Today, the EU and U.K. in principle agreed new terms for the withdrawal agreement giving effect to the U.K.’s exit from the European Union. These include a revised political declaration and protocol concerning Northern Ireland replacing the controversial backstop. An amended unilateral declaration on consent in Northern Ireland by the U.K. was also published. Attached to this client note are comparison documents showing the changes from the previous set of documents.
As regards Northern Ireland, a new arrangement is proposed under which it will remain part of the U.K.’s customs territory but would also remain in the EU’s single market for purposes of goods—but not services. Critically, and unlike the former “backstop”, these arrangements will be terminable upon 2 to 4 years’ notice at the request of the Northern Ireland assembly. Fewer impingements on the United Kingdom’s sovereignty exist, although there is still significant European Commission and European Court of Justice control of State aid. A new list of EU regulations concerning goods which will be applicable in Northern Ireland forms a new section of the withdrawal agreement. Northern Ireland will also be subject to the minimum Value Added Tax (VAT) rates of the EU for goods only, with new procedures for this to be charged or refunded depending on whether goods are for EU export. The political declaration remains fairly similar, with notably no progress made on financial services equivalency (or similar concepts such as mutual recognition). New provisions providing for greater alignment on environmental and social matters and on state aid and restrictions on the role of the European Court of Justice have been added – although these do not build on the single customs territory and leave more room for governance to be consistent with U.K. sovereignty. We hope that these blacklines should help our clients, lawyers, politicians and the public to understand better the changes that have been proposed.