June 29, 2020

The cross-party report examines the effect of the Covid-19 pandemic on the negotiations, and outlines what needs to change if a deal is to be agreed before the end of the transition period on 31 December 2020. It also considers the preparations and Government assistance required to ensure that UK businesses are ready for the changes coming from 1 January 2021, whether or not there is a deal.

The report’s key recommendations include:

• intensified face-to-face negotiations are needed to make progress: the Covid-19 pandemic and enforced move to virtual talks has presented challenges to both sets of negotiators. A return to face-to-face discussions and a speeded-up timetable, now agreed by the parties, will be needed to increase the likelihood of a breakthrough. Given the uncertainty over future Covid-19 developments, the requirement for progress over the summer is clear;
• political leadership is required if the deadlock is to be broken: significant long-established disagreements over fisheries, governance, the level playing field and police and judicial co-operation will only be overcome with movement and compromise on both sides and greater flexibility in the EU mandate. On the level playing field, the Committee proposes an agreement “that takes as its starting point the de facto alignment of the UK and the EU when it comes to current rules and standards”, with future market access dependent on continued adherence to these standards. This would require the establishment of an independent body to adjudicate in the case of any disputes. The report also calls for clear rules on the use of subsidies or state aid, monitored and enforced by an independent authority in the UK and the European Commission in the EU;
• more detail must be provided on the checks that will be required on GB-NI trade under the Northern Ireland Protocol: both sides have a responsibility to the people of Northern Ireland to ensure that the Protocol agreed last October works in practice. The UK’s recent command paper represents a positive start, but more detail is needed soon if businesses are to make the necessary preparations. The report also emphasises the crucial role of the Withdrawal Agreement Joint Committee in resolving outstanding matters, such as deciding which goods arriving in Northern Ireland from Great Britain are at risk of entering the Single Market;
• new border arrangements need to work for all concerned: Covid-19 has added to the challenges faced by businesses in preparing for the end of the transition period. With the UK yet to publish its border operating model, and the necessary customs agents still to be recruited and trained, the Committee welcomes the pragmatic decision to delay from 1 January to 1 July 2021 full controls on all goods entering the UK. The Government must now ensure that the new arrangements work for everyone involved, including HMRC, port authorities, businesses and logistics firms. This will require extensive consultation and discussion, and the timely publication of information and advice to meet the needs of specific sectors. The Government should develop, and publish, an economic and readiness assessment showing how well prepared the UK economy is to leave the transition period. At the same time the Government must consider the needs of UK exporters, who are set to face full controls from 1 January with additional documentation and costs. Goods exporters, as well as the hospitality, broadcasting and financial services sectors are among those who will also require particular attention from the Government; and
• the Government must prepare for the possibility of no agreement being reached: although both sides are committed to a deal, the Committee urges the Government to prepare a plan in case an agreement is not reached. This should include what support it intends to give to sectors that would be particularly affected, for example, by the introduction of tariffs on certain products. The Government should also set out the preparations it believes are needed whether or not an agreement is reached and publish an assessment in the Autumn of both how far advanced these preparations are and of the likelihood that they will be completed in time.

To access the full report, click here.