces Theresa May's Backstop, would mean that Northern Ireland would acquire a unique status whereby it would be part of the UK's customs territory (albeit with a customs border down the Irish sea), but would fully align its regulations with those of the EU Single Market and Customs Union to avoid regulatory and customs checks at the land border between the Republic of Ireland and Northern Ireland  This complex arrangement would require goods moving from outside the EU and UK into Northern Ireland to be charged the appropriate duties (by UK authorities) according to whether their "end-use" is in the UK or the EU.  EU VAT rules would also apply in Northern Ireland.  No provision is made for the free movement of services or people under this arrangement (although the free movement of Irish and British nationals under the Common Travel Area arrangement would remain).

2. What happens next?

In order to come into effect, the Withdrawal Agreement and Political Declaration must be ratified by the UK and EU Parliaments and implemented in UK law by an Act of Parliament.  The first step, a "meaningful vote" on the deal, is due to take place on Saturday evening.  It is more likely than not that, if a coalition of MPs is found to approve the deal on Saturday, this coalition would also be able to see the implementing legislation through Parliament in time for an orderly 31 October 2019 exit.

Saturday's vote will be a hugely significant moment in the Brexit process, and early indications suggest the result is on a knife edge.  Prominent Brexit-leaning Conservative MPs have come out in favour of the deal.  However, the Democratic Unionist Party, with whom the Government has a confidence and supply agreement, have indicated that they do not support the final deal.  

Without the DUP's support, Johnson is likely to need the backing of up to a dozen Labour MPs to get the deal through Parliament.  This is not inconceivable, particularly as a faction of 19 Labour MPs, known as "Labour for a Deal", have previously written to the EU pledging their support for a deal, if one were reached before 31 October.  Whether they will follow through with that pledge once they have reviewed the text of the deal remains to be seen.  

Johnson will also need the backing of around 20 independent Conservative MPs, who Johnson ejected from the party for voting in September this year to enact the Benn Act to prevent a no deal Brexit but who have largely previously indicated they would vote for a deal. At the time of writing, nearly all of these 20 have confirmed that they will back the deal.

3. What happens if the UK Parliament doesn't approve the deal?

Under the terms of the Benn Act, if no deal is approved by Parliament by the end of 19 October 2019, the Prime Minister must write to the EU27 requesting an extension to the Article 50 period to 31 January 2020.  Johnson has previously stated he would not do so, but also that he would not break the law.  If the deal is rejected, it is difficult to see how he could refuse to request an extension and remain Prime Minister.

However, whether an extension is granted is in the hands of the EU27 leaders, who must unanimously agree to such an extension.  The EU27 leaders will not be constrained by the terms of the request and can propose an alternative extension and any conditions they deem appropriate.  In such circumstances, the Benn Act would require Johnson to put the terms of the proposed extension to the House of Commons, who would hold a legally binding vote on whether Johnson should accept the terms.

In the build up to the meaningful vote on Johnson's deal, it has been widely reported that the EU Commission President, Jean-Claude Juncker, stated that there was no need for a "prolongation" of the negotiating period because the EU and UK had agreed a deal.  If the EU were to hold to this position, this would give rise to a risk that the UK could leave with no deal on 31 October 2019 if MPs vote down Johnson's deal.  However, whether to grant an extension is a decision for the EU27 leaders, which they will consider in the event of a vote against the deal in the UK Parliament.


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