Brexit: Status and Outlook
Released: 2020-02-13T00:00:00

Introduction and Issues for Congress

The United Kingdom's (UK's) exit from the European Union (EU), commonly termed Brexit , remains the overwhelmingly predominant issue in UK politics. In a national referendum held in June 2016, 52% of UK voters favored leaving the EU. In March 2017, the UK officially notified the EU of its intention to leave the bloc, and the UK and the EU began negotiations on the terms of the UK's withdrawal. Brexit was originally scheduled to occur on March 29, 2019, but the UK Parliament was unable to agree on a way forward due to divisions over what type of Brexit the UK should pursue and challenges related to the future of the border between Northern Ireland (part of the UK) and the Republic of Ireland (an EU member state). In early 2019, Parliament repeatedly rejected the withdrawal agreement negotiated between then-Prime Minister Theresa May's government and the EU, while also indicating opposition to a no-deal scenario, in which the UK would exit the EU without a negotiated withdrawal agreement. Amid this impasse, in April 2019, EU leaders agreed to grant the UK an extension until October 31, 2019.

On October 17, 2019, negotiators from the EU and the government of UK Prime Minister Boris Johnson concluded a new withdrawal agreement, but Johnson encountered challenges in securing the UK Parliament's approval of the deal. The EU granted the UK another extension until January 31, 2020, while Parliament set an early general election for December 12, 2019. Johnson's Conservative Party scored a decisive victory in the election, winning 365 out of 650 seats in the UK House of Commons. The result provided Prime Minister Johnson with a mandate to proceed with his preferred plans for Brexit. The UK the EU ratified the withdrawal agreement in January 2020, and the UK withdrew from the EU on January 31, 2020. Brexit remains far from over, however, as the UK and the EU enter a process of determining the character of their future relationship.

Many Members of Congress have a broad interest in Brexit. Brexit-related developments are likely to have implications for the global economy, U.S.-UK and U.S.-EU political and economic relations, and transatlantic cooperation on foreign policy and security issues.

In 2018, the Administration formally notified Congress under Trade Promotion Authority (TPA) of its intent to launch U.S.-UK free trade agreement (FTA) negotiations after the UK leaves the EU, and Congress may consider how Brexit developments affect the prospects for an agreement. Whether a potential final agreement would meet congressional expectations or TPA requirements or be concluded as an executive agreement is unclear.Â Congress would likely need to pass legislation to implement the potential FTA before it could enter into force, particularly if it were a comprehensive FTA. U.S. Trade Representative Robert Lighthizer has said that trade negotiations with the UK are a "priority" and will start as soon as the UK is in a position to negotiate, but he cautioned that the negotiations may take time.

Some Members of Congress also have demonstrated an interest in how Brexit might affect Northern Ireland. In April 2019, House Speaker Nancy Pelosi said there would be "no chance whatsoever" for a U.S.-UK trade agreement if Brexit were to weaken the Northern Ireland peace process. On October 22, 2019, the House Subcommittee on Europe, Eurasia, Energy, and the Environment held a hearing titled "Protecting the Good Friday Agreement from Brexit." On December 3, 2020, the House passed H.Res. 585 , reaffirming support for the Good Friday Agreement in light of Brexit and asserting that any future U.S.-UK trade agreement and other U.S.-UK bilateral agreements must include conditions to uphold the peace accord. Other Members of Congress, including Senate Finance Committee Chairman Chuck Grassley, have expressed support for the UK and a bilateral trade agreement post-Brexit and have not conditioned such support on protecting Northern Ireland.

Overview of Developments

The December 2019 election resolved a political deadlock that dominated UK politics for three and a half years. Unable to break the stalemate over Brexit in Parliament, Prime Minister Theresa May resigned as leader of the Conservative Party on June 7, 2019. Boris Johnson became prime minister on July 24, 2019, after winning the resulting Conservative Party leadership contest. Seen as a colorful and polarizing figure who was one of the leading voices in the campaign for the UK to leave the EU, Johnson previously served as UK foreign secretary in the May government from 2016 to 2018 and mayor of London from 2008 to 2016. He inherited a government in which, at the time, the Conservative Party held a one-seat parliamentary majority by virtue of support from the Democratic Unionist Party (DUP), the largest unionist party in Northern Ireland, which strongly supports Northern Ireland's continued integration as part of the UK.

After taking office, Prime Minister Johnson announced that he intended to negotiate a new deal with the EU that discarded the contentious Northern Ireland backstop provision that would have kept the UK in the EU customs union until the two sides agreed on their future trade relationship. The backstop was intended to prevent a hard border with customs and security checks on the island of Ireland and to ensure that Brexit would not compromise the rules of the EU single market (see Appendix A , which reviews the backstop and the rejected withdrawal deal). Although Prime Minister Johnson asserted that he did not desire a hard land border, he strongly opposed the backstop arrangement. Like many Members of Parliament both within and outside the Conservative Party, Johnson viewed the backstop as potentially curbing the UK's sovereignty and limiting its ability to conclude free trade deals. Given initial skepticism about the chances for renegotiating the withdrawal agreement with the EU, the Johnson government began to ramp up preparations for a possible no-deal Brexit.

In September 2019, Parliament passed legislation requiring the government to request a three-month deadline extension (through January 31, 2020) from the EU on October 19, 2019, unless the government had reached an agreement with the EU that Parliament had approved or received Parliament's approval to leave the EU without a withdrawal agreement. The government also lost its parliamentary majority in September 2019, with the defection of one Conservative Member of Parliament (MP) to the Liberal Democrats and the expulsion from the party of 21 Conservative MPs (10 of the 21 were later reinstated) who worked with the opposition parties to limit the government's ability to pursue a no-deal Brexit. Prime Minister Johnson subsequently sought to trigger an early general election, to take place before the October 31 Brexit deadline, but fell short of the needed two-thirds majority in Parliament to support the motion.

The New Withdrawal Agreement

On October 17, 2019, the European Council (the leaders of the EU27 countries) endorsed a new withdrawal agreement that negotiators from the European Commission and the UK government had reached earlier that day. The new agreement replicates most of the main elements from the original agreement reached in November 2018 between the EU and the government of then-Prime Minister Theresa May, including guarantees pertaining to citizens' rights, UK financial commitments to the EU, and a transition period lasting through 2020 (see Appendix A ).

The main difference in the new withdrawal agreement compared to the November 2018 original is in the documents' respective Protocols on Ireland/Northern Ireland (i.e., the backstop). Under the new withdrawal agreement, Northern Ireland would remain legally in the UK customs territory but practically in the EU customs union, which essentially will create a customs border in the Irish Sea. Main elements of the new protocol include the following:

Northern Ireland remains aligned with EU regulatory rules, thereby creating an all-island regulatory zone on the island of Ireland and eliminating the need for regulatory checks on trade in goods between Northern Ireland and Ireland; any physical checks necessary to ensure customs compliance are to be conducted at ports or points of entry away from the Northern Ireland-Ireland border, with no checks or infrastructure at this border; four years after the arrangement comes into force, the Northern Ireland Executive and Assembly must consent to renew it (this vote presumably would take place in late 2024 after the arrangement takes effect at the end of the transition period in December 2020); at the end of the transition period (the end of 2020), the entire UK, including Northern Ireland, will leave the EU customs union and conduct its own national trade policy.

The changes were largely based on a proposal sent by Prime Minister Johnson to then-European Commission President Jean-Claude Juncker and facilitated by Johnson's subsequent discussions with Irish Prime Minister Leo Varadkar. Some analysts suggest the changes also resemble in part the "Northern Ireland-only backstop" initially proposed by the EU in early 2018. In the original agreement, the backstop provision was ultimately extended to the entire UK after Prime Minister May backed the DUP's adamant rejection of a Northern Ireland-only provision, which the DUP contended would create a regulatory barrier in the Irish Sea between Northern Ireland and the rest of the UK and thus would threaten the UK's constitutional integrity. The DUP also opposes the provisions for Northern Ireland in Johnson's renegotiated withdrawal agreement, especially the customs border in the Irish Sea, for similar reasons.

