Publication of the government’s draft Brexit deal with the European Union has revealed the potential arbitration systems that would be introduced if the agreement is ratified.
The outline agreement between the UK and the European Union was published last night after the text was agreed by the Cabinet, but subsequently two cabinet ministers – Brexit secretary Dominic Raab and work and pensions secretary Esther McVey – resigned, saying that they could not support the deal.
Details of the withdrawal agreement include that the entire UK will remain in a customs union with the EU as a way of avoiding a hard Irish border while a long-term trade deal is agreed. This backstop plan will mean Northern Ireland will also have to stay in parts of the EU single market, thereby tying it closer to Brussels than the rest of the country, although prime minister Theresa May has said that the agreement on a long-term trade deal would mean this would never be used.
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The draft agreement does allow the UK to extend the post-Brexit implementation period – which is due to run until the end of 2020 – on a one-off basis, but the 585-page document does not specify how long that could potentially last for.
In a briefing, the European Commission said that the agreement includes “institutional arrangements to ensure the effective management, implementation and enforcement of the agreement”, which includes a dispute settlement mechanisms.
Both the UK and the EU have agreed to a dispute-resolution mechanism that places the withdrawal agreement under the same conditions as those applicable in European Union law, with the Court of Justice of the European Union the ultimate arbiter for matters related to EU law or concepts.
According to the briefing, any dispute on the interpretation of the withdrawal agreement will lead to an initial consultation through a joint UK-EU committee. If no solution is found, either party can refer the dispute to a new arbitration panel.
“The decision of the arbitration panel will be binding on the Union and the UK,” according to the document. “In case of non-compliance, the arbitration panel may impose a lump sum or penalty payment to be paid to the aggrieved party.”
The agreement also allows parties to suspend proportionately the application of the withdrawal agreement itself, except for issues related to citizens' rights, or parts of other agreements between the Union and the UK, although any suspension would itself be subject to review by the arbitration panel.
In an initial analysis of the document, Jill Rutter, the Institute for Government’s Brexit programme director, said ministers had “offered a masterclass in how not to run a negotiation”.
She added: “The end result is a Brexit deal that is undoubtedly a hard sell. But it does have one merit: given the continued polarisation of views, in the government, parliament and the country, it is probably better than other options.
“We have yet to see quite what the UK has signed up to on governance or on geographic indications. But at least the third ‘G’, Gibraltar, proved to be the dog that did not bark, dealt with in a bilateral arrangement made easier by the replacement of Sr Rajoy by Sr Sanchez as Spanish prime minister.”
She said that the UK was “always on the back foot on the backstop” from the moment the Irish government persuaded the EU27 that there had to be a “guarantee” on the Irish border in the Withdrawal Agreement.
“Will we ever escape the backstop? The prime minister’s Chequers proposition could be regarded as her opening shot to show how the UK could solve the Brexit conundrum – how to allow the UK freedom on trade and some regulatory freedom while avoiding a hard border. Exiting the backstop will depend on finding a landing point that both sides can accept that does that. The EU seems clear that it will involve converting the temporary customs union into a permanent one.”
The details of the deal were published last night after May said the Cabinet had reached agreement on the plan. But this morning both Raab and McVey said they were unable to back the plan.
Raab, who as Brexit secretary was prime minister’s Theresa May primary representative in the negotiations, said he “cannot support the proposed deal” due to the regulatory regime proposed for Northern Ireland presents and the indefinite nature of the backstop.
“The terms of the backstop amount to a hybrid of the EU customs union and single market obligations,” he said. “No democratic nation has ever signed up to be bound by such an extensive regime, imposed externally without any democratic control over the laws to be applied, nor the ability to decide to exit the arrangement. That arrangement is now also taken as the starting point for negotiating the future economic partnership. If we accept that, it will severely prejudice the second phrase of negotiations against the UK.”
McVey’s resignation letter said that the deal “does not honour the result of the referendum” or the tests for Brexit that May set out when she became prime minister.
“Repeatedly you have said that we must regain control of our money, our borders and our laws and develop our own independent trade policy. I have always supported you to deliver on those objectives,” she said. “Even after Chequers when you knew I shared the concerns of a very significant number of colleagues, I believed that we could still work collectively to honour the will of the British people and secure the right outcome for the future of our country. This deal fails to do this.
“The proposals put before Cabinet, which will soon be judged by the entire country, means handing over around £39bn to the EU without anything in return.”
The other ministerial resignations this morning were Shailesh Vara, a junior Northern Ireland minister, Suella Braverman, a minister in the Department for Exiting the European Union, Anne-Marie Trevelyan, a parliamentary private secretary at the Department for Education, and Ranil Jayawardena, who was a PPS at the Ministry of Justice.