The Withdrawal Agreement sets out the terms on which the UK will leave the EU. Since the Brexit process began, the content of the Withdrawal Agreement has been closely scrutinised and criticised both by parliament and the media.

In this blog, we explain how a withdrawal agreement works, as well as what has happened so far in the UK's negotiations.

What is a withdrawal agreement?

The process by which a member state leaves the EU is set out in Article 50 of the Treaty on European Union. Once a member state has sent an official notification that it wants to leave the EU, Article 50 states that the EU will attempt to negotiate and conclude an agreement with the state in question, setting out in detail the arrangements for its withdrawal.

These arrangements are contained in the draft Withdrawal Agreement that the UK has negotiated with the EU which, if ratified by both sides, will take the form of a legally binding international treaty. The draft includes sections on the UK's future financial obligations, the status of citizens in both the UK and the EU, and how the Irish border will continue to function. It also contains a transition period lasting until 31 December 2020 during which the vast majority of EU laws would continue to apply in the UK as they do now but the UK would not participate in all of the governmental functions of the EU.

The purpose of the transition period is to provide time for the UK and the EU to negotiate a further agreement setting the terms by which each will trade with the other in the future. The broad outline of what that future trade agreement might cover is set out in the Political Declaration which was published alongside the Withdrawal Agreement.

If no future trade deal is concluded by the end of the transition period (and any extension to it), the Withdrawal Agreement contains a protocol on Northern Ireland which sets out a 'backstop' in relation to the border with the Republic of Ireland. This would see Northern Ireland remain in the EU customs union and single market for an indefinite period, continuing to apply over 300 EU laws and remaining subject to the EU's courts. This would allow Northern Ireland to continue to trade with the Republic of Ireland without any barriers, but would lead to checks on goods passing between Northern Ireland and the rest of the UK.

What is the current status of the withdrawal agreement?

Under UK legislation, the Withdrawal Agreement must be approved by MPs before it can be finally concluded (ratified) by the UK. The current draft was published on 14 November 2018 with the intention of holding a vote in the House of Commons on 11 December 2018. When it became obvious that MPs would not approve the agreement, the vote was delayed until 15 January. Despite the efforts of the government it was voted down by a large majority and has since been rejected twice more by MPs.

A number of elements of the Withdrawal Agreement have proved highly controversial including the so-called 'divorce bill' (the UK's ongoing financial commitments to the EU), and provisions around the potential for the continuing role of EU institutions or EU law in the UK after Brexit. However, the opposition to the agreement has coalesced most strongly around the Irish backstop which some MPs - including the Democratic Unionist Party on which the government relies for support - objecting to what they see as a weakening of the link between Northern Ireland and the rest of the UK and others seeing it as an attempt to trap the UK in the EU customs union thus preventing the UK from striking trade deals with non-EU countries.

Having failed to secure approval for the Withdrawal Agreement, Theresa May announced that she would resign as Prime Minister following a successor being chosen and some commentators have speculated that the current draft of the Agreement is effectively finished.

However, others have stated that, as the only 'deal' currently on the table, her successor could attempt to revive it in some form. All eyes will now be on new Prime Minister Boris Johnson, who will now be responsible for the ultimate fate of the Agreement.

Previously, Mr Johnson has said that the deal Mrs May negotiated with the EU was 'dead' and that he wishes to renegotiate elements of it - primarily to get rid of the backstop. Separately, he has confirmed he intends to take the UK out of the EU on 31 October, if necessary without a deal, and that ministers who serve in his cabinet must "reconcile" themselves to this.

As things stand, if Mr Johnson cannot convince the EU to renegotiate the Withdrawal Agreement and get it through Parliament, the default legal position is that the UK will leave the EU on 31 October without a deal unless it revokes its notification to leave the EU or is granted a further extension to the Article 50 timeline by the EU. We have previously considered what a no-deal Brexit would mean as well as the steps that MPs could take to prevent it.

Time is very much of the essence as MPs will only return to Parliament on 3 September for a couple of weeks before breaking up again for the conference season. This means that there are just 24 sitting days before the rapidly approaching October deadline.

Preparing your business for all Brexit scenarios

With the outcome of Brexit still an unknown and such a short space of time ahead of us, businesses must prepare for every eventuality.