Extension Through January 2020

Prime Minister Johnson hoped to hold a yes or no vote on the renegotiated withdrawal agreement by the extension deadline of October 19, but Parliament decided to delay the vote until it had passed the legislation necessary for implementing Brexit and giving legal effect to the withdrawal agreement and transition period (the Withdrawal Agreement Bill).

Prime Minister Johnson had repeatedly asserted strong opposition to requesting another extension from the EU. As noted above, however, UK law required the government to request another extension from the EU on October 19, 2019, unless the UK and EU had reached a new withdrawal agreement and Parliament had approved that agreement or the UK government received Parliament's approval to leave the EU without a withdrawal agreement.

Johnson accordingly sent the EU an unsigned request for an extension through January 2020 with a cover letter from the UK ambassador to the EU stating that the request was made in order to comply with UK law. Johnson also included a personal letter to then-European Council President Donald Tusk reiterating Johnson's view that a further extension would damage UK and EU interests and the UK-EU relationship. The EU granted the request on October 28, 2019 and extended the Brexit deadline until January 31, 2020.

December 2019 Election

On October 29, 2019, Parliament agreed to set an early general election for December 12, 2019. Some commentators argued that since Prime Minister Johnson won the Conservative leadership contest in July 2019, his highest priority had been to spark a general election that returned him as prime minister. Many observers came to view a general election that produced a clear outcome as the best way to break the political deadlock over Brexit and provide a new mandate for the winner to pursue Brexit plans.

With Brexit the defining issue of the campaign, the Conservative party won a decisive victory, winning 365 out of 650 seats in the House of Commons, an increase of 47 seats compared to the 2017 election (see Table 1 ). The opposition Labour Party, unable to present a clear alternative vision of Brexit to the electorate, and unable to gain sufficient traction with voters on issues beyond Brexit, suffered a substantial defeat with the loss of 59 seats. The Scottish National Party gained 13 seats to hold 48 of the 59 constituencies in Scotland, likely indicating a resurgence of the pro-independence movement in Scotland, where more than 60% of 2016 referendum voters had supported remaining in the EU.

Ratification and Withdrawal

The election outcome put the UK on course to withdraw as a member of the EU by the January 31, 2020, deadline. After the election, the UK government introduced a revised Withdrawal Agreement Bill, which became law on January 23, 2020. The UK government subsequently ratified the withdrawal agreement. The European Parliament voted its consent to the agreement on January 29, 2020, and the Council of the EU completed the EU's ratification the following day. On January 31, 2020, the UK concluded its 47-year membership in the EU.

With the UK's formal exit, an 11-month transition period began, during which the UK is expected to continue following all EU rules and remain a member of the EU single market and customs union. The withdrawal agreement allows for a one- or two-year extension of the transition period, but Prime Minister Johnson has strongly opposed the idea of an extension and inserted language in the Withdrawal Agreement Bill that the transition period will conclude at the end of 2020 without an extension.

The UK intends to begin negotiations on an FTA with the EU, with the aim of concluding an agreement by the end of the transition period. Should the transition period end without a UK-EU FTA or other agreement on the future economic relationship, UK-EU trade and economic relations would be governed by World Trade Organization (WTO) rules (see " Scenarios for UK-EU Trade Relationship Post-Brexit " below). Such an outcome could resemble many aspects of a no-deal Brexit (see "No-Deal Brexit" text box below).

Beyond trade, negotiations on the future UK-EU relationship are expected to seek a comprehensive partnership covering issues including security, foreign policy, energy, and data sharing. Negotiations are also expected to address the numerous other areas related to the broader economic relationship, such as financial services regulation, environmental and social standards, transportation, and aviation. Officials and analysts have expressed doubts that such comprehensive negotiations can be concluded within 11 months. The two sides could temporarily address some areas, such as road transportation and aviation, through side deals granting interim provisions.

The provisions of the revised protocol on Ireland/Northern Ireland are expected to take effect at the end of the transition period. Observers have questioned how exactly the revised protocol will be implemented, including where and how customs checks will take place. Such issues are to be decided by the Joint Committee (of UK and EU officials) during the transition period. Implementation is likely to remain a work in progress. Both parties seek to protect the Good Friday Agreement, while the EU seeks to safeguard its single market and the UK seeks to preserve its constitutional integrity.

Brexit and Trade

Current UK-EU Trade Relationship

Brexit casts great uncertainty over the future UK-EU trade relationship. In 2018, the UK was the second largest economy of the EU28, comprising 15.2% of the bloc's gross domestic product (GDP); Germany comprised 21.0% of the EU's GDP. The EU as a bloc is the UK's largest trading partner; by country, the United States is its largest (see Figure 1 ). While UK trade with other countries, such as China, has risen in recent years, the EU remains the UK's most consequential trading partner. UK-EU trade is highly integrated through supply chains and trade in services, as well as through foreign affiliate activity of EU and UK multinational companies. Within the EU, the largest goods and services trading partners for the UK are Germany, the Netherlands, France, Ireland, and Spain. (See " Implications for U.S.-UK Relations " section for discussion of U.S.-UK trade.)

As a member of the EU, the UK's trade policy was determined by the EU, which has exclusive competence for trade policy for EU member states. UK-EU trading arrangements largely continue to apply during the transition period. Thus, the UK remains in the EU customs union, which makes trade in goods between the UK and other EU members tariff-free and binds the UK to the EU's common external tariff, which the UK and other EU member states apply to goods imported from outside the customs union. During the transition period, the UK also remains a part of the more than 40 preferential trade agreements that the EU has with about 70 countries.

In addition, during the transition period, the UK also remains a part of the EU single market, which provides for the free movement of goods, services, capital, and people. The single market is underpinned by common rules, regulations, and standards that aim to reduce and eliminate nontariff barriers. Such barriers may stem, for instance, from diverging or duplicative production standards, labeling rules, and licensing requirements. Goods move freely in the single market, tariff-free, and generally are not subject to customs procedures.

A product imported into the single market currently faces the common external tariff; once inside the single market, the product does not face additional tariffs regardless of its origin if exported to another EU member state. The single market provides businesses inside the EU with the ability to sell goods and services across the EU more freely. The single market is more developed for goods than for services, but it still offers some significant market access for services. For instance, under the single market, banks and other financial services firms that are established and authorized in one EU member state can apply for the right to provide certain defined services throughout the EU or to open branches in other countries with relatively few additional requirements (known as passporting rights ). Among other things, professionals in an EU member state also can move freely to another EU member state, benefitting from mutual recognition of professional qualifications across EU member states.

Scenarios for UK-EU Trade Relationship Post-Brexit

Following the December 2019 election and the UK's withdrawal from the EU on J anuary 31, 2020, the UK and EU seek to negotiate an FTA to govern their future trade and economic relationship. Whether or not an FTA is concluded, the UK likely will no longer be part of the EU single market and customs union at the end of the ensuing transition period, currently expected to last to the end of 2020.

Free Trade Agreement

The political declaration attached to the withdrawal agreement envisions "an ambitious, broad, deep, and flexible partnership across trade and economic cooperation with a comprehensive and balanced Free Trade Agreement at its core." The Johnson government seeks to negotiate a "best in class" trade deal with the EU. EU FTAs have varied in their scope of trade liberalization and rules-setting.

Draft EU negotiating directives for a trade agreement with the UK include tariff- and quota-free trade on goods and cover a range of sectors, including services trade, digital trade, intellectual property rights (IPR), government procurement, and regulatory cooperation. The EU offer is conditional on commitments to ensure a "level playing field" in relation to state aid, labor and environmental protections, and taxation agreements. The UK, however, may seek to diverge from EU rules and regulations, allowing for more flexibility in its trade negotiations with the United States and other countries.

The Johnson government aims to conclude that deal by the end of the transition period. European Commission President Ursula von der Leyen has said that the timetable was "extremely challenging" and negotiators would do their best in the "very little time" available. EU officials have warned that such a timetable will constrain the scope of the talks.

Many analysts are skeptical that an ambitious trade agreement can be negotiated and approved by the EU and UK governments by the end of the transition period. Some past EU trade agreement negotiations have been lengthy. For instance, EU negotiations with Canada and Japan took, respectively, seven and four years.

