Brussels, 02 March 2018

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NOTE
From: General Secretariat of the Council
To: Delegations
Subject: LTTs on the Protocol on Ireland/Northern Ireland / analysis of PM May's speech

Delegations will find attached the LTTs prepared by the Commission on the Protocol on Ireland/Northern
Ireland and the analysis of PM May's speech of 2 March 2018.

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 LTT on the Protocol on Ireland/Northern Ireland

- The Commission was mandated in December 2017, by Heads of State and

government, to faithfully translate the commitments made in the Joint Report
regarding Ireland/Northern Ireland into legal text.

- The Joint Report states that the overarching requirements of avoiding a hard border
on the island of Ireland and protecting the Good Friday Agreement in all its
dimensions "must be upheld in all circumstances, irrespective of the nature of any
future agreement between the European Union and United Kingdom."

- The Protocol on Ireland/Northern Ireland, in the absence of proposals by the UK on

the two other options mentioned in paragraph 49 of the Joint Report, consequently
sets out how these commitments could be made operational by the time of
withdrawal.

- The two other options remain of course available: We stand ready to listen to any
proposals the UK will make for addressing the issues related to the unique
circumstances on the island of Ireland. The text of the Protocol explicitly provides for
the possibility of a solution to be found in the context of the future relationship or as
a specific solution proposed by the UK: should these be agreed, the Protocol will be
superseded.

- The Protocol focuses on what is necessary to achieve the objective of avoiding a hard
border, and of protecting North-South cooperation, the all-Island economy and the
Good Friday Agreement as a whole.

- Full alignment with Union law on goods, including with veterinary and phyto-sanitary
rules is essential to avoid a hard border. In combination with common customs rules
and oversight and enforcement mechanisms, the Protocol proposes to create a
common regulatory area between the Union and Northern Ireland.

- This common regulatory area creates the necessary conditions for economic life
around and across the border, as well as to continue cooperation between North and
South in the areas we have looked at in the mapping exercise.

- By setting out these proposals, the Commission is putting forward a possible solution
to a problem which is created by Brexit, and by the decision of the United Kingdom to
leave the internal market and the Customs Union.

1
 • Why did you not cover paragraph 50 of the Joint Report?

Paragraph 50 deals with the UK-internal process should the backstop be activated. It gives
the Northern Ireland Assembly and the Northern Ireland Executive a say in any further steps
which the UK may wish to take internally. It is not for the Commission to include these
provisions in a text for negotiation between the EU and the UK.

• Why do you undermine the constitutional integrity of the UK?

The Protocol does not undermine the constitutional integrity of the UK. The constitutional
status of Northern Ireland can only be changed through the arrangements set out in the
Good Friday Agreement, based on the principle of consent.

Creating a regulatory regime in Northern Ireland, which might be different from the rest of
the UK does not undermine UK integrity or sovereignty either. For the past 20 years,
devolved administrations have been given the freedom to set their own, potentially different
rules in devolved matters, and Northern Ireland has made use of this possibility. Already
now, there are controls related to plant health for products entering Northern Ireland from
Great Britain.

• Would the common regulatory area approach also be available to the whole of the
UK?

The approach chosen for the common regulatory area is tailored to the unique situation on
the island of Ireland. It is a selective approach, limited to what is necessary to achieve the
objective of avoiding a hard border and protecting North-South cooperation whilst
preserving the integrity of the internal market and the Customs Union.

Such a selective, and lean version of the internal market is not on offer for the UK as a
whole.

2
 Checks on goods to be carried out at the border

There are more than 60 Union legal acts (with customs as competent authority) for the purpose of
protecting health and life of humans, animals and plants, the environment, public policy and security,
other areas (economic and cultural), of which 15 require controls at the border before the goods are
released for free circulation in the internal market. Most importantly: animal health checks, carried
out at Border Inspection Points (BIP).

• Veterinary checks on animal products (BIP)

• High risk food and feed of non-animal origin

• Plant health directive

• Animal by-products not intended for human consumption

• Products of animal origin from China

• Fishery products entering or leaving

• Invasive alien species

• Fresh fruit and vegetables

• Personal consignments of products of animal origin

• Plastic kitchenware from China and Hong Kong

• Unauthorised GM rice from China

• Fukushima

• Gear gum from India

• Introduction of pelts of the animal species

• Okra, curry leaves from India

3
 Scope of the Protocol on Ireland/Northern Ireland

The Protocol on Ireland/Northern Ireland covers the following areas of the Union acquis:

• Free movement of goods

• Northern Ireland to be part of the Union customs territory (but with joint EU-UK controls at
points of entry/exit of Ireland/Northern Ireland), including VAT and excise duties, internal
taxation

• Agriculture and fisheries products: production and marketing rules, sanitary and
phytosanitary rules

• Electricity for the sake of maintaining the Single Electricity Market on the island of Ireland

• Environment related to cross-border movement of goods

• State aid

• Union citizenship rights for Irish citizens in Northern Ireland

• Non-discrimination

• Data protection

• Privileges and immunities

• Automatic updating of relevant Union acquis, supremacy, direct effect

• Commission oversight and CJEU jurisdiction

4
Analysis of PM May 's speech, Mansion House, 2 March

Overall assessment

PM May gave a speech this afternoon (2 March) at Mansion House in London on the UK's future
economic partnership with the EU.

