Cautious welcome from business for draft Brexit deal

Posted: 15 Nov 2018

Business leaders and trade associations have cautiously welcomed a draft Brexit deal between the UK and EU.

Prime Minister Theresa May secured the backing of Cabinet for a draft withdrawal agreement on Wednesday evening.

The Confederation of British Industry (CBI) said the agreement was "progress" as it moved the UK "one step away from the nightmare precipice of no deal".

"More clarity on the final relationship is needed, and uncertainty remains high, but this is an important step forward," director-general Carolyn Fairbairn said.

She emphasised a future deal must secure "frictionless trade" for the UK's "world-beating services".

Dr Adam Marshall, director general of the British Chambers of Commerce (BCC), said businesses would recognise the Prime Minister's "huge efforts" to reach the "milestone" draft agreement.

"Businesses will be looking carefully and deliberately at the real-world implications of this agreement over the coming days, and expect their elected representatives to do the same," he added.

The National Farmers' Union (NFU) said the draft Brexit deal was "important progress".

President Minette Batters said: "Since the EU referendum, the NFU has maintained that free and frictionless trade for British farming is absolutely critical.

"Despite today's progress, there is still much work to be done. I would urge all involved to remember the importance of British food and farming when considering their support for the new agreement."

The Freight Transport Association (FTA), which represents the logistics sector, said the draft deal represented a "decisive step" towards Brexit.

Chief executive David Wells said: "The draft text seems to have recognised the vital importance of preserving the frictionless movement of goods and the availability of EU workers whilst a new permanent trade deal is negotiated."

Trade association Energy UK said the draft agreement would help avoid "the cliff-edge scenario" which would damage the energy sector and its customers.

"It is a positive development to see energy included in the outline political declaration, and we recognise the hard work that has gone into ensuring energy is a key part of the future EU-UK relationship," chief executive Lawrence Slade said.

He added: "It is critical we ensure the smooth functioning of markets and the continued free flow of energy and co-operation on tackling climate change, in order to benefit our environment and keep bills down for UK customers and businesses."

Greener UK, a coalition of 13 major environmental organisations including Greenpeace, the WWF and Friends of the Earth, said it was "good" the UK and EU had made a "mutual pledge" not to weaken environmental protections.

Amy Mount, head of the Greener UK unit, said: "The test of the UK's commitment to this will be whether the Government provides a truly independent and powerful green watchdog that can take public bodies to court, with access to a range of sanctions including fines."

But she said "positive aspirations" on future UK-EU environmental cooperation and a "green Brexit" still contained "vast uncertainties".

What is in the withdrawal agreement?

The 585-page text will provide the basis of a legally binding treaty. It covers the future rights of EU citizens living in the UK and UK nationals in the EU, the UK's £39 billion "divorce" settlement, as well as protocols on Gibraltar and the UK sovereign base areas in Cyprus.

It also provides for a transition period after the UK leaves in March 2019 running to the end of 2020, with the option of a one-off extension if more time is needed to conclude an agreement on the future relationship.

Crucially it also covers the so-called "backstop" intended to ensure there is no return to the hard border between Northern Ireland and the Republic if negotiations on the future relationship have still not been completed.

How will the backstop work?

It will create a single EU-UK customs territory with the UK continuing to follow EU tariffs and customs rules, avoiding the need for checks between the EU and UK - including between Northern Ireland and the Republic.

In addition however, Northern Ireland will be required to remain aligned with some EU single market rules, including legislation on goods, agricultural production, veterinary controls and state aid rules.

How long can the arrangement last?

The draft agreement contains no end date - beyond making it clear that it should be before the end of the century. It does however state it should be a temporary arrangement and cannot be the basis of a future relationship.

What happens if the UK wants to pull out?

The deal allows the UK and the EU to end the arrangement by mutual agreement. In the event of a dispute, an arbitration panel - made up of two members each from the EU and UK and one independent - will rule on whether it is still necessary.

What about the declaration on the future relationship?

At just eight pages it is a much slimmer document, which will be worked up into a more substantial declaration in time for a special Brexit summit of EU leaders expected at the end of the month. It will provide the basis for the next stage of the negotiations - the future security and economic partnerships, including a wide-ranging free trade agreement. It suggests a "sliding scale", with the EU offering greater access the more of its rules and regulations the UK is prepared to take on.

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