A. Referendum analysis
Appendix A covers:
- Referendum electorate
- Referendum result
- Compare 2016 with 1975
A1 Referendum electorate
Included: 46.5 million people entitled to vote in a UK parliamentary election:
- British citizens over 18, resident in UK
- Irish citizens over 18, resident in UK
- Maltese & Cypriots over 18, resident in UK
- Commonwealth-born citizens over 18, resident in UK
- Commonwealth citizens in Gibraltar over 18
- British expats, lived overseas for <15 years
- Irish citizens born in Northern Ireland, registered to vote there in the last 15 years
Excluded: 4.6 million (1.6 million registered EU citizen voters, 1.5 million young voters, 1.5 million expatriates – could be higher)
- All other EU citizens resident in the UK who are allowed to vote in local elections – estimated at 1.6 million registered voters (which includes some Irish, Maltese and Cypriot citizens listed above).
- Young voters aged 16-18 (unlike the Scottish referendum of 2015) – estimated at 1.5 million voters based on ONS statistics.
- UK expatriates out of the country for 15 years or more. The Conservatives promised in their 2015 election manifesto to restore full voting rights to all expatriates, but had not done so at the time of the referendum. The government reiterated its intention to do so in February 2018.
- Government estimates that there are 5 million UK expatriates (but does not estimate how many have been overseas for 15 years or more).
- For the 1.2 million UK expatriates in the EU, an estimated 300,000 (25%) to 700,000 (58%) are 15-year expatriates.
- Applying the low end of this range (25%) to the 5 million indicates another 1.25 million voters.
As in every election, there were adults who were eligible to vote, but who did not register to vote. However, ONS does not collate data on this group.
Cabinet Office, A democracy that works for everyone: British citizens overseas Policy Statement, October 2016
Office for National Statistics, Electoral statistics, UK: 2016
A2 Referendum result
Table A.1: Referendum result in 2016
33.6 million voted (72.2% of the registered electorate). Of those who voted (Figure B.1):
- 17.4 million (51.9% of those that voted) voted Leave
- 16.1 million (48.1%) voted Remain
- Leave majority was 1.3 milllion votes (2.7% of the electorate; 3.8% of those that voted)
Figure A.1: Referendum result – those who voted
Of the 46.5 million registered electorate (figure B.2):
- 37.4% voted Leave
- 34.7% voted Remain
- 12.9 million (27.8%) did not vote
Figure A.2: Referendum result – including voters who did not vote
The majority of the 12.9 million voters who abstained (i.e did not vote) in June 2016 would have backed Remain if they had voted.
- Subsequent 2016 polls of abstainers showed the majority supported Remain by a greater margin than those who had voted (see Figure B.3).
- Undecideds ranged from 21% to 42% of this group (ignoring one outlier poll).
- Assuming that abstainers had voted but that 40% were still undecided, a Remain vote in this group of only 35% (Leave vote 25%) would have eliminated the Leave majority in the referendum.
- Four of the five polls (ignoring the outlier) resulted in a Remain percentage greater than 35% of between 38% and 55% (with Leave between 20% and 24%).
Subsequent Brexit opinion polls sometimes include this group.
Figure A.3: Polls of those that did not vote
Source: Business Insider, Brits who didn’t vote in the EU referendum now wish they voted against Brexit, 23 September 2016
A4 Compare 2016 referendum with 1975
It is interesting to compare the 2016 referendum result with the 1975 referendum result (Table A.2).
- In 2016 and 1975, the winning number of votes was virtually the same at 17.4 million (rounded)
- Majority in 1975 was 34.4% compared to only 3.8% in 2016. As a result, the 1975 democratic mandate was much stronger than the 2016 mandate.
- Turnout in 2016 (72.2%) was higher than 1975 (64.6%). However, since 1975, the highest turnout (77.7%).was in 1992 for the General Election.
