What just happened? On Africa, EU aid, trade and Brexit – Seven key questions answered

The UK Cabinet backed the draft agreement on the UK’s withdrawal from the EU. Chief European Commission negotiator for Brexit, Michel Barnier, has declared there has been decisive progress which has led Donald Tusk, EU Council President, to convene European leaders to give their backing on 25 November. What this will mean for Africa, EU aid, and trade with developing countries depends entirely on whether the draft withdrawal agreement will actually be passed into law by both, the UK and the EU.

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      We have identified seven burning questions – and tried answering them, although the situation is far from being clear and continues to evolve by the day. While there are 585 pages of text on how to withdraw, currently there are only 8 pages that outline what the future relationship will look like.

      Beyond the withdrawal agreement, it is important that more ‘flesh’ is put on the bones of the draft UK-EU political declaration that would be consequential for cooperation on EU aid, trade and Africa.

      One: Will the draft withdrawal agreement pass?

      The EU has scheduled an extraordinary Summit involving heads of states and government. By 25 November, they will need to give the political sign off that would allow what is now a mere draft agreement to progress into law on the EU side – this includes being voted on by the European Parliament.

      On the UK side, while the Cabinet has given collective approval, it is still very unclear whether the draft Withdrawal Agreement will pass through the UK Parliament and what will happen with UK Prime Minister’s government and party – some of whom want to try and renegotiate the deal.

      The period of significant political volatility in the UK is set to continue – if not become more tumultuous – now, with the resigning of Dominic Raab, the UK Minister responsible for Brexit as well as a possible leadership challenge on the Prime Minister herself.

      Two: What’s relevant for Africa, EU aid and trade if the withdrawal deal passes?

      The draft Withdrawal Agreement assumes that the UK will leave the EU on 29 March 2019. This means that it will no longer be part of EU decision-making structures influencing Africa, aid and trade-related policies.

      Yet, until the end of 2020 (and possibly even 2022), there will be a transition period during which the UK will still be liable to implementing most of the EU’s laws, and to paying its contributions to the EU budget and current and past European Development Funds (EDF).

      If the agreement is accepted, aid from the EU institutions (for which the UK contributes) until at least 2020 will not be cut back from what has been planned. This EU aid will not be at risk of being cut either from the EU budget (for example through the Development Cooperation Instrument and European Neighbourhood Instrument) or from the European Development Fund. And this is not everything. The UK will also be bound to honour its commitment to the EU Emergency Trust Fund for stability and addressing the root causes of irregular migration and displaced persons in Africa. This means that the amounts at the disposal of the EU for external action and development will not change. Yet, during the transition period, the UK will no longer have formal influence and voting rights on this spending.

      On trade, the UK will be in a customs union with the EU27 during the transition period and will continue to apply EU trade policy, including towards Africa. It will be able to negotiate, sign and ratify trade deals with third countries (in Africa, for instance) but these may only be implemented after 2020 if the UK leaves the customs union with the EU.

      But since the trading relationship between the EU and the UK after 2020 has not yet been negotiated, it is unclear how meaningful UK trade negotiations with African countries and regions can actually be. De facto, its influence is limited to proposing the roll-over of specific regimes. This is further complicated by a specific ‘backstop’ arrangement that would keep the UK and the EU in some form of customs arrangement if the UK and the EU will not settle on an alternative agreement by 2020. As we have argued in the past, several scenarios can be envisaged on trade relations with Africa post-Brexit.

      Three: What if the draft withdrawal deal is not accepted?

      This would bring a period of even greater political uncertainty. It would leave room for two possibilities. Either the UK would leave Europe without a deal, or ask to stay – temporarily, or over the long-term perhaps after another referendum, as several commentators suggest.

      No deal. Also known as a ‘cliff-edge Brexit’ or ‘crashing out’. This could happen, for instance, if UK parties will not manage to find a clear agreement on the way forward. If this was to be the case, it is hard to understand just yet what parts of the withdrawal agreement would be honoured, upheld or eventually agreed in ‘mini-deals’.

      If none of the commitments of the withdrawal agreement was to be honoured, this would result in severe stress for the 2019-2020 EU budget, including the amounts dedicated to official development assistance (ODA). The UK would still have control over the ODA that it was scheduled to give via EU institutions, and hence overall ODA (from the UK and the EU institutions combined) may not go down. But obviously, the UK’s decisions on where to direct its ODA would be very different to what the EU institutions would have done.