Leaving the Customs Union

Advocates of a soft Brexit argued that the UK should maintain close economic and trade ties with the EU by remaining a member of the EU customs union or developing another customs arrangement with the EU. A customs union would afford the UK closer economic ties with the EU but would limit the UK's control over its trade policy. The UK could negotiate with other countries on issues outside of the customs union (e.g., services, government procurement, or IPR), but it would have limited negotiating scope, since alignment with the EU would be a condition of being in the customs union. A customs union also could limit UK trade policy in terms of applying trade remedies or developing country preference programs.

Under the withdrawal agreement, the UK is expected leave the EU customs union at the end of the transition period, and the result of the December 2019 UK general election and recent UK official statements makes a future customs union arrangement between the UK and the EU unlikely. The Johnson government opposes any form of soft Brexit, given that such models would force the UK to abide by EU rules and regulations and limit the UK's ability to conduct an independent trade policy. If the UK is no longer part of the EU customs union, it would regain control over its national trade policy and be free to negotiate its own free trade agreements with other countries, a key rationale for many Brexit supporters.

World Trade Organization Terms

If the post-Brexit transition period ends without the conclusion of a trade deal or customs union arrangement with the EU, the UK would no longer have preferential access to the EU market and WTO terms would govern the UK-EU trade relationship (see "United Kingdom, European Union, and the World Trade Organization" text box). Trade between the UK and the EU would no longer be tariff free, and nontariff barriers such as new customs procedures would arise, adding costs to doing business (see below).

Impact on UK Trade and Economy

The precise impact of Brexit on UK trade with the EU and the UK economy depends to a large degree on the shape of the future UK-EU relationship, and the UK's ability to conclude other new trade deals. In most scenarios, Brexit would raise the costs of UK trade with the EU through higher tariffs and nontariff barriers. Costs may be greater in the short term, until commercial disruptions are smoothed out. Costs may be mitigated to some degree if the two sides reach a free trade agreement, although this may take years. New trade deals signed by the UK with countries outside of the EU could boost economic growth, but they may not be by enough to offset the loss of the UK's membership in the EU single market. Some of the higher costs of commerce may be passed to consumers.

As noted earlier, WTO terms would govern UK-EU trade if the transition period ends without a trade deal. EU average most-favored-nation (MFN) tariff rates are low (around 5%) but significantly higher for certain products. Because of the tight linkages in UK-EU trade, higher tariffs would raise the costs of trade not only for final goods but also for intermediate goods traded between UK and EU member states as part of production and supply chains. UK sectors that may be particularly affected by increased tariffs include agriculture and manufacturing sectors (processed food products, apparel, leather products, and motor vehicles). UK importers may face higher costs, as the UK may impose its own MFN-level tariffs on imports from the EU.

Should the UK and EU negotiate a preferential trading arrangement, it likely would not lead to an elimination of all tariffs. In addition, exporters on both sides would have to certify the origin of their traded goods in order to satisfy "rules of origin" to receive the preferential market access.

Brexit makes the UK a "third country" from the EU's perspective, and the UK's regulatory frameworksâalthough currently aligned with those of the EUâwill no longer be recognized by the EU after the transition period. The EU will have to make determinations on whether measures of the UK comply with the corresponding EU regulatory framework. Some observers question the extent to which the Johnson government is willing to maintain regulatory alignment with the EU, and this issue is expected to pose a key challenge in negotiations with the EU on future trade relations.

New administrative and customs procedures could apply to UK-EU trade. UK trade with the EU could face new licensing requirements, testing requirements, customs controls, and marketing authorizations. For instance, by some estimates, delays caused by customs checks of trucks from the EU could cause a 17-mile queue at the Port of Dover. Â Such potential backlogs have raised concerns about spoiling or shortage of foods and medicines and complications for industries that depend on "just-in-time" productions such as autos.

Many businesses in the UK have been preparing for Brexit through such measures as stockpiling inventories, adjusting contract terms, restructuring operations, and shifting assets abroad. Some companies, particularly smaller companies, may not be as equipped as their larger competitors to deal with the transition. UK businesses also remain concerned about the potential effects of a no-deal scenario should the UK and EU fail to reach agreement on a future trade relationship by the end of 2020 without an extension of the transition period.

Certain sectors of the UK economy may be particularly affected by Brexit. Examples include

Autos. The EU is the UK's largest trading partner for motor vehicles, accounting for 43% of UK exports and 83% of UK imports in these products in 2018. The EU also comprises the majority of UK trade in auto component parts and accessories. The UK automobile sector thrives on the sort of "just-in-time production" that depends on a free flow of trade in component parts. If a no-deal scenario unfolded at the end of the transition period, UK auto exports to the EU would face a 10% tariff. Autos are a highly regulated industry, and UK and EU exporters would face new checks for safety and quality standards to obtain approval in the other's market. Chemicals. About 60% of UK chemicals exports are to the EU, and about 73% of UK chemicals imports are from the EU. Chemicals trade in the single market is governed by a European Economic Area (EEA) regulatory framework known as REACH (Registration, Evaluation, Authorisation and Restriction of Chemicals Regulation). UK chemicals exports to the EU could face tariffs of up to 6.5% in the absence of a preferential trade arrangement with the EU. Without a deal, UK chemicals registrations under REACH would become void with Brexit and UK companies would have to transfer their registrations to an EEA-based subsidiary or representative to maintain market access. The UK also would need to set up its own regulatory regime for chemicals. Financial S ervices. London is the largest financial center in Europe presently. Financial services and insurance make up about one-third of UK services exports to the EU. The EU has made clear that the UK will no longer be able to benefit from financial passporting after the transition period. Absent alternative arrangements, such as an equivalence decision by the EU, continued trade in financial services may require UK and EU businesses to restructure their operations. Even with a positive determination, the EU could revoke equivalence at any time. U.S. and other banks are concerned about losing the ability to use their UK bases to access EU markets without establishing legally separate subsidiaries. Some financial institutions, such as Goldman Sachs, J.P. Morgan, Morgan Stanley, and Citigroup, have shifted (or plan to shift) some jobs and assets from London to other European cities, such as Amsterdam, Dublin, Frankfurt, and Paris. By one estimate, financial companies have already committed to moving over Â£1 trillion in assets from the UK to other parts of the EU as part of Brexit contingency planning. Business S ervices. The EU is the largest export market for a range of UK business services (legal, accounting, advertising, research and development, architectural, engineering, and other professional and technical services)âaccounting for 39% of these exports from the UK. Determinations of professional certification qualifications may need to be made. Data F lows. Cross-border data flows underpin much of UK-EU services trade. Although UK regulatory frameworks are currently aligned with those of the EU on data protection and data flows, after the transition period, the EU will have to make determinations on UK compliance with the EU regulatory frameworks, such regarding whether UK standards for protecting personal data meet EU standards under the EU General Data Protection Regulation. The potential blockage of data transfers could have serious implications for UK companies seeking to transfer personal data out of the EUâincluding not only technology companies but also health care companies and other service providers.

Global Britain

Since the referendum, the UK government has championed a notion of "Global Britain," previously under the May government and now under the Johnson government. The idea of Global Britain promotes the UK's renewed engagement in a wide range of foreign policy and international issues, with trade a significant aspect of the broader concept; Global Britain envisages, among other things, an outward looking UK strengthening trade linkages around the world.

For Brexit supporters, a major rationale was for the UK to regain a fully independent trade policy, which would allow the UK to tailor agreements to its specific interests. At the same time, the UK will have less leverage in trade negotiations compared to when negotiating as a part of the EU, given the UK's economic size relative to the EU bloc.