Table A.2: 2016 referendum result compared with 1975
Source: NatCen Social Research
B. GVA by industry sector
Table B.1: GVA by industry sector
C. EU and UK trade agreements
|Table C.1: EU and UK trade agreements|
|EU agreements at 1 January 2021||Status of UK agreements at 1 January 2021|
|21||Free Trade Agreements in place||✓ = UK had negotiated a continuity agreement|
|Iceland||✓ - no deal only|
|Mexico||26 February 2021||Negotiating update|
|Norway||✓ - no deal only|
|Singapore||✓||Updated 25 February 2022|
|Switzerland||✓ - partial||Negotiating update|
|Colombia, Ecuador, Peru||✓|
|Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama||✓|
|Turkey, Andorra, San Marino|
|6||Stabilisation and Association Agreements - Western Balkans|
|Albania, Bosnia Herzegovina, Kosovo, North Macedonia, Montenegro, Serbia||✓ - only Kosovo|
|8||Association Agreements - Euromed|
|Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, Palestinian Authority, Tunisia||✓ - not Algeria or Egypt||Negotiating update with Israel|
|3||Deep and Comprehensive Free Trade Area|
|Georgia, Moldova, Ukraine (+Association Agreement)||✓ - not Moldova||Digital agreement with Ukraine 20 March 2023|
|31||Economic Partnership Agreements|
|6||EU-Southern African Development Community|
|Botswana, Eswatini, Lesotho, Namibia, South Africa, Mozambique.||✓|
|5||EU-Eastern and Southern African States (interim)|
|Comoros, Madagascar, Mauritius, Seychelles, Zimbabwe||✓ - not Comoros|
|Antigua & Barbuda, Belize, Bahamas, Barbados, Dominica, Dominican Republic||✓ - not Suriname|
|Grenada, Guyana, Jamaica, St. Kitts & Nevis, Saint Lucia,|
|St. Vincent & the Grenadines, Suriname, Trinidad & Tobago.|
|3||EU-Pacific countries (interim)|
|Fiji, Papua New Guinea, Samoa||✓ - not Samoa|
|Cote d’Ivoire (interim)||✓|
|Central Africa (Cameroon)|
|3||Partnership and Cooperation Agreements|
|Agreements being adopted or ratified|
|Argentina, Brazil, Paraguay, Uruguay.|
|20||EPAs||Benin (West Africa)|
|Burkina Faso (West Africa)|
|Cabo Verde (West Africa)|
|Gambia (West Africa)|
|Guinea (West Africa)|
|Guinea-Bisseau (West Africa)|
|Liberia (West Africa)|
|Mali (West Africa)|
|Mauritania (West Africa)|
|Niger (West Africa)|
|Nigeria (West Africa)|
|Senegal (West Africa)|
|Sierra Leone (West Africa)|
|Togo (West Africa)|
|NB - this table is being updated|
D. Brexit SME case studies
This appendix provides three real-life SME case studies from 2018, published with the permission of Ready for Brexit, a private sector organisation that helps businesses understand the challenges and opportunities that Brexit will create.
SME case study 1 – CYCL (London)
Luca Amaduzzi’s innovative bicycle safety company CYCL successfully negotiated a deal in the venture capital TV show Dragons’ Den, but to keep his business on the winning track post-Brexit he is seriously considering relocating it to his native Italy
Can you give us some background on CYCL?
We are a start-up that was set up three years ago. We design innovative bicycle products, such as direction indicators for bicycles. My business partner and I are Italian and we are a very international company with an international workforce, but the company was founded in the UK and based in London. We design in the UK and we manufacture in China.
When did you first notice that Brexit would have an impact on your company?
Immediately after the referendum when the pound to dollar exchange rate dropped massively. We pay our manufacturers in dollars, so that had a huge impact and forced us to raise prices. And it hasn’t got any better. The exchange rate now is even worse.
Do you export much to Europe?
Yes. The UK market makes up about 25% of our business and the European market takes up about 60% of our export business. If there is no deal and tariffs are introduced and delays occur at customs we will have to move the stock abroad.
Are you seriously considering relocating?
Yes. We will relocate and open a separate company in the EU to sell from there. If we did move to the EU, Italy would be the country we would be most likely to relocate to. I used to have a company there and I know how the legal system works. I have a temporary company there that I can use if necessary. If we have to, we will move the company to Italy in January and move our stock there too so that we can serve Europe. Europe is a bigger market for us than the UK. Although we are based here and are happy here, the reality is we are considering whether to move so that we can continue to access the European market.
What do you think the UK Government should do to help keep small companies like yours operating here?
They should definitely stay in the Customs Union. Instead of our goods going straight through at the border, goods will have to stop at customs, which will lead to delays and extra paperwork, which is not good for business.
SME case study 2 – Penny Hydraulics Group (Derbyshire)
Robin Penny managing director of Derbyshire-based lifting equipment manufacturer Penny Hydraulics Group says the prospect of a no-deal Brexit has led him to increase his stocks in preparation for border delays
When did you first notice that Brexit would have an impact on your business?
