UK: Why the backstop is such a big issue? – ABN AMRO

Han de Jong, chief economist at ABN AMRO, points out that the UK parliament has sent PM Theresa May back to Brussels to renegotiate the UK’s withdrawal agreement from the EU as the parliament wants an expiration date to, or the right to unilaterally withdraw from, the so-called ‘backstop’.

Key Quotes

“If the UK leaves the EU on the basis of some agreement, nothing will change immediately in the existing trade arrangements. Both sides will then take time to negotiate the future trade relationship. In principle this will be until the end of 2020, but can be extended to 2022 (the ‘transition period’).”

“The backstop stipulates that as long as there is no long-term trade deal, the UK stays in the customs union and Northern Ireland will be subject to the rules of the single market. A majority in the UK parliament fears that the UK’s exit from the EU can effectively be blocked by the backstop is there is no end date to it, or no mechanism to withdraw unilaterally from it. The backstop may not apply if a trade deal is done and a satisfactory arrangement can be made for the border (which is almost 500 km long).”