Statement on the draft Brexit deal

 

"We are now close to a deal on exiting the European Union, and the outline of our future relationship agreement.  The next steps are the European Council meeting on 25th November, consideration by the European parliament, and of course debate in our own Parliament, which I expect to be extensive and thorough, followed by the meaningful vote in Parliament. 

"This will be a vote on government policy, but this goes far beyond party politics.  This is about the future of our country, about an orderly transition to a new relationship with the EU, about seizing new opportunities across the world, and about protecting jobs and livelihoods.  It will be a robust debate.  But ultimately I believe the choice at hand will focus minds – across all parties.  The question isn’t whether you like it or not; the question is whether you like some other viable alternative more.

"Right now, we have two key documents.  The first is the draft Withdrawal Agreement.  The second is the Outline Political Declaration, which sets the key parameters for negotiation of the full future relationship.

"The Withdrawal Agreement covers:

  • Protection of the rights of both EU citizens in the UK and UK nationals living in the EU
  • An ‘implementation period’ (sometimes called a ‘transition period’) – the time-limited period that acts as a bridge to the future relationship, allowing businesses to continue trading as now until the end of 2020
  • A financial settlement estimated at £35-39bn, resolving our obligations on exit
  • To ensure no hard border between Northern Ireland and the Republic of Ireland, even if more time is needed to finalise the future relationship: two options – either a limited time extension to the implementation period or a ‘backstop’ that would retain temporarily a UK-wide customs solution, pending finalisation of the future relationship agreement
  • A dispute resolution mechanism for resolving any disputes between the UK and the EU, through a Joint Committee and ultimately an independent arbitration panel.

"The outline political declaration includes (in outline, obviously):

  • Ending free movement and introducing our new skills-based immigration system; keeping visa-free travel both ways for tourists and temporary business travel
  • A free trade area for goods, with zero tariffs and quotas; ambitious arrangements for services
  • The right of the UK to strike trade deals around the world
  • We will be an independent coastal state, and outside the Common Agricultural Policy
  • Various other items, such as on transport access, energy markets and the security partnership.

"This is the culmination of many months of negotiation – not just from the Prime Minister and the Brexit secretaries of state, but by some of Britain’s finest diplomats and a huge analytical, legal and support team of officials. 

"Although obviously people will rightly discuss and give an opinion on individual aspects of the draft deal, we cannot simply say whether on balance we like it or we don’t.  It is a package.  And as I say, it only makes sense to compare it to some actual deliverable alternative package.

"As I have written many times in correspondence with constituents over the course of this process, there was never going to be, nor could there ever be, an outcome that would fully satisfy all objectives, for two reasons. 

"First, because some of these objectives are to an extent in conflict with each other.  Our objectives include: the controlling of movement of people; the maximisation of trade with the EU nations; the maximisation of trade with other nations; the minimisation of friction at borders; the minimisation of ongoing cash outlays; ensuring there is no return to a hard border in Ireland; and participation in programmes (such as on security and research) of mutual benefit.

"Secondly, because we have been in a negotiation; and in no negotiation do you get sole say over the outcome. 

"In fact, things have moved a very long way from where they were some months ago.

"The EU had opened by saying there were two choices: a Norway model or a Canada (CETA) model.  Neither of these would have been right for Britain, and now we have instead a bespoke UK model, taking account of the unique position of Britain.  

"There had been from the EU an insistence on another binary view too: that for security co-operation any country could only be either an EU member or what’s called a ‘third country’ like any other; but the relationship now envisaged is a middle way, recognising our unique position. 

"The EU had said that avoiding a hard border in Ireland would mean splitting the UK’s customs territory. That could never be acceptable to us and now the EU have dropped their insistence on a Northern Ireland-only customs ‘backstop to the backstop’ with a UK-wide approach instead.

"We are enacting the single biggest change in our relationship with other countries in my lifetime. These are enormous matters and it is right that we have full analysis and reflection and debate.

