Opinion article

The Brexit draft agreement and its implications for Australia

With British Prime Minister Theresa May opting to postpone the planned 12 December vote on the agreement outlining the historic Brexit agreement, Dr Sophie Di Francesco-Mayot unpacks what is in the agreement and how it might affect Australia’s relations with Europe if passed. 

After 20 months of negotiations, European leaders from the 27-member states took less than hour one hour to approve the draft ‘divorce agreement’ on the UK’s withdrawal from the EU and its future relations with the region. 

In Britain, reaching a consensus on the draft deal is proving much more difficult. British Prime Minister Theresa May has stated that the deal “delivered for the British people” and sets the UK “on course for a prosperous future”.  However, the Prime Minister has opted to postpone the planned 12 December vote in the British parliament on the deal. 

Whether it will be approved when the vote takes place remains uncertain as the Labour, Lib Dem, SNP, DUP and a number of conservative MPs are expected to vote against the proposed EU withdrawal agreement. 

What they will be voting on is the 599-page legally binding document that outlines the conditions for the UK’s exist from the EU. 

Here’s a breakdown of some of the deal’s key sticking points preventing agreement in the UK and how an eventual Brexit deal might affect Australia. 

Transition period

Until 31 December 2020, EU law will apply to provide national businesses and administrations time to develop socioeconomic and political ties. The UK will remain in the EU’s Custom Union and in the Single Market. This means that the UK will continue to have market access with the 27 EU member states while maintaining the rules on free movement of goods, capital, services and labour established by the EU. 

The British Government will however lose its right to vote on any decisions taken by EU members, the European Commission and the European Parliament.

Brexit ‘divorce’ bill

The draft agreement includes a €60 billion ‘divorce bill’ which comprises the UK’s unpaid financial obligations to the European Union (EU).

Citizens’ rights

The draft agreement upholds the rights of approximately one million British citizens living in the EU and three million EU citizens living in the UK. It allows UK and EU citizens including their families, who arrived before the end of the transition period to live, work and study while also experiencing equal treatment to host nationals under the respective laws. 

It also includes the Irish border Brexit ‘backstop’ which aims to prevent the reestablishment of physical border checks between Northern Ireland and the Republic of Ireland. This would come into effect if both sides fail to agree on a free trade after the 21-month transition period.

Gibraltar deal

The deal sets the basis for administrative Spanish-British cooperation in areas like citizens’ rights, the environment, customs and police. Gibraltar –The Rock as it is often referred to – is a British overseas territory. It is home to a British naval base and 30,000 people. Attaining full transparency in areas such as tax, smuggling and money laundering and fighting fraud are outlined in the deal.

British bases in Cyprus

The deal aims to guarantee that there will be no disruption or loss of rights for the 11,000 Cypriot civilians living and working in the areas of the British sovereign military bases. It also aims to ensure that EU law will continue to apply in the base areas, including on taxation, goods, agriculture, fisheries and veterinary and phytosanitary rules. 

Future political ties

The political declaration, which is separate from the divorce agreement, sets out what the UK and EU’s relationship may be like post-Brexit.  

Brexit implications for Australia

Australia’s relationship with the EU has experienced periods of ebbs and flows. Both regions witnessed intense diplomatic bickering regarding the EU’s Common Agricultural Policy (CAP). 
Despite these tensions, trade and investment relations have gradually deepened over the past decades resulting in the EU becoming one of Australia’s prominent trading partners. 

The EU remains Australia’s largest partner in two-way services trade and its largest investment partner. Australia is increasingly becoming an attractive location for European businesses in the Asia Pacific region. Strong bilateral investment flows currently exist which has facilitated the establishment of approximately 2400 European companies in Australia. 

Australia-EU relations will continue to intensify through the 2008 EU-Australia Framework agreement and the Free Trade Agreement under negotiation. 

While Brexit is unlikely to negatively impact these ties, it will have ramifications for the pattern of Australian companies using the UK as a gateway into the EU market; they will now have to engage directly with other European countries. 
About the authors

Sophie Di Francesco-Mayot

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Sophie Di Francesco-Mayot is a Research Officer at the RMIT EU Centre. A political scientist by training, Sophie’s research interests include European politics, European integration, EU institutions, political parties, culture, religion and identity. 

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