CONTEXT

CONTEXT

 

The United Kingdom (UK) submitted on 29 March 2017 the notification of its intention to withdraw from the EU – of which it has been a member since 1972 – pursuant to Article 50 of the Treaty on European Union (i.e. situation known as “Brexit”). The issue of the United Kingdom (UK) leaving the European Union (EU) has seen two Prime Ministers – David Cameron and Theresa May – resigning from their positions.

A REVISED WITHDRAWAL AGREEMENT CONCLUDED

On 17 October 2019, UK and EU negotiators reached agreement on a modified Withdrawal Agreement. If ratified by the UK Parliament and EU bodies this agreement will allow an organised UK withdrawal from the EU. The revised agreement confirmed the establishment of a transition period during which the UK remains part of the EU customs union and single market and all current EU trade arrangements will continue to apply to the UK.

This is scheduled to last until 1st January 2021, to allow time for the negotiation of a new long-term UK-EU trade arrangement which would apply after the UK has left the EU customs union and single market. The agreement foreseen the possibility for this transition period to be extended by mutual agreement for a further two years (to 1st January 2023) if negotiations for a long-term trade agreement between the UK and EU27 have not be completed by the end of 2020.

The revised Withdrawal Agreement retained Article 129 which effectively committed the UK to roll over existing EU market access arrangements in their entirety until 1st January 2021. Should the revised Withdrawal Agreement be ratified by all the concerned parties, this would mean a continuation of current terms and conditions of access to the UK market for ACP horticultural exporters, with no change in the UK’s most-favored-nations tariffs (MFN tariffs) until at least 1st January 2021.

STALLING OF RATIFICATION IN THE UK

However with Prime Minister Johnson leading a minority government, the UK government proved unable to secure the full passage of the Withdrawal Agreement Bill through the UK Parliament without running the risk of substantial amendments to the Bill which the government of Prime Minister Johnson would find unacceptable (e.g. continued membership of the EU customs union and single market or the holding of a confirmatory referendum).

Prime Minister Johnson, therefore, withdrew the Bill from Parliament and submitted a request to the EU for a further extension to the ‘Article 50 period’ during which time the UK remains a full member of the EU and EU trade agreements fully apply to the territory of the EU. On 29 October 2019, the European Council (Article 50) decided, in agreement with the UK, to extend further the two-year period provided for by Article 50 of the Treaty on European Union, until 31 January 2020.

Prime Minister Johnson then moved to secure Parliamentary agreement for the holding of General Election, which took place on the 12th December.

OVERVIEW OF POTENTIAL BREXIT OPTIONS

Even though the outcome of the elections held on December 12 strengthens the probability of a “Hard Brexit”, there remains uncertainty over the outcome of the Brexit process in the UK, with 4 potential outcomes arising from on-going developments. These are:

Scenario 1: Scenario 2: Scenario 3: Scenario 4:
A ‘No-Deal Brexit’ in which the UK leaves the EU customs union and single market on a disorganised basis A ‘Hard Brexit’ in which the UK leaves the EU customs union and single market on an organised basis A ‘Soft Brexit’ in which the UK remains in the EU customs union and a single market A ‘No Brexit’ in which the Brexit project is abandoned, and the UK remains a full part of the European Union


For ACP horticultural exporters the ‘No-Deal Brexit’ scenario and the ‘Hard Brexit’ scenario are of concern since this would change:

  • the legal basis on which exports to the UK market take place, requiring separate trade agreements to be concluded with the UK; and
  • the administrative basis on which the export trade to the UK (and to a limited extent the E27) takes place, with this throwing up particular problems along the triangular supply chain.

Need more information or want to provide feedback