After the 2016 referendum in which 52% of voters in the United Kingdom (UK) favored leaving the European Union (EU), Brexit was originally scheduled to occur on March 29, 2019. In early 2019, however, Parliament repeatedly rejected the withdrawal agreement negotiated between Prime Minister Theresa May’s government and the EU without supporting any alternative. Given continued political deadlock over Brexit in the UK, the EU has granted the UK three deadline extensions. The most recent extension lasts until January 31, 2020.
Recent Developments and Possible Scenarios
On October 17, 2019, EU and UK negotiators reached a new withdrawal agreement altering the Northern Ireland backstop provision, which was a main sticking point to Parliament passing the original deal. Under the new deal, Northern Ireland (part of the UK) would maintain regulatory alignment with the EU (essentially creating a customs border in the Irish Sea) to maintain an open border with the Republic of Ireland (an EU member state) while safeguarding the rules of the EU single market. At the end of a transition period, the UK (including Northern Ireland) would leave the EU customs union and pursue an independent national trade policy. The UK and EU have sought to avoid a no-deal Brexit, a scenario in which the UK leaves the EU without a negotiated withdrawal agreement, due to concerns that it could cause considerable disruption with regard to the economy, trade, security, Northern Ireland, and other issues.
UK Prime Minister Boris Johnson encountered difficulties in attempting to secure Parliament’s approval of the new deal, however. Seeking to break the deadlock, the UK Parliament agreed to set an early general election for December 12, 2019. The dynamics of Brexit are likely to evolve in relation to the election’s outcome. Possible scenarios include Parliament approving the new withdrawal agreement by the January deadline; a new government shifting to a soft Brexit, in which the UK remains in the EU customs union; continued political deadlock; another extension; and a no-deal Brexit.
Brexit, Trade, and Economic Impact
The various Brexit scenarios have considerable implications for the UK’s trade arrangements. Outside the EU customs union, the UK would regain an independent national trade policy, a major selling point for many Brexit supporters who advocate negotiating new bilateral trade deals around the world, including with the United States. The UK likely would seek to negotiate a free trade agreement (FTA) with the EU. A Brexit in which the UK remains a member of the EU single market or customs union would provide more barrier-free access to the EU, but the UK would have to follow most EU rules without having a say in how those rules are made. Analysts predict the disruption resulting from any form of Brexit likely will have at least a short-term negative economic impact on the UK. A no-deal Brexit represents the most disruptive and unpredictable scenario, and many businesses in the UK are taking steps to mitigate potential economic losses.
Northern Ireland
Many observers have expressed concerns that Brexit could destabilize the Northern Ireland peace process and lead to a hard border with physical infrastructure and customs checks between Northern Ireland and the Republic of Ireland. Although conditions have improved considerably since the 1998 peace accord (known as the Good Friday Agreement or the Belfast Agreement), concerns about the fragility of peace and security in Northern Ireland remain. A Brexit that results in a hard border likely would have negative economic effects for Northern Ireland and constitute a pressure point in the continuing implementation of the peace agreement.
U.S.-UK Relations and Congressional Interest
President Trump and Administration officials have expressed support for Brexit. Members of Congress hold mixed views. The UK likely will remain a leading U.S. partner in addressing many foreign policy and security challenges, but Brexit has fueled a debate about whether the UK’s global role and influence is likely to be enhanced or diminished. In 2018, the Administration notified Congress of its intention to negotiate a bilateral FTA with the UK after Brexit. Congress likely would need to pass implementing legislation before the potential FTA could enter into force. Many in Congress also are concerned about Brexit’s possible implications for Northern Ireland’s peace process and economy.
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