Seeking continuity in its trade ties after Brexit, the UK is acting on a number of fronts. Among other things, the UK is

N egotiating its own WTO schedule of commitments on goods, services, and agriculture. A s chedule of commitments refers to the commitments that WTO members make to all other WTO members on the nondiscriminatory market access (i.e., "most-favored-nation," or MFN, access) they will provide for trade in goods, services, agriculture, and government procurement. Although the UK is a WTO member in its own right, it does not have an independent schedule of commitments, as the EU schedule applies to all EU members, including the UK. Outside of the EU, the UK will need to have its own schedule on the market access commitments to other WTO members. In some cases, the UK may be able to replicate the EU schedule; other cases may be more complex. For example, developing the UK's agricultural schedule involves reallocation of EU and UK tariff-rate quotas such as beef, poultry, dairy, cereals, rice, sugar, fruits, and other vegetables. The EU and UK have engaged in bilateral discussions on apportioning the tariff-rate quotas; some WTO members, including the United States, have raised concerns that the UK-EU approach could reduce the level and quality of their access to UK and EU markets. During the transition period, the UK continues to apply to the EU schedule. In other developments, parties to the WTO Government Procurement Agreement (GPA) have agreed to the UK's continued participation in the GPA in principle; the UK has delayed submitting its instrument of accession for the GPA. Working to replicate existing EU deals with non-EU countries. The UK was a part of over 40 trade agreements with around 70 countries by virtue of its membership in the EU. Unless it makes other arrangements, the UK will lose its preferential access to these markets after the transition period. To avoid this outcome, the UK has been working to replicate the EU's trade agreements with other countries. According to the UK government, UK trade with countries with which the UK seeks to conclude continuity agreements accounted for 11.1% of total UK trade in goods and services in 2018. As of December 4, 2019, the UK has signed 20 "continuity" deals, accounting for about 8.3% of total UK trade; these deals cover around 50 countries or territories, including Switzerland, Liechtenstein, Iceland, Norway, and South Korea. Negotiating sector-specific regulatory agreements. The UK is negotiating mutual recognition agreements (MRAs) to assure continued acceptance by UK and partner country regulators of each other's product testing and inspections in certain sectors. The UK government has signed MRAs with Australia, New Zealand, and the United States. Discussions between the UK and Japan on an MRA are ongoing. Taking steps to pursue a range of new trade deals once outside of the EU. In addition to the United States, potential countries that the UK has identified as of interest for negotiating new trade deals include Australia, China, India, and New Zealand. A new priority for the UK is signing an FTA with Japan, with whom the EU already has an FTA. Rather than "rolling over" the EU-Japan FTA, Japan seeks to negotiate new terms with the UK. Japan is one of the UK's largest investors, with major carmakers such as Nissan, Toyota, and Honda operating auto-manufacturing factories in the UK.

Brexit and Northern Ireland59

In the 2016 Brexit referendum, Northern Ireland voted 56% to 44% against leaving the EU. Brexit poses considerable challenges for Northern Ireland, with potential implications for its peace process, economy, and, in the longer term, constitutional status in the UK. Following Brexit, Northern Ireland is the only part of the UK to share a land border with an EU member state (see Figure 2 ). Preventing a hard border on the island of Ireland (with customs checks and physical infrastructure) was a key goal, and a major stumbling block, in negotiating and finalizing the UK's withdrawal agreement with the EU.

Northern Ireland's history of political violence complicated arrangements for the post-Brexit border between Northern Ireland and the Republic of Ireland. Roughly 3,500 people died during "the Troubles," Northern Ireland's 30-year sectarian conflict (1969 to 1999) between unionists (Protestants who largely define themselves as British and support remaining part of the UK) and nationalists (Catholics who consider themselves Irish and may desire a united Ireland). At the time of the 1998 peace accord in Northern Ireland (known as the Good Friday Agreement or the Belfast Agreement), the EU membership of both the UK and the Republic of Ireland was regarded as essential to underpinning the political settlement by providing a common European identity for both unionists and nationalists in Northern Ireland. EU law also provided a supporting framework for guaranteeing the human rights, equality, and nondiscrimination provisions of the peace accord.

Since 1998, as security checkpoints were dismantled in accordance with the peace agreement, and because both the UK and Ireland belonged to the EU's single market and customs union, the circuitous 300-mile land border between Northern Ireland and Ireland effectively disappeared. The border's disappearance served as an important political and psychological symbol on both sides of the sectarian divide and helped produce a dynamic cross-border economy. Many experts deem an open, invisible border as crucial to a still-fragile peace process, in which deep divisions and a lack of trust persist. Some analysts suggest that differences over Brexit also heightened tensions between the unionist and nationalist communities' respective political parties and stymied the reestablishment of the regional (or devolved) government for close to three years following the last legislative assembly elections in March 2017. (For more background, see Appendix B .)

Possible Implications of Brexit

The Irish Border and the Peace Process

Many on both sides of Northern Ireland's sectarian divide expressed deep concern that Brexit could lead to a return of a hard border with the Republic of Ireland and destabilize the peace process. Police officials warned that a hard border post-Brexit could pose considerable security risks. During the Troubles, the border regions were considered "bandit country," with smugglers and gunrunners. Checkpoints were frequently the site of conflict, especially between British soldiers and militant nationalist groups (or republicans ), such as the Irish Republican Army (IRA), that sought to achieve a united Ireland through force. Militant unionist groups (or loyalists ) were also active during the Troubles.

Security assessments suggested that if border or customs posts were reinstated, violent dissident groups opposed to the peace process would view such infrastructure as targets, endangering the lives of police and customs officers and threatening the security and stability of the border regions. Some experts feared that any such violence could lead to a remilitarization of the border and that the violence could spread beyond the border regions. Many observers note a slight uptick in dissident republican activity over the last year, especially in border regions, as groups such as the New IRA and the Continuity IRA sought to exploit the stalemates over both Northern Ireland's devolved government and Brexit. Violence has been directed in particular at police officers (long regarded by dissident republicans as legitimate targets), and several failed bombings were attempted in border areas (especially Londonderry/Derry, a key flashpoint during the Troubles).

Many in Northern Ireland and Ireland also were eager to maintain an open border to ensure "frictionless" trade, safeguard the north-south economy, and protect community relations. Furthering Northern Ireland's economic development and prosperity is regarded as crucial to helping ensure a lasting peace in Northern Ireland. Establishing customs checkpoints would pose logistical difficulties, and many people in the border communities worried that any hardening of the border could affect daily travel across the border to work, shop, or visit family and friends. Estimates suggest there are roughly 208 public road crossings along the border and nearly 300 crossing points when private roads and other unmarked access points are included. Some roads cross the border multiple times, and the border splits other roads down the center. Only a fraction of crossing points were open during the Troubles, and hour-long delays due to security measures and bureaucratic hurdles were common.

Since the Brexit referendum in 2016, UK, Irish, and EU leaders asserted repeatedly that they did not want a hard border and worked to prevent such a possibility. In the initial December 2017 UK-EU agreement setting out the main principles for the withdrawal negotiations, the UK pledged to uphold the Good Friday Agreement, avoid a hard border (including customs controls and any physical infrastructure), and protect north-south cooperation on the island of Ireland. Analysts contend, however, that reaching agreement on a mechanism to ensure an open border was complicated by the UK government's pursuit of a largely hard Brexit, which would keep the UK outside of the EU's single market and customs union. As noted previously, the backstop emerged as the primary sticking point in gaining the UK Parliament's approval of former Prime Minister May's draft withdrawal agreement in the first half of 2019. Prime Minister Johnson opposed the backstop but also asserted a desire to avoid a hard border on the island of Ireland.

Some advocates of a hard Brexit contended that security concerns about the border were exaggerated and that the border issue was being exploited by the EU and those in the UK who would have preferred a soft Brexit, in which the UK remained inside the EU single market and/or customs union. The Good Friday Agreement commits the UK to normalizing security arrangements, including the removal of security installations "consistent with the level of threat," but does not explicitly require an open border. The Irish government and many in Northern Irelandâas well as most UK government officialsâargued that an open border had become intrinsic to peace and to ensuring the fulfillment of provisions in the Good Friday Agreement that call for north-south cooperation on cross-border issues (including transport, agriculture, and the environment). Some advocates of a hard Brexit, frustrated by the Irish border question, ruminated on whether the Good Friday Agreement had outlived its usefulness, especially in light of the stalemate in reestablishing Northern Ireland's devolved government. Both the May and Johnson governments continued to assert that the UK remains committed to upholding the 1998 accord.