About a month ago when the negotiations got to the point where no deal looks to be a distinct possibility. I think that up until then everybody thought that there was going to be some sort of a deal and that there would at least be a two-year transition period, but it’s getting very close to March now and people are placing orders for things, quite a lot of which are on three-month lead times. It’s getting to the point where if there is going to be a hard Brexit we need to start overstocking.
How much trade do you do with Europe?
We only export about 15%, but when you look at all the components we use, virtually everything is imported whether it’s the steel or the plastic or the fittings, everything comes in from somewhere to start with. We do get a large number of items from the Far East, but I would say that 75% is from Europe or Eastern European, which is going to be affected by any border controls down at Dover and Calais.
What are you doing to prepare for Brexit?
The possibility of there being no deal will cause tremendous hold-ups at the borders. So we are planning to overstock. We are looking at renting extra warehouse space so that we can overstock just to keep our customers serviced. That will probably give us a couple of months grace, by which time hopefully something has happened and goods start to flow again. I can see there being a problem for a month or more down at our borders, where normally stuff comes through without any checks.
So you have had to make a considerable investment in space and extra stock?
Yes, that’s what we are doing now. We are also ringing our suppliers to ask what they are doing about it. We are going out to see a supplier in Italy in November to see how they are going to supply stuff to us and what their plan is. We are starting to get a plan together to mitigate the problems because I think now that whatever happens there will be some sort of disruption. Even if there is a two-year conversion point then all we’re doing is pushing that back. This could just be a trial run for two years’ time, but at some point, there’s going to be a problem.
What is the reaction from your European suppliers to Brexit?
They think that it’s our problem, so we’re going to firmly tell them that it’s also their problem. If they can’t get stuff here, then we are not going to be buying from them. For stuff coming in from China, there are established routes. There is somewhere to put the containers while they go through customs. That supply route is sorted out, but for stuff coming in from Europe there is no infrastructure, there is nobody to check it, there is nowhere to park the vehicles.
What do you think the Government should be doing to help SMEs through the Brexit process?
There’s a lot of information on Government websites about what we should be doing, but none of it is very constructive. There needs to be somewhere to park lorries coming in from Europe and going to Europe and it’s just not going to be there. I think that businesses are starting to realise that there is going to be one almighty cock up in March no matter what happens. I am losing any hope that they are going to sort it out and if they do buy two years, we are only putting it off and then there will be an almighty cock up in two years’ time.
SME case study 3 – Rex London (London)
Taig Karanjia, chief operations officer of gifting business Rex London is creating a base on mainland Europe to minimise any disruption to his trade with EU nations post-Brexit
Has Brexit had an impact on your business to date?
So far no. We do some trade shows in Paris and Frankfurt, the two biggest ones in Europe, and interestingly just after the referendum, we saw a different reaction from the French and the Germans at those shows. The Germans were acting like we’d lost a relative and were saying we had big problems and were quite concerned about how they were going to trade with us. Whereas the French didn’t seem to mind at all and were oblivious to it.
Aside from that, we haven’t seen an impact. Our exports have grown in the last year and a half, but that’s up until now. We have four trade shows in January and February, three of which are abroad and if things are quite tense and undecided by then I think that’s when you might have some severe ramifications, because people are unlikely to want to order thinking ‘well am I going to have to be paying tax on this or import duties?’
Have you made any changes to your business in preparation for Brexit?
Yes. We design our products and we have them made in China, so we import everything into the UK from China. Then we export from the UK. Currently, 45% of our turnover is export and the majority of that is direct to Europe. We do export to Japan and Australia as well, but it’s Europe – France, Germany, Spain and Belgium – that is our key market. We have no alternative, but to create a base in Europe. Unlike some companies where they might have a handful of products and customs clearance would be quite straight forward, our product range goes to 2,700 lines, all of which will be liable to different types of regulations and will all have commodity codes as well.
As a result of Brexit, we’ve had to broaden out our options and we’ve set up a warehouse presence in Holland. We have warehouse space in Venlo and we have another warehouse that is being set up this week just outside of Amsterdam. From the warehouse close to Amsterdam we will sell directly to the Dutch and the Venlo warehouse is for our German business, as it’s right next to the border.
We also have a business address in Amsterdam so that we can set up a company very quickly, which will be the next step.