      A ‘no deal’ would not only cause political and economic uncertainty in the UK and in the EU but would also have a knock-on effect on the European and perhaps global economy. Both the UK and the EU are making contingency plans for the very possible reality of a ‘no deal’ scenario – yet most agree that it would be enormously disruptive. The UK pound (and therefore UK aid spending) would also most likely lose significant value.

      While a ‘no deal’ may allow the UK to strike trade deals with other countries (including in Africa), the UK will most likely be concerned with trade deals with larger economies first. Some reported that the UK is working to make sure that certain developing countries from the African, Caribbean and Pacific group of states would have at least the same type of deals with the UK that they currently have with the EU. It is likely that, in the short-term, the political turmoil created in the UK by a ‘no deal’ will not make it a safe bet for rapidly concluding new trade deals on different terms with developing countries.

      Change of mind: Stay. This would entail a number of political, legal and technical hurdles to overcome both on the UK and the EU side. The political position of the UK government would have to change completely. There are three ways this can happen: a change of Prime Minister, a change of government (via a general election), or a second referendum (which would have to be voted for and agreed by Parliament and won by those who wish to remain in the Union). But the road to these options could also lead to a ‘no deal’ or a ‘crashing out’ scenario by default.

      If the UK and the EU were able to overcome all these obstacles, and the UK was not to leave, then its formal relationship with the EU – and the EU’s relationship with Africa on trade and aid – would remain legally and technically the same as today.

      Four: What is most likely to happen now?

      This is a tough question and the unpredictability of UK politics makes it no less hard to answer. The majority of the political class and, according to recent polling, the majority of the UK population does not currently favour the withdrawal deal and, at the same time, fears the ‘crashing out’ scenario. Whether there will be a majority in favour of the Withdrawal Agreement in the UK parliament is still unclear and, at the moment, it looks unlikely.

      The UK could ask to buy more time and extend the 29 March 2019 deadline. But this would require unanimous backing from various EU actors and, probably, the UK would need to show that it would be willing to resolve the issue politically (by means of a general election or a referendum).

      Five: Won’t an agreed withdrawal deal open up space for creative cooperation between the EU and the UK in relation to Africa and aid after Brexit?

      The draft Withdrawal Agreement does not cover directly the issue of the future relationship between the EU and the UK, which is included in a separate draft document known as the ‘outline of the political declaration’.

      Discussions on Africa, EU aid and trade with developing countries have been very absent when discussing Brexit at the top negotiations table. The draft declaration currently does not say much of relevance to Africa regarding those areas, besides mentioning a vague commitment to collaborate on sustainable development. But the political declaration will evolve and there should be more space to discuss EU-UK collaboration related to Africa and EU aid at the technical level now that, at the political level, the EU has deemed that ‘decisive progress’ has been achieved.

      In the past, the UK has made a number of proposals on development collaboration, for example on EU aid. More proposals from the UK can probably be expected. The development community in UK and EU should push for these issues to be explicitly covered as they continue drafting the final political declaration.

      Six: What could a future relationship between the EU-UK look like in relation to Africa and development cooperation?

      This largely depends on whether the draft Withdrawal Agreement passes, what is in the final political declaration and what type of Brexit happens – if it will happen at all. The coming weeks will offer greater clarity on where we are heading the future relationship between the EU and the UK. This will be the object of another negotiation that may go on for years. However, there is a necessity to think about the implications and options in relation to Africa and development cooperation. We created a choice matrix to assist these complex discussions.

      The EU’s own processes, such as the negotiations on the future of its relationship between the ACP countries, and the negotiations on the next EU budget for the period ranging from 2021 to 2027, have the potential to either open up or close down space for such collaboration. So it is not just the UK-EU political declaration that matters in terms of policy processes.

      Seven: What to look out for now?

      At the highest level, a leadership challenge to the Prime Minister, or a vote in the UK Parliament expected in early December will allow us to know if the draft Withdrawal Agreement is likely to be accepted by the UK –provided this vote isn’t also postponed.

      Alternatively, we might expect a general election or referendum, both of which would have to be voted for by Parliament. At another level, if the political declaration evolves to incorporate more issues directly relevant to trade and EU aid then there would be further insight to the direction of travel. So, the uncertainty continues – including that on the future implications of Brexit for Africa, EU aid and developing countries trade.

      The views are those of the authors and not necessarily those of ECDPM.

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