The existing confusing December 2017 text about the “backstop” is not legally binding. We still have a brief, golden opportunity to walk away from this mess.
Trade treaties normally contain clauses which allow either party to withdraw on notice. I can’t think of a single existing trade treaty which does not contain such a notice clause. So what the EU is currently asking for – a clause which would allow the UK to terminate the backstop only if it is replaced by a subsequent agreement with the EU – is wholly exceptional in international treaty practice. This would lock the UK into a relationship with the EU which the UK could not escape without the EU’s permission.
Instead of pressing for a simple clause which gives the UK the right to withdraw from the backstop on notice, the Government is contemplating a clause under which the UK’s right to withdraw is dependent upon satisfying a ‘joint review mechanism’ or arbitral body. It is virtually unheard of in international treaty relations for states to agree to be bound by decisions of tribunals which are not strictly neutral.
Typically, an international arbitration panel will consist of an arbitrator appointed by each party and a neutral chairman. However, the Chequers White Paper has proposed an arbitration process modelled on Ukraine’s humiliating deal with the EU under which the arbitration panel is obliged to refer issues of EU law to the ECJ and is bound by its decision.
It would be contrary to all international practice if the ECJ were to be involved in this way in an arbitration which governed whether or not the UK was permitted to leave the backstop and regain control of our own laws and our external trade policy. It would also add to the delays of an arbitration.
International arbitrations can be inherently complex. So a big risk factor to be considered by the Cabinet is the prospect of the UK being locked into the backstop for a lengthy period while an arbitration drags on.
The Facilitated Customs Arrangement (FCA) in the Chequers White Paper aims to ensure that all goods imported into the UK will be subject to the correct EU import tariff (to be levied by UK customs and paid over to the EU) if they are re-exported into the EU over an open UK/EU border. A dual-tariff scheme of this kind has not been tried before anywhere in the world.
The UK Government has admitted that it cannot get this new system working until the end of December 2021. It could be much longer. The truth is that the Government can have no confidence about when it would have the system ready and be able to initiate the procedure for exiting from the backstop, let alone how long an arbitration would take and whether it would succeed.
While the backstop is in operation, it would be impossible to implement free trade agreements with non-EU countries because we would not be allowed to remove tariffs on their goods. In theory we would be free to negotiate such agreements, to come into force when the backstop ends. But if escaping the backstop depends on an arbitration procedure we could not tell prospective free trade partners when we would be free to implement a deal – or whether we would be able to implement a deal at all.
So my advice to the Cabinet is that agreeing to a backstop which the UK can only leave if we satisfy a review mechanism risks dropping the UK into a legal black hole for a number of years and quite possibly for longer.
We would be subject to EU control of our tariffs and external trade policy and of wide areas of our internal laws, without having any vote on the rules which bind us, and we would be unable to negotiate trade agreements with non-EU countries. My own view is that signing up to this backstop with this review mechanism would be mad, simply mad.
‘We could not tell prospective free trade partners when we would be free to implement a deal’
The Government’s approach to a ‘backstop’ agreement is flawed and could leave the UK trapped