Why have you chosen Holland as your base on the European mainland?
We chose Holland because of its geographical location for distribution throughout Europe. Also, from a point of view of setting up companies, Holland is a good deal easier than somewhere like France where the administration is quite arduous.
We are probably going to hold off until December before we set up the Dutch subsidiary company. At the moment we are setting up the structure so that we have the relationship with two different warehouses, then we have the facility to register our business and we can start that in December once it looks like it’s going to be absolutely necessary. We will then have to take larger warehouse space so that we can export our goods into Holland and only go through one set of customs clearances.
Our selling point to our customers is that we deliver within five working days. That is one of the reasons that we do well, and we export very well. Not only do they like our products, they like that we are quick on delivery. That is a quick supply, particularly if you’re a business wanting to sell goods on, knowing when you’re going to get a delivery is important to you.
What support would you like to see the Government give to SMEs like yourself to help with the Brexit process?
I don’t think that there is anything that they can do because they are bound by their own interests and by much larger businesses. They are much more interested in the huge businesses like the services and the automobile industries than giftware companies. We are one of the many small businesses that fall outside the huge amount of pressure that the larger organisations put on the Government. They don’t have the time to deal with or be interested in small businesses.
Do you see anything positive coming out of Brexit?
Not in the industry that we are in. We already export to places like Japan and we’re very aware of the different regulations that are required to export to countries around the world.
For example, we sell a packet of four paper straws and they come in four different colours – yellow, orange, purple and red – and we cannot export that to Japan because they don’t accept anything with a purple or red dye, which is related to food. There are little things like this which different countries have that mean when you are exporting the product lines like we are it becomes problematic.
For a company like ours a big market is good for us, it’s easy to deal with and it’s very simple to trade with. The only option for us as a company is to go and have a presence in Europe and trade from Europe, because we can’t practically trade into Europe with this many products.
E. Trade and Cooperation Agreement
F. Withdrawal Agreement and Political Declaration
Appendix F is structured:
- Structure of the Withdrawal Agreement
- Transition period
- Dispute resolution
- Protocol on Ireland and Northern Ireland
- Political Declaration
- Separation provisions
On 17 October 2019, the UK and the EU agreed the final draft Withdrawal Agreement and Political Declaration. The Withdrawal Agreement was ratified and entered into force on 31 January 2020. On 23 January 2020, Parliament passed the Withdrawal Agreement Act, which implemented the agreement in UK law.
The Withdrawal Agreement (WA) confirms the details of the financial settlement of current obligations and also largely protected citizens rights as they were for EU citizens living in the UK on exit day. It also contains three protocols (on the border between Ireland and Northern Ireland, the UK’s Sovereign Base Areas in Cyprus, and Gibraltar) and nine annexes. it also deals with separation issues to minimise disruption to people and businesses.
In October 2019, the EU and the UK agreed a small number of changes to May’s 2018 WA principally in relation to the Irish backstop. Only two Articles in the main Withdrawal Agreement changed from the November 2018 text, and the changes were minor. This means that the rest of the Agreement remains the same. The main differences are in the Protocol on Ireland/Northern Ireland. There were associated changes to the Political Declaration plus some other amendments.
The Brexit FactBase section on negotiations describes the changes in the final Johnson WA. The text of the original Withdrawal Agreement together with the Political Declaration on the framework for future EU-UK relations, was endorsed by EU leaders at a specially convened European Council meeting on 25 November 2018.
