The withdrawal agreement is not a trade deal with the EU

Published: 11th Jul 2019

In brief

Claim

The current withdrawal agreement effectively keeps us in the single market and customs union.

Conclusion

The withdrawal agreement doesn’t set out the terms of the UK’s future trading relationship with the EU. That would have to be negotiated after Brexit. If the withdrawal agreement passed but no trade deal was then negotiated, the Irish backstop would kick in—keeping Northern Ireland aligned to some of the rules of the single market, but not the rest of the UK. The UK would be in a customs union.

“If we continually try to wrap ourselves around the current withdrawal agreement, and we remain in the customs union, and in the single market, which is effectively what is entailed by the present withdrawal agreement...”

Boris Johnson MP, 9 July 2019

This article was co-written with our friends at the Institute for Government.

During this week’s Conservative leadership debate, Boris Johnson argued that Theresa May’s proposed withdrawal agreement effectively keeps us in the single market and customs union.

The single market establishes common rules and regulations for free movement of goods, people, services and capital between EU countries. The EU customs union is a free trade area in which countries can’t put tariffs on goods and services imported from each other, and set the same tariff for countries outside the union. 

The withdrawal agreement only sets out the immediate terms of the UK’s exit from the EU. The future trading relationship with the EU would need to be negotiated once the UK has left. While that trade deal was being negotiated (until the end of the transition period), the UK would remain in the single market and customs union.

During this period it would be possible to negotiate a trade deal that doesn’t keep the UK in the single market and customs union (indeed, that was the kind of deal the UK and EU negotiators agreed to try and pursue if the withdrawal agreement was passed).

But if the two sides failed to agree a future relationship, the Irish backstop—part of the withdrawal agreement—would come into force.

That Irish backstop contains a customs union between the UK and EU, but the UK would be outside of the EU’s single market. Northern Ireland would, however, remain aligned to the rules of the single market necessary to avoid a hard border on the island of Ireland. It would not cover free movement of people or single market rules on services, only a subset of the single market rules on goods.

We factchecked the rest of the debate here.


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