Issue link: https://maltatoday.uberflip.com/i/1075590
OPINION 26 maltatoday | SUNDAY • 27 JANUARY 2019 'Deal' or 'No deal'? Edward Zammit Lewis PRIME Minister Theresa May is committed to honour the decision of the British people taken in June 2016 to leave the EU. With Brexit scheduled for Friday, 29 March 2019, she battles on in Westminster and in Brussels to secure a deal for an orderly withdrawal of the UK from the EU. What if she fails? After months of complex and politically charged ne- gotiations, on 25 November 2018, the two sides agreed on a Withdrawal Agreement. On 15 January however, MPs rejected the deal by 230 votes, the largest defeat suffered by a sitting UK government in history. After surviving a no- confidence vote the next day, Prime Minister May offered cross-party consultations. The Labour Party, however, refused to play ball. Parliament is due to vote again on 29 January on an amended deal which will focus on a more palat- able "backstop" arrangement and other amendments being submitted by MPs. The outcome is uncertain. With Brexit just over two months away, it is not clear whether there will be a deal, or a "no deal" Brexit, or an exten- sion of the 29 March 2019 deadline, or a second referen- dum. Irrespective of which scenario will materialise, Brexit will cause major disruptions, and Malta needs to be prepared. The Withdrawal Agree- ment provides for a transition period until 31 December 2021, during which current EU laws will continue to apply in the UK. This implies that in the immediate aftermath of Brexit Malta's relationship with the UK will not change. If the Withdrawal Agreement is not ratified by 30 March 2019, there will be no transition pe- riod, and this relationship will change abruptly. Although the overall impact of a "no deal" Brexit can never be fully avoided, the EU has started implementing a Con- tingency Action Plan which is intended to protect the vital interests of EU citizens and businesses and to limit the most damaging effects of a "no deal" scenario. Guided by this Contingency Action Plan and Malta's spe- cific needs and special rela- tionship with the UK, Prime Minister Joseph Muscat on 23 January announced details of Malta's preparations for Brexit. A crucial post-Brexit issue for Malta concerns the free movement of persons. The extent of Brexit's repercussions on citizens' rights depends on whether there will be an orderly withdrawal or a "no deal" scenario. The agreed Political Declaration commits the parties to establish mobil- ity arrangements, including arrangements for temporary entry for business purposes, visa-free travel for short-term visits, and cooperation on tack- ling illegal immigration. The deal also provides that EU citizens and their families will be able to move and work in the UK, and vice versa, until the end of the transition period on 31 December 2021. Those who take up residence in the UK before this date will be allowed to stay, and, if they stay for five years, can remain permanently. However, all these arrange- ments will disappear in a "no deal" scenario. To remedy such a situation the Contingency Action Plan encourages mem- ber states to take a generous and pragmatic approach to the rights of UK citizens provided that this approach is recipro- cated by the UK. Malta is already committed to such an approach. Muscat has emphasised that there is an understanding between both sides that in no way will citizens who live in our two countries be made to go through any negative experi- ences. He announced that UK citizens will be required to apply for a residence permit and will be granted renewable 10-year permits. With regard to tourism, the provision on free-visa travel for short visits should dispel much of the anxiety about the future of the UK tourist market. Malta hosts more than 2.2 million tourists, of whom around 560,000 (24%) come from the UK. However, there could be post-Brexit connectivity prob- lems in a "no deal" scenario. It will be difficult to avoid interruptions in air traffic, even though the Contingency Action Plan foresees measures to ensure basic connectivity. A negative "no deal" scenario could badly impact Malta's UK tourism market through possible depreciations in the pound Sterling, and a possible retraction of the UK economy. The difference between an orderly Brexit and a "no deal" scenario will mostly be felt with regard to trade in goods. The Political Declaration envisages having a trading re- lationship based on a compre- hensive free trade agreement. The aspiration for the free flow of goods is strengthened by a commitment to ensure that no tariffs, fees, charges or quantitative restrictions across all sectors will apply, and by a commitment on customs and regulatory co-operation. However, this will not be the case in a "no deal" scenario. Overnight, all relevant EU legislation on the importation and exportation of goods mov- ing between the EU and third countries will begin to apply to the UK, including the Union's Customs Code. Trade in goods will be far from frictionless. In response Malta's Customs department has been beefed up and is preparing even for a "no deal" scenario, and the Government has created in the 2019 Budget a financial instrument to help local companies whose main business involves trade with the UK. Brexit can provide both challenges and opportunities, in particular with regard to financial services, provided there is a deal. It might have a positive ripple effect on Malta's financial services industry as financial services companies based in the UK might be tempted to relocate to an EU member state. There are other elements to reassure Malta should there be an orderly Brexit scenario. Among them is the commit- ment by the parties to agree on new and specific arrange- ments on digital commerce, which will facilitate electronic commerce, address unjustified barriers to trade by electronic means, and ensure an open, secure and trustworthy on-line environment for businesses and consumers. Malta has embarked on a comprehensive programme to maximise the competitiveness of its digital economy and, in a "no deal" scenario post-Brexit arrangements in this area will be needed. Security issues might not be too much of a concern since the UK and the EU have com- mitted themselves to establish a broad, comprehensive and balanced security partnership. This will include police coop- eration on tackling crime and terrorism, as well as foreign policy and defence coopera- tion. An important point to con- sider is that with Brexit, deal or no deal, Malta will be losing an important ally in the EU Edward Zammit Lewis is a Labour MP With Brexit scheduled for Friday, 29 March 2019, Prime Minister Theresa May battles on in Westminster and in Brussels to secure a deal for an orderly withdrawal of the UK from the EU