"I heard many people’s views around East Hampshire during the referendum campaign in 2016. I took part in debates, held public meetings, and campaigned in the streets. I know that people on both sides voted as they did for many different reasons. But one thing I heard about a lot locally was a strong view that we needed to take back control over the movement of people.  I also heard a great deal of dissatisfaction with large amounts of money going to Brussels each year. But there was also a very wide realisation that, of course, the countries of Europe are important trading partners for us, and there is great value to our cooperation on things such as security and academic research. 

"I had campaigned for ‘remain’ and I was disappointed in the result.  But I was also clear from the moment that the result was in that we had to deliver on the result – that it was up to everyone in politics and public policy to work together to secure the best Brexit deal for Britain.  From that day, to my mind there could be no ‘Leavers’ and ‘Remainers’.

"Parliament had given the British people the final say and this was entirely clear at the time.  It was a very participatory campaign with much information and points of debate brought from dozens of bodies, from the principal campaign groups to trade unions and business groups, the BBC, newspapers, economists, academics and more.  In my experience, people heard from and took from a variety of sources.  The turnout was high and the margin of the result clear.

"MPs from across the political spectrum voted overwhelmingly in favour of invoking Article 50 in 2017. I was one of them.  Both main political parties also pledged in their 2017 manifestos to respect the EU referendum result.  I stood on one of these manifestos.  These parties received over 80% of the vote.

"We now have a draft deal and it delivers on the referendum result.  It will bring the end of freedom of movement, giving back control of this to the UK Parliament.  It will stop the indefinite sending of huge sums to Brussels.  It will give us back control of our laws.

"It does this in a way which is good for our economy and people’s jobs.  We will be able to maintain good levels of trade with the EU – including for the just-in-time supply chains needed for sectors like automotive – and we will be able to strike our own deals with other countries (and we can do these deals during the implementation period, for enactment at the end of the IP).  Trade, directly or indirectly, drives economic growth, creates jobs and, along with productivity improvement and innovation, enables us to fund essential public services upon which we all depend so much. 

"Much of the political debate has turned on the so-called ‘backstop’, sometimes referred to as the ‘Northern Ireland Protocol’.  It may be worth dwelling on this for a moment.  The backstop is a fall-back arrangement, a sort-of insurance policy, to protect the Northern Ireland and the Republic of Ireland, if the two parties failed to reach an agreement on the future relationship, before our date of leaving. 

"We do not anticipate being in this backstop scenario; indeed neither we nor the EU want the backstop to happen at all – albeit for different reasons (the EU think it would give the UK an unfair competitive advantage). 

"Both sides are bound to negotiate in good faith using best endeavours to get to the future relationship.  But it is true that there is limited time before the end of the Implementation Period (31st December 2020) to settle the detail (though of course we start from a unique position of regulatory alignment and past participation in programmes and so on).  So there is a facility, if it looks like the future relationship would not be ready in time, to extend the implementation period, in which case no backstop would be needed.  If we did enter the backstop we could call for a review.  Were there a disagreement, a special conference would seek to resolve the differences.  If that failed to reach resolution it would go to independent arbitration.  As is usual with international interactions of this sort, the parties are bound to act reasonably in the circumstances: you cannot just unreasonably ‘veto’ something.  And the context is that Article 50 in any event does not allow for the creation of anything permanent – any arrangement can only be temporary.

"So, what are the alternatives to the deal? 

"There is no alternative negotiated deal package available.  And any attempt to reopen negotiations could of course also lead to adverse developments.  There is still the stage of the European Council on 25th November to go through.

"But there are two other possible outcomes.  Neither would be good for Britain.

"First is the risk of no Brexit at all.  It is not clear how this would come about, nor what the stance of some of the EU 27 would be, given their own varied domestic political pressures.  But there are people in British politics who would like to thwart the Brexit process, and there are various devices they may seek to use to do so.  Having had a referendum – a “people’s vote”, you might say – It would be, in my assessment, undemocratic not to act in good faith on its result.