F2 Structure of the Withdrawal Agreement
1 Common Provisions (p 6)
2 Citizens’ Rights (p 16)
3 Separation Provisions (p 69)
- Goods placed on the market
- Ongoing customs procedures
- Ongoing procurement procedures
- Ongoing VAT and excise duty matters
- Intellectual Property
- Ongoing Police and Judicial Cooperation in Criminal Matters
- Ongoing Judicial Cooperation in Civil and Commercial Matters
- Data Protection
- Immunities and privileges
4 Transition (p 196)
5 Financial Provisions (p 210)
6 Institutional and Final Provisions (p 268).
- Ireland/Northern Ireland (p 302) and Annexes to Ireland/N.I. protocol (p 331)
- Sovereign Base Areas of UK in Cyprus (p 476)
- Gibraltar (p 496)
I. Social Security Coordination (p 505)
II. Provisions of EU law referred to in Article 41(4) (animal health) (p 529)
III. Time limits for situations or customs procedures referred to in Article 49(1) (p 531)
IV. List of networks, information systems and databases referred to in Articles 50, 53, 99 and 100 (p 533)
V. Euratom (p 547)
VI. List of administrative cooperation procedures referred to in Article 98 (p 552)
VII. List of Acts/Provisions referred to in Article 128(6) (p 555)
VIII.Rules of Procedure of the Joint Committee and Specialised Committees (p 560)
IX. Rules of Procedure for dispute settlement (p 569)
If you would like more detail on the draft Withdrawal Agreement of November 2018, please either refer to the House Of Commons research papers listed below or “Brexit Negotiations: What is in the Withdrawal Agreement”, published by the European Commission.
F3 Transition period
The transition period runs to December 2020 but a one-time extension was possible to December 2022. It is unlikely that the future relationship will be ready by December 2020 (due to its scale, complexity and political sensitivity). The UK had to notify the EU of its wish to extend the transition period by 1 July 2020, but chose not to – despite the global pandemic.
During the transition period:
- Freedom of Movement continues and rights of EU citizens in UK remain largely unchanged
- UK makes payments to the EU budget. Financial settlement includes payments up to December 2020. Thereafter payments similar to those as member – likely to be €10 to €15 billion a year.
- UK follows EU laws and rules, including any new ones that come into force during the transition
- UK leaves EU governance bodies and has no role in EU decision-making. However EU agrees to consult with UK on new laws
- UK follows EU commercial policy (or EU trade policy)
- UK may discuss future trade agreements with other countries but may not sign or implement them
- EU law, where it applies, will continue to have supremacy over UK law
F4 Dispute resolution
The UK and EU will first try to resolve disputes via a Joint Committee. If the Joint Committee cannot agree, then either the EU or the UK can request an arbitration panel. The EU and the UK will each nominate two members to the panel and agree a chair. If a party does not comply with a ruling, then the panel can impose a financial penalty. Temporarily, parts of the agreement could also be suspended (except in relation to citizens’ rights). If a dispute relates to interpretation of EU law, or whether the UK has complied with ECJ judgements, then the ECJ will have jurisdiction. The ECJ ruling will be binding on the arbitration panel.
Figure E1 from the European Commission describes the governance structure for dispute resolution.
Figure F1: Dispute resolution
F5 Protocol on Ireland and Northern Ireland
The Protocol on Ireland and Northern Ireland (the Protocol) codifies the “Irish backstop” referred to in the Joint Declaration of December 2017. The purpose of the backstop is to prevent a future border on the island of Ireland. This is the part of the original WA to which Johnson negotiated changes in late 2019.
The Protocol is necessary because, without it, there would need to be physical checks to ensure trust. It also provides appropriate redress mechanisms between the EU and UK. Outside the EU, no invisible borders exist. For example, between the US and Canada, there is infrastructure to check people and goods traffic (goods are subject to both customs and product safety checks). The majority of customs experts says that technological solutions to remove physical checks do not yet exist: few believe non-physical solutions would be ready by 2022.
A joint UK-EU committee will oversee the NI Protocol and the single customs territory. The Committee will take decisions by mutual consent and its verdicts would be binding. To end the Protocol, both parties must agree to end it.
Some key points to note under the Protocol (this is not a comprehensive list):
- NI continues to be a member of the EU Customs Union and the UK Customs Territory.
- NI continues to be in the Single Market for goods and complies with relevant EU laws, regulations and standards (such as technical regulation of goods, agricultural and environmental protection, state aid).
- There is an invisible border between NI and ROI but a harder border between GB and NI.
- Customs checks and controls apply for goods moving from GB to NI.
- No customs checks or controls are required for goods moving between NI and ROI.
- Goods moving directly from GB to NI are tariff-free unless the good is “at risk” of being moved into the EU afterwards.
- Goods from third countries entering NI are subject to the UK tariff, unless they are at risk of being moved to the EU, when EU tariff applies.
- European Commission and the ECJ have jurisdiction to enforce EU rules in NI. However, UK bodies will often be tasked with enforcement duties.
- Consent article gives NI democratic institutions the opportunity periodically to reject the protocol. If the Assembly vote against it, it will cease to apply two years later.
- Interpretation and dispute resolution:
- Specialised Committee on the Protocol considers issues relating to the interpretation and implementation of the protocol.
