UK’s EU Traders Warned not to “Hold Their Breath”

An international logistics expert has warned the UK’s
businesses trading with the EU not to “hold their breath” in
anticipation of the so-called Malthouse Compromise ending the
current Brexit impasse. Adam Johnson, director of Leeds-based Tudor
International Freight, said the proposed blueprint for the period
following UK withdrawal from the bloc, which had emerged in recent
days, was unlikely to be adopted for various reasons.

The approach, the brainchild of housing minister Kit Malthouse,
has two sections. Plan A would apply if UK left the EU with a
withdrawal agreement, Plan B would take effect if it did so without
one. “Plan A would involve the UK ‘buying’ a 12-month
extension to the proposed ‘standstill’ transition period,
currently due to apply between Brexit day next month and December
2020,” said Adam.

“The plan would also replace the Irish backstop, envisaged to
take effect if the parties haven’t agreed new long-term trading
arrangements by the end of the transition period. The backstop,
proposed in the draft withdrawal agreement published last November,
would avoid the return of a hard border through the UK effectively
remaining in the EU Customs Union. Instead, Malthouse proposes the
UK and EU would apply zero tariffs to imports of each other’s
goods, agreed mutual recognition provisions and rules of origin
arrangements, all disposable after 10 years, plus technological
solutions, to keep the border open,” he added.

Plan B would also involve the purchase of a transition period
lasting to the end of 2021, with citizens’ rights being protected
during it, to provide more time for the parties to prepare for a
no-deal divorce.

The Malthouse Compromise has attracted support and interest from
MPs across the Conservative party, including Steve Baker, a
prominent member of the pro-Brexit European Research Group, and
Nikki Morgan, a former education secretary and leading Remain
campaigner before the 2016 referendum. In addition, Prime Minister
Theresa May has described the suggestion as “a serious
proposal.”

Mr Johnson, however, said there were flaws in the plan and
therefore reasons for UK businesses trading with the EU to believe
it would not take effect.

He said: “Firstly, it’s hard to see the UK and EU agreeing
future trading arrangements within two years, when the latter’s
free trade deal with Canada, implemented in 2017, took seven years
to finalise, for example.

“Secondly, like the recent amendment passed in the House of
Commons in the name of Conservative MP Sir Graham Brady, the
Malthouse Compromise doesn’t specify what technical alternatives
to the Irish backstop it envisages applying after the transition
period. Indeed, leading EU Brexit negotiator Sabine Weyand said
recently that this issue had been examined in depth during the
bloc’s negotiations with the UK and not only were such solutions
unavailable now, this would remain the case for the next few
years.”

Mr Johnson added that the idea of UK businesses trading with the
EU tariff-free for up to a decade, on the basis that the country
and the bloc were in the process of negotiating a free trade deal,
was also regarded by some experts as a misreading of what World
Trade Organisation rules allowed.

He said: “Regarding Plan B of the Malthouse Compromise,
lawyers have pointed out that the only legal basis for a transition
period is a withdrawal agreement, ratified by all relevant parties
before the UK leaves the EU, so it’s hard to see one taking
effect if we depart without a deal.”

Mr Johnson added that the EU had also stated repeatedly that it
regarded the current draft withdrawal agreement as finalised and
not for re-opening.

He said: “Taking factors such as these into account, our
advice to any of the UK’s EU traders hoping the Malthouse
Compromise will prove to be a Brexit breakthrough is ‘don’t
hold your breath’. In our view, like the Brady amendment, it’s
likely to be more successful in uniting previously divided elements
of the Conservative party than providing a way forward in the
Brexit process.”

Source: FS – Transport B.
UK’s EU Traders Warned not to “Hold Their Breath”



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