"Second is the risk of ‘no deal’.  We are told sometimes that there is no majority in Parliament for no deal.  In my assessment this is correct, but that may prove irrelevant.  Ultimately, ‘no deal’ just means, literally, that you haven’t managed to make a deal: it is the default position. 

"In truth there is not a single version of ‘no deal’, but a range, from a soft exit to ‘WTO rules’, through to a real crash out.

"Even the soft version is unattractive.  WTO rules are often mentioned but rarely explained.  In the interests of brevity, suffice to say that the major nations of the world expend large amounts of effort, resource and political will to try to move beyond WTO rules with their major trading partners, to wide-ranging free-trade agreements (FTAs).  It would be bizarre for us to be seeking FTAs with the United States and elsewhere (as we are), but to be happy with WTO rules for our nearest trading partners.

"Something else is worth being very clear about: moving to WTO rules doesn’t save you £39bn.  The great majority of the ‘divorce settlement’ is connected to the process of exit, not to the set up of the future relationship, and payable regardless of the nature of the future relationship.  Legal liabilities are ultimately enforceable, but anyway the UK is of course a full and responsible member of the international community and we pay our legal dues.

"Any attempt to withhold monies due would make a crash out more scenario likely.  I have been asked a number of times what the worst case scenario is.  I don’t think it is possible to paint a picture of a single worst case.  But clearly an abrupt stop to administrative co-operation with our near neighbours could be significantly harmful in many respects – and that is true even were the event itself to be short-lived.

"We have of course, and rightly, been making contingency preparations for a no deal scenario, and it is also quite right that in any negotiation you have to have a walk away point; it had to be known that no deal was an option for us.  But that doesn’t make it an attractive one.

"There is no reason we should have to face up to that scenario.  Because we have a deal on the table.

"After four decades of membership, it comes as no surprise that withdrawal is complex.  There is a vast array of aspects and considerations.  And we have to face up to key issues, including the need to avoid a hard border between Northern Ireland and the Republic.  There are compromises and trade-offs involved.  Indeed the Prime Minister has spoken of the discomfort of aspects of the backstop, though of course we hope never to have to use it.

"There is also considerable advantage to be had.  This deal does deliver on the key things that I heard about so often across East Hants during the referendum.  It means we can decide our own financial priorities.  And it means we can strike our own trade deals around the world – playing to Britain’s strengths as we pursue opportunities in a rapidly changing world.

"We have so much going for us as a country – from our legal system and education to our time zone and the English language.  And of course the energy, the drive, the creativity of the British people.  With a constructive trading arrangement with our near neighbours and the ability to strike new economic relationships worldwide, we are uniquely placed to chart a prosperous future."

 

Damian Hinds
November 2018

 

Links to further information

The full draft Withdrawal Agreement (585pp PDF):

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/756374/14_November_Draft_Agreement_on_the_Withdrawal_of_the_United_Kingdom_of_Great_Britain_and_Northern_Ireland_from_the_European_Union.pdf

Summary explainer of the draft:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/756376/14_November_Explainer_for_the_agreement_on_the_withdrawal_of_the_United_Kingdom_of_Great_Britain_and_Northern_Ireland_from_the_European_Union___1_.pdf

The outline political declaration:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/756378/14_November_Outline_Political_Declaration_on_the_Future_Relationship.pdf

Explanatory note on the NI Protocol / ‘backstop’

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/756375/14_November_Technical_Explanatory_Note_Arts_6-8_Northern_Ireland_Protocol.pdf

You can find out more about ‘WTO rules’ here:

https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact2_e.htm

On ‘no-deal’ preparations:

https://www.gov.uk/government/collections/how-to-prepare-if-the-uk-leaves-the-eu-with-no-deal