In light of Johnson's victory with a decisive Conservative majority in the December 2019 elections and Parliament's subsequent approval of the renegotiated withdrawal agreement, concerns have largely receded about a hard border developing on the island of Ireland. Uncertainty persists about what the overall UK-EU future relationshipâincluding with respect to tradeâwill look like post-Brexit and whether the two sides can reach an agreement by the end of the transition period. However, unlike with the previous backstop arrangement, the provisions related to the Northern Ireland border are not expected to change pending the outcome of the UK-EU negotiations on its future relationship. A former UK official notes that the Johnson government "claims they have got rid of the backstop but in fact, have transformed it from a fallback into the definitive future arrangement for Northern Ireland" that would effectively leave Northern Ireland in the EU's single market and customs union. Prolongation of the post-Brexit arrangements for Northern Ireland will be subject to the consent of the Northern Ireland Assembly in 2024 but is not contingent upon the conclusion of a broader UK-EU agreement by the end of the transition period in December 2020.

At the same time, many of the details related to how the post-Brexit regulatory and customs arrangements for Northern Ireland will work in practice must still be fleshed out by UK and EU negotiators during the transition period, and Brexit has further exacerbated political and societal divisions in Northern Ireland. As noted previously, the DUP opposed the Northern Ireland provisions in the renegotiated withdrawal agreement because it viewed them as treating Northern Ireland differently from the rest of the UK and undermining the union. In light of the Conservative Party's large majority following the December 2019 elections, however, the DUP lost political influence in the UK Parliament and was unable to block approval of the renegotiated withdrawal agreement.

Many in the DUP and other unionists feel abandoned by Prime Minister Johnson's renegotiated withdrawal agreement. Amid ongoing demographic, societal, and economic changes in Northern Ireland that predate Brexit, experts note that some in the unionist community perceive a loss in unionist traditions and dominance in Northern Ireland. Some analysts suggest that the new post-Brexit border and customs arrangements for Northern Ireland could enhance this existing sense of unionist disenfranchisement, especially if Northern Ireland is drawn closer to the Republic of Ireland's economic orbit in practice post-Brexit. Such unionist unease in turn could intensify frictions and political instability in Northern Ireland; observers also worry that heightened unionist frustration could prompt a resurgence in loyalist violence post-Brexit.

Some experts have expressed concerns about the potential for a hard border on the island of Ireland in the longer term should Northern Ireland's Assembly fail to renew the post-Brexit arrangements that would keep Northern Ireland aligned with EU regulatory and customs rules. Although many view this scenario as unlikely given that pro-EU parties hold a majority in the Assembly (and this appears unlikely to change in the near future), in such an event, the UK and the EU would need to agree on a new set of provisions to keep the border open. The DUP also argues that by allowing the Assembly to give consent to the border arrangements for an additional four years through a simple majority, the renegotiated withdrawal agreement undermines the Good Friday Agreement, which requires major Assembly decisions to receive cross-community support (i.e., a majority on each side of the unionist-nationalist divide).

Some commentators believe the 2019 UK election resultsâin which the DUP lost two seats in the UK Parliament, unionists no longer hold a majority of Northern Ireland's 18 seats in Parliament, and DUP votes were no longer crucial to Prime Minister Johnson's ability to secure approval of the withdrawal agreementâhelped improve the prospects for reestablishing Northern Ireland's devolved government. A functioning devolved government appeared to offer the DUP the best opportunity to ensure it has a voice in implementing the new border and customs arrangements for Northern Ireland and in the upcoming negotiations on the future political and trade relationship between the UK and the EU. On December 16, 2019, the UK and Irish governments launched a new round of talks with the main Northern Ireland political parties aimed at reestablishing the devolved government.

On January 10, 2020, the DUP and Sinn Fein agreed to a deal to restore the devolved government put forward by the UK and Irish governments. The new Assembly convened the following day. The power-sharing deal addresses a number of key issues, including use of the Irish language, and promises additional UK financial support for Northern Ireland. The deal also calls for Northern Ireland's Executive, led by DUP First Minister Arlene Foster and Sinn Fein Deputy First Minister Michelle O'Neill, to establish a Brexit subcommittee to assess Brexit's implications for Northern Ireland. In addition, it reaffirms the UK government's commitment to including Northern Ireland Executive representatives in upcoming UK-EU Joint Committee meetings that will seek to implement the agreed arrangements for Northern Ireland post-Brexit.

The Economy

Many experts contend that Brexit could have serious negative economic consequences for Northern Ireland. According to a UK parliamentary report, Northern Ireland depends more on the EU market (and especially that of Ireland) for its exports than does the rest of the UK. In 2017, approximately 57% of Northern Ireland's exports went to the EU, including 38% to Ireland, which was Northern Ireland's top single export and import partner. Trade with Ireland is especially important for small- and medium-sized companies in Northern Ireland. Although sales in 2017 to other parts of the UK (Â£11.3 billion) surpassed the value of all Northern Ireland exports (Â£10.1 billion) and were nearly three times the value of exports to Ireland (Â£3.9 billion), small- and medium-sized companies in Northern Ireland were responsible for the vast majority of Northern Ireland exports to Ireland. Large- and medium-sized Northern Ireland firms dominated in sales to the rest of the UK. UK and DUP leaders maintain that given the value of exports, however, the rest of the UK is overall more important economically to Northern Ireland than the EU.

Significant concerns existed in particular that a no-deal Brexit without a UK-EU withdrawal agreement in place would have jeopardized integrated labor markets and industries that operate on an all-island basis. Northern Ireland's agri-food sector, for example, would have faced serious challenges from a no-deal scenario. Food and live animals make up roughly 32% of Northern Ireland's exports to Ireland; a no-deal Brexit could effectively have ended this trade due to the need for EU sanitary and phytosanitary checks at specified border inspection posts in Ireland, which would significantly extend travel times and increase costs. The Ulster Farmers' Unionâan industry association of farmers in Northern Irelandâasserted that a no-deal Brexit would be "catastrophic" for Northern Ireland farmers. Many manufacturers in Northern Ireland and Ireland also depend on integrated supply chains north and south of the border; raw materials that go into making products such as milk, cheese, butter, and alcoholic drinks often cross the border between Northern Ireland and Ireland several times for processing and packaging.

Although many in Northern Ireland are relieved that a no-deal Brexit was averted, the DUP and others in Northern Ireland contend that the renegotiated withdrawal agreement could be detrimental to Northern Ireland's economy. A UK government risk assessment released in October 2019 acknowledged that the lack of clarity about how the customs arrangements for Northern Ireland will operate in practice and possible regulatory divergence between Northern Ireland and the rest of the UK could lead to reduced business investment, consumer spending, and trade in Northern Ireland. The DUP highlights the potential negative profit implications for Northern Ireland businesses engaged in trade with the rest of the UK. Under the deal, Northern Ireland firms that export goods to elsewhere in the UK would be required under EU customs rules to make exit declarations, which would likely increase costs and administrative burdens. Concerns also exist that should the UK and the EU fail to reach agreement on a future new trade relationship by the end of the transition period, there could be significant customs and regulatory divergence between the UK and the EU, which in turn could mean more checks and controls on goods traded between Northern Ireland and the rest of the UK.

Brexit could have other economic ramifications for Northern Ireland, as well. Some experts argue that access to the EU single market was one reason for Northern Ireland's success in attracting foreign direct investment since the end of the Troubles, and they express concern that Brexit could deter future investment. Post-Brexit, Northern Ireland also stands to lose EU regional funding (roughly $1.3 billion between 2014 and 2020) and agricultural aid (direct EU farm subsidies to Northern Ireland are nearly $375 million annually).

UK officials maintain that the government is determined to safeguard Northern Ireland's interests and "make a success of Brexit" for Northern Ireland. They insist that Brexit offers new economic opportunities for Northern Ireland outside the EU. Supporters of Prime Minister Johnson's renegotiated withdrawal agreement argue that it will help improve Northern Ireland's economic prospects. Northern Ireland will remain part of the UK customs union and thus be able to participate in future UK trade deals but also will retain privileged access to the EU single market, which may make it an even more attractive destination for foreign direct investment.

