Within the draft Withdrawal Agreement (“WA”), 175 pages consists of a Protocol whose formal title is “Protocol on Ireland/Northern Ireland”, together with 10 detailed Annexes which form part of it. Informally it is called the Northern Irish “backstop” protocol. Neither its formal nor its informal title really describes it. It should be called “the whole UK permanent lock-in protocol with extra lock-in for Northern Ireland.”
Most of its provisions do not come into force until the end of the transition period. However, at that point and in the absence of an agreement between the UK and the EU to the contrary, the whole Protocol will come into force and will require the whole of the UK to stay in a Customs Union with the EU – a Customs Union in which the UK has no vote on the tariffs to be charged, or on with whom to do or not do trade deals, but will be obliged to follow the EU’s tariffs at all times. Further, it obliges the UK not to deviate from EU rules on a wide range of so-called “level playing field” areas of policy, including environment, workplace rights, state aids and competition law.
Secondly, it will require Northern Ireland (unlike Great Britain) to be subject to a large number of EU Single Market regulations and directives, and customs and tax rules.
Finally – and this is the most important point – the UK has no right under the treaty either to prevent the Protocol coming into effect or, once it is in force, to leave it, unless the EU agrees. In this regard, the Protocol is unique amongst trade agreements, which invariably contain clauses allowing each party the right to withdraw on notice.
The Protocol can only be stopped from coming into force if the EU agrees with the UK to replace it before the end of the transition period with a trade agreement. If the Protocol comes into force, the UK cannot exit from it without a “joint” decision (meaning the EU has a veto) in the ‘joint committee’ (article 20 of the Protocol). This absence of a clause allowing withdrawal on notice is unprecedented in the EU’s own trade agreements with non-member countries. Under international law, future governments and Parliaments would be locked in and be bound by the treaty concluded by this government.
Because of this lock-in, the Protocol would not operate just as a ”backstop”. In negotiations on the future trade treaty, the EU would have no incentive to offer the UK terms which are any better than the Protocol – since if the UK fails to agree to the EU’s demands, the Protocol automatically comes into effect and lasts indefinitely, giving the EU tariff-free access for its £95bn trade surplus in goods and keeping up the EU’s external tariff wall around the UK market as a barrier against competing goods from non-EU countries.
The Protocol will require the whole UK to remain in a Customs Union at the end of the transition unless there is agreement between the UK and the EU to the contrary.
It will require Northern Ireland (unlike Great Britain) to be subject to a large number of EU single market regulations and directives, and customs and tax rules.
Under the backstop, the UK would have to follow the EU’s external trade policy and apply EU import tariffs. This would kill stone dead the chances of the UK following an independent trade policy after Brexit. We would not be able to offer tariff concessions to free trade partners, so they would have no incentive to offer us concessions on say services which we would want to export to them.
Further, it will render the theoretical right to negotiate third country trade agreements during the transition period totally meaningless. Since we will be unable to tell prospective free trade partners when we will be free to implement such an agreement, or indeed whether we will ever be free to do so at all, they will have no interest in spending time and effort on serious negotiations with us.
This subordinate relationship also applies to so-called trade remedies, where the EU takes action to impose anti-dumping or countervailing duties under WTO rules on non-EU countries. The EU will take these actions in order to protect its own interests, regardless of any negative impacts on UK consumers, and the UK will be obliged to comply with those measures by imposing higher tariffs – even where this is contrary to the UK’s interests. Under Art.4(3) of Annex 2, we will have merely the right to be consulted.
Where dumping affects UK industries, the UK will have no right to take anti-dumping action to protect its own interests. The UK would be totally dependent on the EU to take action. If UK industries but no EU industries are affected, why should we expect the EU to do that?
It is quite extraordinary for one of the leading trading nations of the world to be a complete rule taker on its trade policy in this way. This one-sided Customs Union arrangement would destroy the ability of the UK to take advantage of the freedom brought by Brexit to forge a new independent trade policy and would shackle us permanently to being a dependency of the EU.
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