Welcome to our latest issue of Boardroom Brexit, covering developments during the week commencing 18 March 2019.
Key developments this week in the UK
- The third vote on the draft Withdrawal Agreement didn't take place this week. John Bercow, Speaker of the House of Commons (the Commons), announced that the deal couldn't come before the Commons this parliamentary session in similar, or substantially similar, terms as before. According to parliamentary convention dating back to 1604, the government couldn't hold repeated votes in the Commons, in the same parliamentary session, on a motion that is the "same in substance."
- This led to the UK Prime Minister, Theresa May, formally asking the EU to extend the Brexit deadline to 30 June 2019, which is a much shorter extension than she had previously indicated she might seek.
- On Thursday, the EU granted an extension from the original 29 March deadline until:
- 22 May 2019, if the Commons passes the deal; or
- 12 April 2019, if the Commons doesn't pass the deal.
Our DLA Piper Brussels-based colleagues explain the outcome of the European Council meeting as follows:
- Theresa May will seek to bring back the Withdrawal Agreement for a vote next week (or possibly the week after). In so doing, she'll need to convince the Speaker that the Agreement isn't the same in substance as was already voted on. It remains to be seen how she will achieve this.
- If the vote takes place, and the deal is not approved, the UK will need to come up with a plan B before 12 April 2019 that satisfies the EU. The UK will also have to decide by 12 April whether to hold European Parliament elections. If the UK convinces the EU of a new way forward in negotiations and decides to hold European Parliament elections, a longer extension of 9 or 12 months will be required and granted. If the UK decides not to hold European Parliament elections, 12 April may remain the date of a no-deal Brexit, although the EU may grant a further short extension to prepare for this.
- Next Monday (25 March), a group of cross-party MPs desperate to avoid a no-deal Brexit will put forward a series of alternatives to the current deal for the Commons to vote on.
- Exit day under the EU (Withdrawal) Act 2018 is 29 March 2019. The date can be amended by secondary legislation to reflect the postponed deadline, but a majority vote in both the House of Commons and the House of Lords will be necessary. It's expected that there will be a comfortable majority in both Houses to achieve this. Until this secondary legislation comes into force, however, exit day under UK law remains 29 March 2019.
Key developments this week in the EU-27
EU-27 rejects 30 June extension request, offers alternative timeline
- On Thursday, following extensive late-night discussions at the European Council summit in Brussels, EU leaders rejected Theresa May's request for a Brexit deadline extension until 30 June 2019, and instead offered an amended Brexit timetable with two new key dates:
- 22 May 2019: On the condition that the UK Commons approves the draft Withdrawal Agreement, the EU grants an extension until 22 May 2019, which is the day before the start of the European Parliament elections.
- 12 April 2019: Should the Commons, however, fail to approve the Withdrawal Agreement, the EU grants an extension only until 12 April 2019, which is the final day that the UK can decide whether or not to participate in the European Parliament elections.
- Donald Tusk, the European Council President, made quite clear that in light of the EU's decision, all options remain on the table for the UK: "The UK government will still have a choice between deal, no-deal, a long extension or revoking Article 50."
- During Thursday's summit, the EU-27 challenged Theresa May on how she intends to proceed should the Commons vote against the Withdrawal Agreement. She was, however, unwilling to respond, in order not to "speculate."
- Despite this unanimous extension decision by the EU-27, EU governments continue to deliver messages reflecting differing degrees of patience and courtesy in light of the UK's inability to agree on a united Brexit approach.
- French President Macron continues to demonstrate a firm line, saying: "It's a real political and democratic crisis. But this crisis is a British one. It's now up to the British to end the ambiguities."
- In contrast, German Chancellor Merkel voiced clear disagreement with President Macron, warning that EU leaders couldn't afford to be judged by history as having allowed a disorderly Brexit.
- Ahead of the summit it was widely expected that the EU-27, in light of the serious economic consequences facing both the UK and remaining EU governments in the event of a no-deal Brexit, would grant the UK at least some kind of limited Brexit delay. Nevertheless, EU leaders' rhetoric this week vis-à-vis London once again significantly sharpened, and there was a heated discussion on the maximum extension that could be granted. The EU leaders' decision clearly reflects that they are well aware of the historical importance of their decisions.
Pressure on European economies
Hope in the Netherlands
- Dutch Foreign Minister Stef Blok claimed that that there is "no alternative but to hope for the best but prepare for the worst." According to the Port Authority, the port of Rotterdam - a strategic hub between continental Europe and the UK - is spending millions of euros and hiring hundreds of employees to prepare for a potential no-deal Brexit, in order to handle customs checks. The Port Authority also expressed concerns regarding agricultural controls, smuggling and illegal migration in the event of a no-deal Brexit.
Medical supplies under risk after Brexit
- The European Federation of Pharmaceutical Industries and Associations blamed the EU-27 for a "lack of focus" on the supply of medicines after Brexit. The Federation invited EU leaders to allow medicines and medical devices quality-tested in the UK to be recognised in the EU, and to prioritise the transfer of medicines and pharmaceutical ingredients across borders. The Federation underlined that, last year, the UK agreed that medicines and devices approved in one of the member states could continue to be sold in the UK after Brexit, and criticised that no reciprocal declaration has been made by the EU.