Constitutional Status and Border Poll Prospects

Brexit has revived questions about Northern Ireland's constitutional status. Sinn Feinâthe leading nationalist party in Northern Irelandâargues that "Brexit changes everything" and could generate greater support for a united Ireland. Since the 2016 Brexit referendum, Sinn Fein has repeatedly called for a border poll (a referendum on whether Northern Ireland should remain part of the UK or join the Republic of Ireland) in the hopes of realizing its long-term goal of Irish unification. The Good Friday Agreement provides for the possibility of a border poll in Northern Ireland, in line with the consent principle , which stipulates that any change in Northern Ireland's status can come about only with the consent of the majority of its people. The December 2019 election, in which unionist parties lost seats in the UK parliament while nationalist and cross-community parties gained seats, also has prompted increased discussion and scrutiny of Northern Ireland's constitutional status and whether a united Ireland may become a future reality.

Any decision to hold a border poll in Northern Ireland on its constitutional status rests with the UK Secretary of State for Northern Ireland, who in accordance with the Good Friday Agreement must call a border poll if it "appears likely" that "a majority of those voting would express a wish that Northern Ireland should cease to be part of the United Kingdom and form part of a united Ireland." At present, and despite the 2019 election results in Northern Ireland, experts believe the conditions required to hold a border poll on Northern Ireland's constitutional status do not exist. Most opinion polls indicate that a majority of people in Northern Ireland continue to support the region's position as part of the UK. Some analysts attribute the UK parliamentary election results in Northern Ireland to frustration with the DUP and Sinn Fein (which also saw its share of the vote decline amid gains for a more moderate nationalist party and a cross-community party), rather than as an indication of support for a united Ireland.

At the same time, some surveys suggest that views on Northern Ireland's status may be shifting and that a "damaging Brexit" in particular could increase support for a united Ireland. A September 2019 poll found that 46% of those polled in Northern Ireland favored unification with Ireland, versus 45% who preferred remaining part of the UK. Analysts note that Northern Ireland's changing demographics (in which the Catholic, largely Irish-identifying population is growing while the Protestant, British-identifying population is declining)âcombined with the post-Brexit arrangements for Northern Ireland that could lead to enhanced economic ties with the Republic of Irelandâcould boost support for a united Ireland in the longer term.

Irish unification also would be subject to Ireland's consent and approval. Some question the current extent of public and political support in the Republic of Ireland for unification, given its potential economic costs and concerns that unification could spark renewed loyalist violence in Northern Ireland. According to Irish Prime Minister Varadkar, a border poll in Northern Ireland in the near future would be divisive and disruptive amid an already contentious Brexit process. In Ireland's February 8, 2020, parliamentary election, however, the nationalist Sinn Fein party (which has a political presence in both Northern Ireland and the Republic of Ireland) secured the largest percentage of the vote for the first time in Ireland's history, surpassing both Varadkar's Fine Gael party and the main opposition party, Fianna Fail. Sinn Fein's election platform included a pledge to begin examining and preparing for Irish unification, but housing, health care, and economic policy issues dominated the Irish election. Sinn Fein appeared to benefit mostly from the Irish electorate's desire for domestic political change rather than from the party's stance on a united Ireland. Nevertheless, some commentators suggest that Sinn Fein's electoral success in the Republic of Ireland could add momentum to calls for a united Ireland.

Implications for U.S.-UK Relations

Many U.S. officials and Members of Congress view the UK as the United States' closest and most reliable ally. This perception stems from a combination of factors, including a sense of shared history, values, and culture; a large and mutually beneficial economic relationship; and extensive cooperation on foreign policy and security issues. The UK and the United States have a particularly close defense relationship and a unique intelligence-sharing partnership.

Since 2016, President Trump has been outspoken in repeatedly expressing his support for Brexit. President Trump counts leading Brexit supporters, including Boris Johnson and Brexit Party leader Nigel Farage, among his personal friends. He publicly criticized Theresa May's handling of Brexit and stated during the most recent Conservative leadership race that Boris Johnson would "make a great prime minister." President Trump repeated his support for Johnson prior to the December 2019 UK election and celebrated Johnson's win, writing on social media that the election outcome would allow the United States and UK to reach a new trade deal.

Senior Administration officials have reinforced the President's pro-Brexit messages. During an August 2019 visit to London, then-U.S. National Security Adviser John Bolton stated that the Administration would "enthusiastically" support a no-deal Brexit; he asserted that a U.S.-UK trade deal could be negotiated quickly and possibly be concluded sector-by-sector to speed up the process. In a September 2019 visit to Ireland, Vice President Mike Pence reiterated the Administration's support for the UK leaving the EU and urged Ireland and the EU to "work to reach an agreement that respects the United Kingdom's sovereignty." Vice President Pence expressed his hope that an agreement would "also provide for an orderly Brexit."

Foreign Policy and Security Issues

President Trump has expressed a largely positive view of the UK and made his first official state visit there in June 2019 (he also visited in July 2018), but there have been some tensions over substantive policy differences between the UK government and the U.S. Administration and backlash from the UK side over various statements made by the President. Under President Trump and Prime Minister May, the United States and the UK proceeded from relatively compatible starting points and maintained close cooperation on issues such as counterterrorism, combating the Islamic State, and seeking to end the conflict in Syria.

In contrast, the UK government has defended both the Joint Comprehensive Plan of Action agreement (known as the Iran nuclear deal) and the Paris Agreement (known as the Paris climate agreement) and disagreed with the Trump Administration's decisions to withdraw the United States from those agreements. Despite the close relationship between President Trump and Prime Minister Johnson, there are no clear indications that a post-Brexit UK might reverse course on contentious areas such as the Iran nuclear deal or climate change to align with the views of the Trump Administration. Additionally, in January 2020, the UK government announced it would allow Chinese telecom equipment company Huawei to build parts of the UK's 5G cellular network, despite U.S. calls to boycott Huawei due to security risks. At the same time, Prime Minister Johnson has expressed support for the Middle East Peace Plan announced by the Trump Administration in January 2020, reversing May's earlier criticism of the Administration's recognition of Jerusalem as Israel's capital.

Brexit has forged opposing viewpoints about the potential trajectory of the UK's international influence in the coming years. The Conservative Party-led government has outlined a post-Brexit vision of a Global Britain that benefits from increased economic dynamism; remains heavily engaged internationally in terms of trade, political, and security issues; maintains close foreign and security policy cooperation with both the United States and the EU; and retains "all the capabilities of a global power." Other observers contend that Brexit would reduce the UK's ability to influence world events and that, without the ability to help shape EU foreign policy, the UK will have less influence in the rest of the world. Developments in relation to the UK's global role and influence are likely to have consequences for perceptions of the UK as either an effective or a diminished partner for the United States.

Parallel debates apply to a consideration of security and defense matters. Analysts believe that close U.S.-UK cooperation will continue for the foreseeable future in areas such as counterterrorism, intelligence, and the future of the NATO, as well as numerous global and regional security challenges. NATO remains the preeminent transatlantic security institution, and in the context of Brexit, UK leaders have emphasized their continued commitment to be a leading country in NATO. Analysts also expect the UK to remain a key U.S. partner in operations to combat the remaining elements of the Islamic State in Iraq and Syria.

In 2018, the UK had the world's sixth-largest military expenditure (behind the United States, China, Saudi Arabia, Russia, and India), spending approximately $56.1 billion. The UK is also one of seven NATO countries to meet the alliance's defense spending benchmark of 2% of GDP (according to NATO, the UK's defense spending was 2.14% of GDP in 2018 and was expected to be 2.13% of GDP in 2019).

Nevertheless, Brexit has added to questions about the UK's ability to remain a leading military power and an effective U.S. security partner. U.S. officials and other leading experts have expressed concerns about reductions in the size and capabilities of the British military in recent years. Negative economic effects from Brexit could exacerbate concerns about the UK's ability to maintain defense spending, investment, and capabilities.

Brexit also could have a substantial impact on U.S. strategic interests in relation to Europe more broadly and with respect to possible implications for future developments in the EU. For example, Brexit could allow the EU to move ahead more easily with developing shared capabilities and undertaking military integration projects under the EU Common Security and Defense Policy (CSDP), efforts that generate a mixture of praise and criticism from the United States. In the past, the UK has irritated some of its EU partners by essentially vetoing initiatives to develop a stronger CSDP, arguing that such efforts duplicate and compete with NATO. With the UK commonly regarded as the strongest U.S. partner in the EU, a partner that commonly shares U.S. views, and an influential voice in initiatives to develop EU foreign and defense policies, analysts have suggested that the UK's withdrawal could increase divergence between the EU and the United States on certain security and defense issues.

