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Brexit after the Prime Minister’s Defeat


Brexit after the Prime Minister’s Defeat

Brexit after the Prime Minister’s Defeat

After a devastating defeat for Theresa May, the Brexit clock keeps ticking. On Tuesday 15 January, the House of Commons rejected her Bill on the Withdrawal Agreement with the European Union (EU) by 230 votes; the largest defeat for a sitting British government in history[1]. Her government gained a slim victory in a no-confidence vote a day later.

The Prime Minister must, by 21 January, present a new plan for the UK’s withdrawal, which Parliament must approve. (A second agreement about how to trade with each other in future, will be negotiated subsequently, if there is a mutually accepted withdrawal agreement.) Mrs May has invited all party leaders and other MPs to discuss what needs to be done in order to make this possible. Her own party is divided between those who want to avoid a no-deal scenario, and those who believe “sovereignty” must be restored, even if the price is a “hard” Brexit. The Irish backstop has figured as a very controversial issue.[3]

A second referendum looks unlikely (although there is wide-spread support for this idea), while some MPs talk about a Norway-type agreement now. The latter will require new negotiations with Brussels. This is not a realistic option. Unless Parliament “takes control” over what happens next and can muster majority support for an orderly Brexit (which the EU supports), the very real danger is that the UK may crash out of the EU without a deal.

The UK exits form the EU on 29 March 2019, with or without a deal, unless a last-minute extension for further negotiations can be agreed. The real question now is under what conditions the UK will trade with the EU immediately post-Brexit. This is why it is vital for Parliament to agree on an orderly exit.

Brussels has indicated that an extension of the period to finalize a withdrawal deal may be considered. The final exit date could be pushed till the end of July 2019, depending on what happens in the House of Commons next week. An extension will only be offered if there are real prospects that a withdrawal agreement can indeed be reached. Several European states (Holland, Germany and Sweden amongst them) favour a “soft” Brexit, but this process is now in unchartered waters. Parliament is not responsible for international agreements, it is the function of the Executive. Brexit is re-writing the rule-book.

If a withdrawal agreement can be reached, the serious business of negotiating a future trade agreement between the EU and the UK will start. For this a transitional period of 2 years is foreseen. If there is no withdrawal deal, preferential trade with the UK’s largest trading partner will abruptly end at 11PM on 29 March 2019. (This may be the reason why many Britons have started buying up tinned food and essential medicines.)

A “no-deal” Brexit would mean the severing of all preferential trade ties with the EU -- and trading with all partners under World Trade Organisation (WTO) rules. This will cause major disruption and will have huge cost implications, as higher tariffs kick in and “frictionless” trade with the EU goes. According to the Confederation of British Industry (CBI) the UK’s GDP may shrink by up to 8%, putting thousands of jobs at risk.[4]

The UK is an important destination for African exports.[5] Trade presently takes place under preferential arrangements of the EU[6] and, for SACU member states and Mozambique, under the SADC Economic Partnership Agreement of 2016. They will cease to apply to trade with the UK if the latter must respect WTO rules.

From an African perspective, an orderly Brexit is the best option. New reciprocal legal arrangements (such as the rolling-over of existing preferences and treaty obligations) must then be put in place but the UK and African Governments will have a two-year transition (when the UK will continue to trade under EU rules) to work those out. In the case of a hard Brexit, all UK trade will be governed by WTO rules and Most Favoured Nation tariffs. London will need a WTO derogation to launch its own Generalised System Preferences arrangement in order to grant African exports and exports from other developing countries preferential access to its markets. This will take time.

[1] Brexit: Theresa May’s deal is voted down in historic Commons defeat. BBC News, 15 January 2019; Theresa May urges Jeremy Corbyn: Let’s talk Brexit. BBC News, 17 January 2019.

[2] The PM won a vote of no confidence by 325 to 306. She only survived thanks to the backing of the 10 members of the DUP. Had they switched allegiance, the government would have lost by one vote: 315 to 316.

[3] It is a safety net intended to ensure that there will not be a hard border between Northern Ireland and the Republic of Ireland, even if no formal deal can be reached. If there were no workable agreement, Northern Ireland would stay in the customs union and much of the single market, guaranteeing a friction-free border with the Republic. Both the UK and EU signed up to this idea in December 2017 as part of the initial Brexit deal, but there have been disagreements since on how it would work. See What is the Brexit backstop? The Guardian, 15 October 2018.

[4] No-deal Brexit would put thousands of UK jobs at risk, CBI to warn. The Guardian, 10 January 2019.

[5]The EU is the main market for African food and manufactured products, accounting for 51% of Africa’s exports to the EU in 2016, whereas raw materials accounted for 49%. Food and manufactured exports to the EU increased constantly since 2013, by +23% and +17%. https://eeas.europa.eu/sites/eeas/files/eu_-_africa_trade_2017.pdf

[6] The EU’s Generalised System of Preferences (GSP) and the Everything but Arms arrangement for LDCs.

About the Author(s)

Gerhard Erasmus

Gerhard Erasmus is a founder of tralac and Professor Emeritus (Law Faculty), University of Stellenbosch. He holds degrees from the University of the Free State, Bloemfontein (B.Iuris, LL.B), Leiden in the Netherlands (LLD) and a Master’s from the Fletcher School of Law and Diplomacy. He has consulted for governments, the private sector and regional organisations in southern Africa. He has also been involved in the drafting of the South African and Namibian constitutions. He grew up in Namibia.

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