- Joint Committee of the WA is available to reconsider any issues which the Specialised Committee is unable to resolve.
- WA also provides for reasonable means to settle these disputes, including with an arbitration procedure
- Protocol allows each Party to take appropriate unilateral safeguarding measures to remedy if application of the Protocol leads to serious economic, societal or environmental difficulties. If these unilateral measures look excessive, the other Party may take re-balancing measures.
Draft Withdrawal Agreement, 14 November 2018
House of Commons research briefing, UK’s EU Withdrawal Agreement, 8 July 2019
House of Commons research briefing, The October 2019 EU UK Withdrawal Agreement, 18 October, 2019
Institute for Government, Brexit deal: the Northern Ireland protocol, February 2020
F6 Political Declaration
The Political Declaration (27 pages) is not legally-binding. It provides directional guidance to the long and complex negotiations that began formally when the UK left the EU on 31 January 2020. It is a vague and aspirational document which means there is little certainty about the UK’s future arrangements with the EU. While the transition period provided temporary certainty, the future beyond the end of the transition period is unclear.
The scope of the future relationship is immense, covering topics such as mobility of citizens, goods, services, capital and investment, digital commerce, data exchange, law enforcement, fish, cyber-security, security (including health), defence, foreign policy, law enforcement, transport, energy, UK participation in some EU regulatory bodies, UK participation in some EU programmes (e.g. in science and education). For example, the rights of UK citizens in the EU will be curtailed unless new rights are granted.
For financial services, an urgent item is to agree the basis for establishing regulatory equivalence to facilitate UK-EU trade when passporting terminates at the end of the transition period.
Note that any future UK-EU trade agreement will require the approval of all the EU27 – each country has a right to veto. This gives EU27 countries powerful leverage to pursue their individual interests in the negotiations.
Politics apart, it is very unlikely that the future relationship will be agreed by December 2020. The technical and political complexity of the negotiations will make this impossible to achieve. Several informed observers believe that an extension to December 2022 would not have been enough, either.
The long negotiation process creates uncertainty beyond the end of the transition period, which will continue to reduce UK trade with other countries and foreign investment in the UK. Businesses and investors will inevitably redirect their attention from the UK to EU countries with a more certain future relationship with the EU Single Market.
F7 Separation provisions
The Withdrawal Agreement covers a long list of separation issues to ensure an orderly wind-down of existing arrangements (see page 69), but provides no proposals for the future partnership.
- enables goods placed on the market before the end of the transition period to continue to be further made available on the EU or UK market until they reach their end-user, with no need for re-certification, re-labelling or product modifications;
- provides for processes for managing and terminating ongoing intra-Union movements of goods, ongoing customs procedures as well as VAT and excise duty matters;
- protects existing unitary intellectual property rights, including the existing stock of EU geographical indications;
- winds down public procurement procedures ongoing at the time of the end of the transition period and guarantees the rights of those concerned by the procedures under Union law;
- includes provisions for winding down ongoing police and judicial cooperation in criminal matters;
- includes provisions for winding down administrative and judicial procedures (e.g. state aid and infringement cases);
- addresses the use of data and information exchanged before the end of the transition period and makes sure that data transferred before the end of transition period remain protected under the principles and provisions foreseen by Union law;
- provides for the disconnection of the UK from networks, information systems and databases established on the basis of Union law at the end of the transition period, in particular those networks that are only accessible to Union Member States or the Schengen associated countries;
- deals with ongoing judicial cooperation on commercial matters in order to make sure court judgements can be relied upon; and
- addresses all issues related to the United Kingdom’s departure from Euratom.
Draft Political Declaration, 22 November 2018
House of Commons briefing paper, Political Declaration on the framework for future EU-UK relationship, 30 November 2018
House of Commons research briefing, Revisions to the Political Declaration on the framework for future EU-UK relations, 18 October 2019
European Commission, Getting ready for changes – Communication on readiness at the end of the transition period between the European Union and the United Kingdom, July 2020
G. Chequers proposals
On 12 July 2018, for the first time since the referendum vote in June 2016, the Chequers White Paper (‘The future relationship between the United Kingdom and the European Union’) described in 90 pages the UK Government’s proposals for its future relationship with the EU. The White Paper contained more detail than the subsequent November 2018 Political Declaration.
The Chequers proposals proved divisive in Parliament – leading to cabinet resignations and objections from Tory MPs.