More broadly, U.S. officials have long urged the EU to move beyond what is often perceived as a predominantly inward focus on treaties and institutions, in order to concentrate more effort and resources toward addressing a wide range of shared external challenges. Some observers note that Brexit has pushed Europe back toward another prolonged bout of internal preoccupation, consuming a considerable degree of UK and EU time and personnel resources in the process.

Trade and Economic Relations and Prospective U.S.-UK FTA

The UK is a major U.S. trade and economic partner (see Figure 3 ). The UK is also a leading source of and destination for foreign direct investment, and affiliate activity is significant. Presently, WTO terms govern U.S.-UK trade, and these terms continue to apply after Brexit unless the two sides secure more preferential access to each other's markets through the conclusion of a bilateral FTA. The UK can negotiate, but not implement, trade agreements with other countries during the transition period.

In July 2017, the United States and the UK established a bilateral working group to lay the groundwork for a potential future bilateral FTA post-Brexit and to ensure commercial continuity in U.S.-UK ties. The bilateral working group has met regularly to discuss a range of issues, including industrial and agricultural goods, services, investment, digital trade, intellectual property rights, regulatory issues, and small- and medium-sized enterprises.

On October 16, 2018, the Trump Administration formally notified Congress under Trade Promotion Authority (TPA) of its intent to enter into negotiations with the UK on a bilateral trade agreement. U.S. Trade Representative Robert Lighthizer has said that trade negotiations with the UK are a "priority" and will start as soon as the UK is in a position to negotiate, but he cautioned that the negotiations may take time. Whether the Administration ultimately takes a comprehensive approach to the negotiations, as with the U.S.-Mexico-Canada Trade Agreement, or a more limited approach, as with the U.S.-Japan trade deal, remains to be seen.

In the meantime, the United States and the UK have signed MRAs covering telecommunications equipment, electromagnetic compatibility for information and communications technology products, pharmaceutical good manufacturing practice inspections, and marine equipment to ensure continuity of trade in these areas. In addition, the two sides have signed agreements on insurance and derivatives trading and clearing, as well, to ensure regulatory certainty.

Some analysts question the priority that will be afforded to U.S.-UK trade agreement negotiations, in light of the UK-EU and U.S.-EU trade agreement negotiations. Some analysts also question the sequencing, to the extent that the United States may face difficulty negotiating meaningfully with the UK without knowing what the final UK-EU relationship looks like; others counter that the UK-EU relationship is becoming clearer. Some experts view a U.S.-UK FTA as more feasible than a U.S.-EU FTA, given the U.S.-UK "special relationship" and historical similarities in trade approaches. The UK has been a leading voice on trade liberalization in the EU. Others have expressed doubts about the likelihood of a "quick win" for either side, particularly as negotiations would need to overcome a number of obstacles and concerns.

Many U.S. and UK businesses and other groups see an FTA as an opportunity to enhance market access and align UK regulations more closely with those of the United States than the EU regulatory framework, aspects of which raise concerns for U.S. business interests. Other stakeholder groups oppose what they view as efforts to weaken UK regulations. For instance, some in UK civil society have expressed concerns about the implications of U.S. demands for greater access to the UK market, and potential changes to UK food safety regulations and pharmaceutical drug pricing. Key issues in U.S.-UK FTA negotiations also could include financial services, investment, and e-commerce, which are a prominent part of U.S.-UK trade. To the extent that the UK decides to continue aligning its rules and regulations with the EU, sticking points in past U.S.-EU trade negotiations could resurface in the U.S.-UK context.

Other complexities for the U.S.-UK trade talks include frictions over tariffs and other policy issues. For instance, the Trump Administration has threatened the UK with tariffs over its plan to apply a new digital services tax and strongly opposes the UK's decision to open its 5G network development to participation by Huawei, a Chinese telecommunications firm. Other issues, such as the U.S. Section 232 national security-based steel and aluminum tariffs and potential auto tariffs, could see pushback from the UK side.

Many Members of Congress support a U.S.-UK FTA. However, some Members of Congress have cautioned that they would oppose a trade agreement if Brexit were detrimental to the Northern Ireland peace process, whereas others support a trade agreement without such conditions. Whether a potential final FTA would meet congressional expectations or TPA requirements or be concluded as an executive agreement remains to be seen. Congress may continue to hold consultations with the Administration over the scope of the negotiations and engage in oversight as the negotiations progress.

Conclusion

Three and a half years after the Brexit referendum, a decisive victory in the UK's December 2019 general election allowed UK Prime Minister Johnson to proceed with Brexit. The UK withdrew from the EU at the end of January 2020 and began a transition period, scheduled to last until the end of 2020, during which it is expected to focus on negotiations with the EU on an FTA and other elements of the future UK-EU relationship. A significant number of unknowns remain, including how elements of the withdrawal agreement will be implemented, whether the two sides will be able to conclude an agreement on the future relationship during the 11-month transition period, and the effects of ending the transition period without such an agreement. Regardless of the precise turn of events, the aftermath of Brexit is expected to remain a primary focus of UK politics and a leading concern for the EU for the foreseeable future.

During the 116 th Congress, developments with regard to Brexit and their implications for U.S.-UK and U.S.-EU relations, foreign policy and security cooperation, and the global economy and trade issues may remain of interest to Members of Congress. The topic of a prospective U.S.-UK FTA may be a particular area of congressional interest. Congress also may consider how Brexit could affect Northern Ireland and the Northern Ireland peace process.

Appendix A. Review of the Backstop and the Rejected Withdrawal Deal

Under former United Kingdom (UK) Prime Minister Theresa May, the approach of the UK government to leaving the European Union (EU) was to pursue a relatively hard Brexit , meaning a full departure from the EU single market and customs union, and a full restoration of British sovereignty over lawmaking, including with regard to controlling immigration. The approach called for the UK to subsequently negotiate a free trade agreement with the EU to secure as much access to the EU market as possible.

In November 2018, EU and UK negotiators finalized a 585-page draft withdrawal agreement and a 26-page political declaration on the future relationship. The withdrawal agreement contained four main elements to guide the UK's orderly departure from the EU:

Guarantees pertaining to the rights of the approximately 3 million EU citizens residing in the UK and the approximately 1 million UK citizens residing in the EU. A commitment by the UK to pay the EU Â£39 billion (approximately $50 billion) to settle outstanding budgetary and financial pledges. A transition period, lasting through 2020, in which the UK would be bound to follow all rules governing the EU single market while the two sides negotiate their future relationship and implement steps needed to effect an orderly separation. A backstop provision, which would keep the UK in the EU customs union until the two sides agreed on their future trade relationship. The backstop was made necessary by the lack of an apparent solution to the Irish border question, with both sides intent on avoiding a hard border with customs checks and physical infrastructure between Northern Ireland and the Republic of Ireland. The provision was intended to protect cross-border trade and preserve the peace process between parties to Northern Ireland's long sectarian conflict. The EU also viewed the backstop as necessary to ensure that Brexit would not violate the rules and structure of the EU single market.

The nonbinding political declaration on the future UK-EU relationship called for an economic partnership with the EU that features an ambitious free trade area and deep cooperation, but also "separate markets and distinct legal orders," and the development of an independent UK trade policy.

The backstop provision became one of the main obstacles to securing Parliament's approval of the withdrawal agreement. Although the former May government contended that it would never be necessary to implement the backstop, critics noted that the UK would be unable to conduct an independent national trade policy, one of the main selling points for Brexit's supporters, as long as the UK remained a member of the EU customs union. (The backstop would have taken effect at the conclusion of the transition periodâthat is, at the end of 2020âif the two sides had not reached a new trade agreement with more preferable arrangements for resolving the border issue.)

Supporters of a hard Brexit, led by a faction of the Conservative Party, objected that the backstop would leave the UK a "vassal state" of the EU, bound indefinitely to many EU rules (both sides would have to jointly agree to end the backstop). Many unionists in Northern Ireland strongly opposed the deal because a provision in the backstop would preserve deeper regulatory alignment between Northern Ireland and the EU to avoid a hard border. They argue that it is unacceptable to treat Northern Ireland differently from the rest of the UK and that doing so weakens the UK's constitutional integrity.

