Adam Johnson warns industry traders not to “hold their breath” about Malthouse Compromise

Adam Johnson, Director of Tudor International Freight, said the proposed blueprint for the period following UK withdrawal from the bloc, which had emerged in recent days, was unlikely to be adopted for various reasons.

The approach has two sections. Plan A would apply if UK left the EU with a withdrawal agreement, Plan B would take effect if it did so without one.

Johnson explains Plan A would involve the UK ‘buying’ a 12-month extension to the proposed ‘standstill’ transition period, currently due to apply between Brexit day next month and December 2020.

The plan would also replace the Irish backstop, envisaged to take effect if the parties haven’t agreed new long-term trading arrangements by the end of the transition period.

Proposed in the draft withdrawal agreement published last November, the backstop would avoid the return of a hard border through the UK effectively remaining in the EU Customs Union.

Malthouse proposes the UK and EU would apply zero tariffs to imports of each other’s goods, agreed mutual recognition provisions and rules of origin arrangements, all disposable after 10 years, plus technological solutions, to keep the border open.

Johnson said Plan B would also involve the purchase of a transition period lasting to the end of 2021, with citizens’ rights being protected during it, to provide more time for the parties to prepare for a no-deal divorce.

Johnson, however, says there were flaws in the plan and therefore reasons for manufacturing businesses to believe it would not take effect.

When the latter’s free trade deal with Canada was implemented in 2017 it took seven years to finalise, therefore Johnson believes it’s hard to see the UK and EU agreeing future trading arrangements within two years.

Johnson added that the EU had also stated repeatedly that it regarded the current draft withdrawal agreement as finalised and not for re-opening.

He said: “Taking factors such as these into account, our advice to any manufacturing sector EU traders hoping the Malthouse Compromise will prove to be a Brexit breakthrough is ‘don’t hold your breath’.”