Although this meant that the Chequers proposals were shelved, it is worth looking at them to appreciate the breadth and complexity of issues that the UK’s future relationship with the EU will need to embrace. We discuss the White Paper under its three sections:
- Economic partnership
- Security partnership
- Cross-cutting cooperation
We also consider its interaction with government legislation.
The Chequers paper proposed that goods trade (manufactured and agri-food) should remain in the Single Market and the UK should follow a common rulebook with the EU covering regulatory and other standards for goods. This would mean the UK follows EU law and regulation for goods. In addition, the government wished to have the discretion to deviate from the rulebook but accepted that consequences for UK Single Market access would follow.
The UK would leave the EU Customs Union, which would be replaced by an EU-UK ‘Facilitated Customs Arrangement’ (FCA) which would permit tariff-free EU-UK trade in goods and would avoid new non-tariff barriers. The FCA would allow the UK to set its own tariffs which could be different to EU tariffs. The FCA would also allow the UK to pursue its own trade deals with other countries. The operation of the FCA is complicated and the details of how it would work in practice were not spelt out. The operation of the FCA would require the EU27 to introduce EU-wide changes for it to work.
The approach to goods aimed to avoid physical infrastructure at the border in Ireland. It also minimised frictions on goods trade, which would avoid many of the damaging consequences of Brexit for UK manufacturing and agri-food. Goods account for about 60% of the UK’s exports to the EU. As part of this approach, the UK proposed to remain a member of the European Chemicals Agency and the European Medicines Agency.
For services, which generate a significant trade surplus for the UK with the EU of £30 billion and account for 40% of UK exports to the EU, the White Paper laid out high-level aspirations rather than detailed proposals. The high-level proposals centred on the idea of regulatory autonomy for the UK (and the EU) with regulatory equivalence between the UK and the EU. On financial services, the paper proposed dialogue on new regulations and close supervisory cooperation supported by joint governance between the UK and the EU. (Normally the EU is the sole arbiter of whether equivalence is granted or withdrawn.)
The paper said very little new on immigration. The paper repeated the government’s objective that UK and EU citizens’ rights to Freedom of Movement will end. The economic partnership would contain reciprocal mobility arrangements for skilled workers and visa-free travel for business, leisure and educational purposes. The proposal did not cover permanent hires or family members.
The Irish-UK Common Travel Area would remain. The paper noted that the Migration Advisory Committee report, then expected in September 2018, would inform UK policy, but gave no deadline for agreeing the policy.
On VAT and Excise duties, the paper proposed common cross-border processes for goods to avoid new declarations and border checks. However, the paper provided no detail on what these processes and procedures would be, nor how they would work.
The Chequers White Paper proposed continued cooperation between the UK and the EU on security. The proposals went beyond normal third-country arrangements. The paper listed the important areas of cooperation that the UK enjoys as an EU member state and proposed they should continue.
For example, the paper proposed that the UK would remain a participant in several EU agencies, including Europol and Eurojust. The paper also proposed close cooperation on foreign policy, which is an EU national competence.
The White Paper noted that where the UK participates in an EU agency, the UK would respect the remit of the Court of Justice of the European Union (CJEU or ECJ).
Also, the paper proposed a mutual commitment to individuals’ rights, noting that the UK would remain a party to the separate European Court of Human Rights after it had left the EU.
The White Paper identified areas where the UK proposes ‘cooperative accords’, for example on science and innovation, culture and education, international development, defence research and space (with continued UK involvement in Galileo). In many of these areas, the UK would be willing to make a financial contribution.
On data protection, the UK proposed a new arrangement under which the EU could no longer arbitrarily end data sharing with the UK if the EU believed that the UK’s approach was no longer adequate. The paper proposed that the UK should influence future developments of the EU’s data protection laws.
To implement and govern all of this, the UK proposed an association agreement overseen by a joint institutional framework. The framework would consist of a political-level council supported by a joint committee, supported in turn by several technical committees. The UK and the EU could use the joint committee to notify each other in advance of proposed legislative and regulatory changes.
The White Paper also included proposals for the incorporation of future EU laws into UK law for the common rulebook, enforcement (principally through UK courts but with reference to ECJ case law) and dispute resolution, which would refer questions of interpretation of EU law to the ECJ.
Interaction with government legislation
Shortly after publication of the White Paper, the Government’s customs and trade bills underwent their First Readings in the Commons on 16 and 17 July 2018.