Advocates of a soft Brexit maintain that permanent membership in the EU single market would be the least damaging outcome in economic terms, and that an assurance of permanent customs union membership would mitigate Brexit-related uncertainties. Many who favor a soft Brexit argued that May's withdrawal agreement prolonged such uncertainties while failing to deliver sufficient benefits. Others in the opposition parties voted against the deal in the hopes that its defeat would lead to an early general election or a second referendum on EU membership.

Between January 2019 and March 2019, the House of Commons rejected the withdrawal agreement three times. The House of Commons also held a series of nonbinding "indicative" votes to determine where Members stood on options and proposals, including staying in the EU single market and/or customs union, leaving without a deal, cancelling the withdrawal process to avoid "no deal," and holding a public vote to confirm any deal. No proposal received a majority.

Appendix B. Northern Ireland: From the Troubles to a Fragile Peace

Between 1969 and 1999, roughly 3,500 people died as a result of political violence in Northern Ireland. The conflict, often referred to as "the Troubles," has its origins in the 1921 division of Ireland and reflects a struggle between different national, cultural, and religious identities. Protestants in Northern Ireland (48%) largely define themselves as British and support remaining part of the United Kingdom ( unionists ). Catholics in Northern Ireland (45%) consider themselves Irish, and many Catholics desire a united Ireland ( nationalists ). In the past, more militant unionists ( loyalists ) and more militant nationalists ( republicans ) were willing to use violence to achieve their goals.

The 1998 Peace Agreement

For years, the British and Irish governments sought to facilitate a negotiated political settlement to the conflict. After many ups and downs, the two governments and the Northern Ireland political parties participating in peace talks announced an agreement on April 10, 1998. The resulting Good Friday Agreementâor Belfast Agreementâis a multi-layered and interlocking document, consisting of a political settlement reached by Northern Ireland's political parties and an international treaty between the UK and Irish governments.

At the core of the Good Friday Agreement is the consent principle âthat is, a change in Northern Ireland's status as part of the United Kingdom (UK) can come about only with the consent of the majority of Northern Ireland's people (as well as with the consent of a majority in Ireland). Although the agreement acknowledged that a substantial section of the population in Northern Ireland and a majority on the island desired a united Ireland, it recognized that the majority of people in Northern Ireland wished to remain part of the UK. If the preferences of these majorities were to change, the agreement asserted that both the UK and Irish governments would have a binding obligation to bring about the wish of the people; thus, the agreement included provisions for future polls (a border poll ) to be held in Northern Ireland on its constitutional status should events warrant.

The Good Friday Agreement set out a framework for devolved governmentâthe transfer of specified powers over local governance from London to Belfastâwith a Northern Ireland Assembly and Executive Committee in which unionist and nationalist parties would share power. The agreement also contained provisions on the decommissioning (disarmament) of paramilitary weapons, policing, human rights, UK security normalization (demilitarization) in Northern Ireland, and the status of prisoners. Finally, the Good Friday Agreement created several new institutions to promote "north-south" cooperation on cross-border issues among leaders on the island of Ireland and "east-west" institutions to address regional issues affecting the UK, Ireland, the Channel Islands, and the Isle of Man.

Despite a much-improved security situation since 1998, full implementation of the Good Friday Agreement has been challenging. For years, instability in Northern Ireland's devolved government was the rule rather than the exception. Decommissioning and police reforms were key sticking points. In 2007, however, the hard-line Democratic Unionist Party (DUP) and Sinn Fein, the political party associated with the Irish Republican Army (IRA), reached a landmark power-sharing deal. Regularly scheduled Assembly elections since the 2007 deal (in 2011 and 2016) produced successive power-sharing governments led by the DUP and Sinn Fein. In 2010, the DUP and Sinn Fein also reached an agreement to resolve the controversial issue of devolving police and justice affairs from London to Belfast.

Recent Crisis in the Devolved Government and Other Challenges

Analysts largely view implementation of the most important aspects of the Good Friday Agreement as complete. At the same time, tensions and distrust persist among the unionist and nationalist communities and their respective political parties, and many experts suggest that the peace process remains fragile. The inability of Northern Ireland's political parties to reach an agreement on reestablishing a devolved government for nearly three years following snap 2017 Assembly elections exemplifies the ongoing divisions and frictions in Northern Ireland's politics and society.

The previous devolved government led by the DUP and Sinn Fein collapsed in January 2017, after 10 months in office. The immediate impetus for the collapse was a renewable energy scandal involving DUP leader and Northern Ireland First Minister Arlene Foster. However, frictions on several other issuesâincluding giving the Irish language the same official status as English, legalizing same-sex marriage, and Brexitâcontributed to Sinn Fein's decision to force snap Assembly elections. The DUP and Sinn Fein remain at odds over Brexit; Sinn Fein strongly opposes Brexit, whereas the DUP is the only major Northern Ireland political party to support it. The DUP retained the largest number of Assembly seats in the March 2017 elections, but Sinn Fein reduced the gap with the DUP to one seat in the Assembly and was widely regarded as the biggest winner.

Negotiations on forming a new devolved government proceeded in fits and starts but repeatedly stalled, primarily over a potential stand-alone Irish Language Act. Some analysts suggest that the DUP's support for the Conservative Party government in the UK Parliament following the June 2017 snap general election further heightened distrust between Sinn Fein and the DUP, hardened the positions of both parties, and made reaching an agreement on a new devolved government more difficult. Others note that Brexit has consumed UK and Northern Ireland politicians' time and attention and largely overshadowed negotiations on a new devolved government.

In April 2019, journalist Lyra McKee was shot and killed while covering riots in Londonderry (also known as Derry). The New IRA, a dissident republican group opposed to the peace process, claimed responsibility (but also apologized, asserting that it had been aiming to shoot a police officer but hit McKee by accident). McKee's death sparked a significant public outcry and prompted the UK and Irish governments to launch a more intensive effort to revive talks with Northern Ireland's political parties on forming a new devolved government. Negotiations remained largely deadlocked, however, throughout the summer and fall of 2019 amid ongoing uncertainty over Brexit.

On December 16, 2019, the UK and Irish governments launched a new round of talks with the DUP, Sinn Fein, and Northern Ireland's other main political parties aimed at reestablishing the devolved government. These negotiations followed the UK's December 12, 2019, general election in which Prime Minister Johnson's Conservative Party won a convincing parliamentary majority, negating the influence of the DUP in the UK Parliament and clearing the way for approval of the Brexit withdrawal agreement with the EU. Some analysts suggested the UK election results improved the prospects for restoring Northern Ireland's devolved government. Both the DUP and Sinn Fein saw a decrease in their shares of the vote, while more moderate "middle ground" parties saw an increase, in part due to voter dissatisfaction with the impasse in reestablishing the devolved government.

On January 10, 2020, the DUP and Sinn Fein agreed to a deal to restore devolved government put forward by the UK and Irish governments. The new Assembly convened the following day and elected a new Executive, including the DUP's Arlene Foster as First Minister and Sinn Fein's Michelle O'Neill as Deputy First Minister. The power-sharing deal is wide-ranging and addresses a number of key issues, including use of the Irish language, health and education concerns, increasing the number of police officers, and measures to improve the sustainability and transparency of Northern Ireland's political institutions. Both the UK and Irish governments also promised additional financial support for Northern Ireland as part of the deal.

Despite the decrease in the levels of violence since the Good Friday Agreement, Northern Ireland continues to grapple with a number of issues in its search for peace and reconciliation. Northern Ireland remains a largely divided society, with Protestant and Catholic communities existing in parallel. Around 100 peace walls or other physical barriers throughout Northern Ireland separate some Protestant and Catholic neighborhoods, and schools and housing estates remain mostly single-identity communities. Sectarian tensions continue to flare periodically on issues such as parading, protests, and the use of flags and emblems. Other prominent challenges include addressing Northern Ireland's legacy of violence (often termed dealing with the past ), curbing remaining paramilitary and dissident activity, and promoting economic development and equality. Experts also contend that Brexit may continue to pose significant concerns for Northern Ireland's still-tenuous peace process and its future political and economic development.