This deal does not solve the EU puzzle

The agreement reached between the UK and the EU setting out arrangements for the transition period ending on Dec 31 2020 leaves many thorny issues unresolved. David Davis called it a decisive step on the road to Brexit; but it could yet lead into another cul-de-sac. On the positive side, much of the colour-coded text is in green for agreement, though this has been achieved by way of significant concessions from Britain. The vexed issue of citizens’ rights has been settled with all EU nationals arriving in the 21 months between the official Brexit date next March and the end of transition given the right to reside in the UK. An agreement on the size of the divorce bill and how it will be paid is also enshrined in the draft legal text.

There has been a good deal of compromise, mostly, but not all, on the part of the UK, in order to get the deal done ahead of this week’s EU summit in Brussels. In essence, the UK will remain subject to EU law and the jurisdiction of the European Court of Justice with no say over what is decided.

The position of Scottish Conservative MPS has been compromised by the absence of safeguards for British fishermen during transition. The votes of these 13 MPS at Westminster could yet scupper the deal on this issue if they remain unconvinced by promised “consultations” about quotas.

The most intractable issue remains Ireland. The draft text accepts that, if no other solution can be found to avoid a hard border between the Republic and Northern Ireland, the province will remain in regulatory alignment with the EU. Since Theresa May has stated unequivocally that Northern Ireland will not be treated differently from the rest of the UK this could only be achieved if Britain remained in regulatory alignment, too. Labour proposes to achieve this by staying in a customs union with the EU. Mrs May has ruled this out.

The Government’s dilemma would be obviated by a full-blown, free trade deal which removes all barriers to goods and services, but this is not going to be achieved by October when the final agreement is due to be voted on in the UK parliament and across the EU.

The aim of transition is to remove the cliff-edge threat to business and the City of an exit next March. But this will merely be replaced by more uncertainty unless the post-brexit trading arrangements can be settled in the coming months – and talks on those have not even begun.