• A change in tone, but not in substance: all red lines confirmed

The speech has been timed to feed into the EU27 preparation of the March European Council in
response to the EU's call on the UK to provide further clarity on its position for the future
relationship.

However, like with PM May's previous speeches, she addressed more her domestic audience, trying
to bridge the gaps between the two poles of the debate on Brexit in the UK.

While the speech was long on aspirations, it was short on workable solutions that would respect the
EU27 principles.

In contrast to previous speeches, the tone was positive and measured, and there was an explicit
recognition of (some of) the negative impacts of the UK leaving the EU. The speech also explicitly
confirmed the existing UK red lines: the UK will leave the Single Market and the Customs Union; it
will no longer recognise the direct jurisdiction of the Court of Justice of the EU, the UK Parliament has
full autonomy over UK laws, free movement of people will end, and the UK wants to run an
independent trade policy.

• A new model based on a double cherry-picking: taking in selective elements of EU

membership and of third country trade agreements

In essence, the PM May proposes a "new model" based on:

• The UK Parliament deciding in full sovereignty which bits of the EU it will continue to accept
("partial EU membership" with same benefits as today but less obligations)
• A mixture of ideas from various third country relationship models.

In talking about "hard facts", less access to the EU compared to today, and the "unresolved tensions"
in the UK's position, she pointed to the need for the UK to make trade-offs. In this context, she used
the language of finding a balance between rights and obligations, but essentially argued that the UK
would decide on that balance by itself for each sector of the single market.

In doing so, she is trying to keep the unity in her cabinet, which could so far only agree on
"divergence from the EU unless the UK does not want to diverge". Her speech was more a domestic
communication battle than proposing real substance and ways forward.

In a tweeted reaction, Michel Barnier stressed the fact that PM May is requesting an FTA in her
speech, having confirmed that the UK leaves the single market and customs union.
 • On Ireland/Northern Ireland, a welcome recognition of the UK's responsibility for the
problem and a reaffirmed commitment to the Good Friday Agreement – but no solution
proposed, and the mutually contradictory UK objectives (no Single Market/no customs
union; no border on the island of Ireland, no border down the Irish Sea) persist

More in detail

On the positive side, the PM's speech:

• Recognised that trade-offs between sovereignty and market access must be made
• Accepted that leaving the EU has a cost for the UK
• Accepted that Brexit is complex
• Accepted that a "no deal" WTO scenario is more costly than other scenario's
• Engaged with the concept of a level playing field and committed to "no race to the bottom"
• Recognized that leaving the single market means losing the passport for financial services
• Recognized for fisheries that "reciprocal access" to waters and open markets for each other's
fisheries products are key

She also confirmed the determination of the UK to agree in the days ahead on a transition period, in
spite of the remaining and substantive divergences at the negotiation table.

She confirmed the December joint EU-UK commitments. Though positive in itself, this expresses the
fact that the UK debate has recently shed doubt on upholding those commitments and that she has
to push back against domestic pressure. In this context, the speech did not come up with any
concrete suggestion on how the solve the issue of avoiding a hard border in Ireland and Northern
Ireland.

The speech is highly ambiguous on the nature of the future economic partnership, and does not
address the question of the unresolved tension in the UK position. PM May used the language of a
Free Trade Agreement several times, listing varying benefits that Canada and South Korea have
obtained.

But she also called for a "new and better model" that does not yet exist, referred to Ukraine, and
built on that by proposing what amounts to "partial membership of the single market" via:

• Voluntary alignment by UK parliament to EU standards

• Mutual recognition of standards and professional qualifications
• "A comprehensive system of mutual recognition for goods"
• Associate membership of some regulatory agencies (abiding by the rules with a financial
contribution), notably chemicals, medicines, and aviation safety, but "of course, Parliament
would remain ultimately sovereign. It could decide not to accept these rules", with
consequences for UK access rights.
• Some unspecified role for the ECJ: though outside of its direct jurisdiction, ECJ jurisprudence
would continue to play a vital part in UK life, and UK courts will look at ECJ rulings (which she
described as a "hard fact"…)
• A new dispute settlement mechanism (completely independent arbitration, so no to ECJ; but
a mechanism which is "common to FTAs")
On services, PM May singled out two in particular: broadcasting, where she wants mutual
recognition of licenses to continue, and financial services where she hints at a "collaborative,
objective framework that is reciprocal, mutually agreed, and permanent".

PM May confirmed that "free movement for people will come to an end", but also suggested that the
UK would focus on letting in highly skilled and seasonal workers.

Finally, the PM confirmed that the UK will leave the Customs Union and have its fully independent
trade policy. But the speech only rehashed the Lancaster House speech of January 2017 with options
for customs cooperation, some more realistic than others, indicating that there seems to have been
zero progress in the UK's thinking on this matter (including on maintaining the idea that UK could
collect EU customs duties).