Analysis: The Brexit deal

Reading time: 6-8 minutes.

On Thursday,17th October 2019 the infamous Brexit deal was grasped by Britain. This is approximately 3 years after the initial referendum to leave the European Union. This humongous victory for Prime Minister Boris Johnson proves to be of vital importance as his election campaign revolved entirely around the Brexit Deal.

Although this deal has come after a lot of efforts and shall be considered a high point for all those in support of the exit of Britain from the European Union, it is still only half a battle won. Prime Minister Boris Johnson’s actual difficulties begin now, when he has to get the deal approved by the British Parliament, requiring 27 approvals for the same. This will prove to be particularly difficult because of all the criticism the Brexit deal has been receiving.

Background of the deal:

European Union was initially construed as a consequence of the World War two. Its main purpose was to provide an economic backbone to the member states. Britain is also a part of the European Union but on 23rd June 2016, a referendum was conducted to find out how many supported the exit of Britain from the European Union.

This referendum is also called the EU referendum, European referendum or the Brexit referendum. It was conducted under the flagship of the following two Acts.

  • European Union Referendum Act 2015
  • Political parties, election and referendums Act 2000                                                                                                                                                     

The entire idea witnessed both support and opposition, from different politicians. ‘Britain stronger in Europe’ was the strongest opposition of the cause, with the then Prime Minister David Cameron and Chancellor George Osborne as the flag bearers. It was hugely supported by the Conservative party minister of parliament, Boris Johnson.

Theresa May thrice tried to get the Brexit deal approved, failing each time. The point of contention has always been the Irish border and its status post exit. The fear of a hard border between Ireland and Britain after the approval of the deal has been sticking out like a sore thumb. This is the ‘backstop’ to the entire deal.

Salient Features of the deal:

  1. The Irish border Issue

 Through the integration of all member states into the European Union, extreme societal contrasts had gone down to a minimum. It is feared that with the return of a hard border between Ireland and Britain, social, cultural and economic divisions will surface.

In the latest deal under the flagship of Boris Johnson, no particular relief has been propounded to address these concerns. Northern Ireland will be treated differently from mainland Great Britain.

2. Impact on Value Added Tax

The deal aims at maintaining consistency in the VAT rates to avoid sudden and extreme fluctuations. The ulterior motive of this is to ultimately maintain the VAT rate in Northern Ireland, which will be prone to changes post exit of Britain.

3. Proposition for a Northern Ireland Assembly

An Assembly in Stormont which shall enable the Northern Ireland to determine important changes in the arrangement of the transition period. This transition period will start once Britain exits the European Union and establishes an independent economy. This transition period will ensure the that no adverse effects of the exit shall be faced by Northern Ireland. These decisions can be taken by the assembly through a simple majority.

4. Custom Policy

According to the latest Brexit deal, Northern Ireland will continue to remain a part of the Britain’s custom territory and shall benefit from the independent trade policy which will come into effect once the Brexit deal is approved by the Parliament. But in the case of the European single market, Northern Ireland will be treated as an entry point.

In case of goods entering Northern Ireland, from any country outside of the European Union, the UK tariffs will apply. On the other hand, if these products were to be heading for the European single market, then the EU tariffs will apply.

A joint committee shall be set up to assess the risks of goods entering Northern Ireland.

Significance of the recent Brexit deal:

Ever since the failure of Theresa May in getting the Brexit deal approved, there has been a budding pressure to see the deal through. The Brexit deals proposed under Theresa May were struck down on three different occasions. The fact that the Brexit deal has been finally accepted by the European Union is a significant moment.

Support was expressed by the European Union President Jean-Claude Juncker, “Where there is a will there is a deal- we have one! Its a fair and balanced agreement for the EU and the UK and it is a testament to our commitment to find solutions”.

Although Boris Johnson’s deal majorly mirrors Theresa May’s deal, there are certain changes which catch the eye. Two important differences in the two deals are,

  • Rights of EU citizens in UK and the citizens of UK in EU.
  • Money to be paid by Britain to European Union during exit, this was earlier set at 39 billion.

This Brexit deal will have a major effect on certain spheres such as Northern Ireland and the consequences it will face because of a hard border. Also, It will change the economic structure including taxation policy and custom norms courtesy to the independent trade set up post exit.

Now the question of significance here is, “will Brexit happen without an approved deal or with an approved deal?” If in case on 31st October UK exits the European single market without an approved deal, the exit will be chaotic and will lead to an economic recession in Britain. This analysis has been provided by the Office of Budget’s Responsibility.

Criticism and comments:

  • The Northern Irish party, whose support Boris Johnson will require to ratify the agreement has refused to support the deal.
  • Head of the Labor Party, Jeremy Corbyn said he was “unhappy”with the deal and would vote against it.
  • Democratic Unionist Party (DUP), which is an ally to the Johnson government, said the new text was not acceptable- a step that could spur hardline Brexiteers to oppose the ratification.

Because of the flack that the deal has been receiving from various Members of Parliament, it seems like a dicey situation where nothing can be said for sure. It is believed that the Northern Ireland border issue has not been properly addressed and that the Brexit deal will prove to be to their disadvantage. Still some other believe that another referendum should be conducted as there is a probability that the results will not be same as of 2016, and the majority will tilt against the British exit.

Conclusion: The way forward

The deal witnessed its first win when the MPs granted preliminary vote to the withdrawal deal. But when a follow up vote was taken to put the deal on a fast track process, majority was not attained in favor of the deal, thus rendering it practically impossible for there to be an approved Brexit deal by 31st October.

There are three possibilities under the current circumstances

  • Orderly exit of the UK from the EU
  • Chaotic exit with economic consequences
  • Another referendum to take an update on people’s opinion

Now the Members of the Parliament have a choice between voting for the Brexit deal or risking a chaotic exit. The entire situation may be summed up appropriately through the words of the Finnish Prime Minister Antti Rinne, “ The ball again is in the British parliament’s court… I hope I hope it goes through this time— I hope we are at the end of this process. But there are still many doubts- for instance inside the British Parliament”.

–This article is brought to you in collaboration with Mrinalini Goyat.

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