The customs bill created legal powers for the government to put in place its eventual customs policy on import duties. The trade bill covered the UK position on converting the EU’s existing trade deals with third countries into bilateral deals post-Brexit. (Conversion to a UK bilateral depends on the agreement of the other countries, which may be withheld: see the trade section for more details on these deals).
The Government accepted four amendments to its customs bill, which aimed to:
- Prevent the UK from collecting tariffs on behalf of the EU unless the EU reciprocated
- Prevent the UK agreeing to a border in the Irish Sea
- Prevent the UK from being part of the EU VAT area if it stayed in a customs union with the EU
- Require primary legislation if the UK wished to remain in the EU Customs Union
On the face of it, these amendments undermined key features of the White Paper. The amendments:
- required additional bureaucracy across the EU which the EU was likely to reject;
- would prevent the proposed backstop arrangements for the Irish border being implemented;
- could result in physical infrastructure being required at the Irish border in contravention of the Good Friday Agreement.
Despite the amendments, informed observers said that the Government might be able to find ways to achieve its intended objectives. The customs bill went to the Lords at on 4th September 2018. However, because it was a ‘supply bill’ the House of Lords could not amend it. The bill passed unamended.
On 24 July 2018, the UK government published another White Paper: Legislating for the Withdrawal Agreement between the United Kingdom and the European Union. This White Paper confirmed that the UK’s forthcoming European Union (Withdrawal Agreement) Bill would be the primary means to protect the rights of EU citizens in UK law, legislate for the transition period and create a financial authority to manage payments under the financial settlement between the UK and the EU.
For more details on the UK’s legislation in relation to Brexit, please visit Brexit : legislation on the Parliament website.
H. Negotiation papers
|Table H.1: Negotiation papers|
|European Commission||UK Government|
|To EU27||To UK||Position papers||Position and partnership papers|
|29 May 2017||12 Jun 2017||Essential principles on the financial settlement||26 Jun 2017||Safeguarding the position of EU citizens in the UK and UK nationals in the EU|
|29 May 2017||12 Jun 2017||Essential principles on citizens’ rights||13 Jul 2017||Ongoing Judicial and Administrative Proceedings|
|29 Jun 2017||13 Jul 2017||Nuclear materials and safeguard equipment (Euratom)||13 Jul 2017||Nuclear Materials and Safeguard Issues|
|29 Jun 2017||13 Jul 2017||Judicial Cooperation in Civil and Commercial Matters||13 Jul 2017||Privileges and Immunities|
|29 Jun 2017||13 Jul 2017||Ongoing Union Judicial and Administrative Procedures||15 Aug 2017||Future customs arrangements|
|29 Jun 2017||13 Jul 2017||Ongoing Police and Judicial Cooperation in Criminal Matters||16 Aug 2017||Northern Ireland and Ireland|
|29 Jun 2017||13 Jul 2017||Issues relating to the Functioning of the Union Institutions, Agencies and Bodies||21 Aug 2017||Continuity in the availability of goods for the EU and the UK|
|29 Jun 2017||13 Jul 2017||Governance||21 Aug 2017||Confidentiality and access to documents|
|29 Jun 2017||13 Jul 2017||Goods placed on the Market under Union law before withdrawal date||22 Aug 2017||Providing a cross-border civil judicial cooperation framework|
|20 Jul 2017||Joint technical note on EU-UK positions on citizens’ rights after second round of negotiations|
|23 Aug 2017||Enforcement and dispute resolution|
|24 Aug 2017||The exchange and protection of personal data|
|7 Sep 2017||21 Sep 2017||Use of Data and Protection of Information Obtained or Processed before the withdrawal date||6 Sep 2017||Collaboration on science and innovation|
|7 Sep 2017||21 Sep 2017||On-going Public Procurement Procedures||12 Sep 2017||Foreign policy, defence and development|
|7 Sep 2017||21 Sep 2017||Intellectual property rights (including geographical indications)||18 Sep 2017||Security, law enforcement and criminal justice|
|7 Sep 2017||21 Sep 2017||Customs-related matters needed for an orderly withdrawal of the UK from the Union|
|20 Dec 2017||-||Commission recommendation including supplementary negotiating objectives|
|7 Feb 2018||-||Transitional Arrangements in the Withdrawal Agreement|
|28 Feb 2018||15 Mar 2018||Draft Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community|
Sources: Europa and UK Government