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No Deal or Article 50 extension looms, as MPs reject Brexit agreement again

Second crushing defeat for Withdrawal Agreement, as government set to unveil 'no deal' import tariffs on agricultural goods

The UK government will publish on Wednesday (March 13) its proposals for import tariffs to apply on agricultural and other imports in the event of a no deal Brexit, after a fresh defeat for prime minister Theresa May’s Brexit Withdrawal Agreement on Tuesday evening (March 12).

In a crushing blow for the UK government’s Brexit strategy, the House of Commons on Tuesday rejected a slightly-reworked version of the EU-UK Withdrawal Agreement by a massive 149-vote margin. Its motion to approve the deal was thrown out by 391 votes to 242, with 75 members of May’s own Conservative party voting against.

The same deal had been previously rejected by an even wider 230-vote margin on January 16.

The UK tariff plans, which are understood to have been signed off by the UK government last week, are scheduled to come into effect as from Saturday March 30.

With May’s deal defeated, the default option now is a ‘no deal’ Brexit on Friday March 29 - unless the EU agrees to an extension of the Article 50 process, which would involve the UK remaining as an EU member state for a further period of time.

Parliament to vote on Brexit fate

Just two-and-a-half weeks now remain before the Article 50 period expires, and the UK government will now ask Parliament to vote tomorrow (Wednesday) on whether or not it supports leaving the EU without a deal.

If a no deal vote is rejected, then a further vote will be held on Thursday asking for Parliament’s backing for the government to seek an extension to the Article 50 process. This would be the only way to prevent an automatic no-deal Brexit on March 29.

An extension to Article 50 would have to be approved by a unanimous vote of all of the EU27 governments, whose leaders are meeting in Brussels next week (March 21-22).

It is widely expected that the EU would agree to any Article 50 extension request, although European Council President Donald Tusk warned in a statement this evening that this would not be a foregone conclusion, and that member states would expect fresh plans to be forthcoming from London.

“The EU27 will expect a credible justification for a possible extension and its duration. The smooth functioning of the EU institutions will need to be ensured,” he said.

The UK government has yet to clarify the duration of any Article 50 extension request, or the terms on which an extension might be sought.

Food and farming groups warn of ‘catastrophe’

Following Tuesday’s vote, the four farming unions representing England, Wales, Scotland and Northern Ireland issued a joint statement urging an extension, saying that a no deal Brexit would be “a catastrophe for British farming and food production.”

“This continued uncertainty is having real world consequences on farming businesses – and wider British industry – already,” the union leaders said. 

“It is time for MPs to consider the concessions they will need to accommodate to support a deal that finally brings to an end the enormous and damaging uncertainty that is already undermining our food and farming sectors.”

The UK Food and Drink Federation was even more critical of the Parliamentary delays, calling it “another body blow for the country and the UK’s largest manufacturing sector.”

The FDF statement added: “As we teeter on the brink of the cliff edge, just seventeen days’ away, confidence in our political leaders is almost gone. We can only hope that members of Parliament will vote decisively to take a 29 March ‘no-deal’ exit off the table.”

UK import tariffs to be unveiled

Meanwhile, with the prospect of a no deal Brexit having moved substantially closer, the government has confirmed that the schedule of tariffs to be applied when the UK leaves the EU will be announced tomorrow morning.

Britain is expected to apply zero tariffs on the majority of its imports immediately after Brexit, in order to minimise disruption of trade with the EU. However, UK Environment Secretary Michael Gove stated at the National Farmers Union conference last month that tariffs, or tariff rate quotas, would continue to apply on sensitive agricultural products. This is understood to include beef, pigmeat, poultrymeat, butter and cheese, and possibly other agricultural products as well.

WTO law requires that, in the absence of a free trade agreement, zero tariffs must be applied on a ‘erga omnes’ basis – i.e. applying to all supplier countries, EU and non-EU.

This has complicated the political calculation for the UK, which wants to avoid food price rises as a result of the sudden imposition of tariffs on EU imports, but which equally wants to avoid opening up sensitive agricultural markets to a potentially damaging flood of imports from third countries such as Brazil and Australia.

Britain is also expected to announce that it will unilaterally follow all EU standards on food quality and safety for at least nine months after a no-deal Brexit.

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