Confused by Brexit? Well, you're probably not alone.
1 NEWS Europe correspondent Joy Reid, who has been reporting on the issue, breaks it down.
BREXIT – WHAT IS IT?
Brexit is a catch phrase coined for Britain leaving the EU, joining together the words “Britain” and “Exit”. That’s essentially what’s happening.
After a referendum in June 2016, the UK voted to leave the European Union (a group of 28 countries in Europe which pays membership and enjoys free trade and movement of people).
In order for it to leave, British Prime Minister Theresa May had to invoke Article 50 of the Lisbon Treaty which gives both sides a two-year window to work out what a separation would look like.
She did that on the March 29 2017 – so the UK will officially leave the EU on March 29 2019 with or without a separation deal.
WHY DID THE UK VOTE TO LEAVE?
The UK essentially voted to take back control of its laws, economy and its borders.
The “Vote Leave” campaigned on concerns around some of the EU laws which the UK are subject to due to its membership and the costs of being an EU member.
It said that the UK would have more money if it didn’t have to pay EU membership fees.
Immigration was also a big issue due to widespread concern about the free movement of people.
WHY’S IT SO COMPLICATED?
This is the first time a country has ever left the European Union.
Britain joined in 1973, and for the past 45 years has agreed to all sorts of laws, trade deals, rules and regulations. The question is, how to get out of them.
There’s no precedent so effectively people are making it up as they go along.
It’s being likened to unscrambling an egg… How does one do that? We’re about to find out.
WHERE ARE THINGS AT NOW?
Both sides have partly agreed on the departure deal including how much the UK will pay the EU when it leaves (39 billion pounds which is around NZ$77b).
But the terms around a future relationship is far from agreed.
Theresa May has come up with a plan called the Chequers deal, named after the Prime Minister's country retreat where it was hashed out. Essentially it proposes –
• A common rulebook on goods – avoiding friction at the UK-EU border.
• Facilitated customs arrangement – which would see the UK collect tariffs on the EU’s behalf. This would avoid a hard Irish border and remove the need for extra border checks.
• Close cooperation on services
• Close alignment on rules and laws and no free movement of people
• But the UK would maintain the freedom to make trade deals with the rest of the world.
This is NOT a final Brexit deal… but rather the Prime Minister’s wish list which the EU and UK are now negotiating on.
WHAT DOES THE EUROPEAN UNION THINK ABOUT THIS CHEQUERS DEAL?
They say frankly that “Chequers won’t work”. They don’t like big chunks of it especially around the Irish border and the economic framework.
It however acknowledges that the plan has positive elements with reference to security and foreign policy.
WHAT’S THIS ABOUT THE IRISH BORDER?
The Irish border is without a doubt the most complicated issue to solve.
The 500km border between Northern Ireland and Ireland is the only place where the UK directly meets the EU.
The question of what to do about the people and goods that cross it every single day is proving problematic.
Both sides don’t want a hard border and if border posts were to be rebuilt (which no one wants) that would break part of Good Friday agreement which brought peace to the region after decades of violence.
The EU wants a “backstop” clause which is basically an insurance policy that if an agreement can’t be reached then a fluid trade border between the north of the island of Ireland (UK) and south of the island (EU) would occur and push any customs border/ tariff checks to the ports at the Irish Sea.
But Theresa May says that will effectively split Northern Ireland from the rest of the UK and that it is unacceptable saying no prime minister would agree for Northern Ireland to be subject to different regulatory rules than the rest of the UK.
Both sides are currently at a major stand off on this.
WHAT ABOUT TRADE?
This is another biggie.
The UK sends 44 per cent of its exports to the EU and it imports 53 per cent of all imported goods from the EU. Currently this is all without tariffs.
But a new deal needs to be reached on what will happen when the UK leaves.
The closer the UK stays aligned to the EU, the harder it will be to make new trade agreements with the rest of the world, like America and New Zealand.
Again, there’s no agreement on this issue.
Commentators say the EU believes it holds most of the cards but the UK is threatening a “no deal” exit which means leaving the EU without any agreement at all on trade, which the EU will definitely want to avoid.
WHAT WOULD A “NO DEAL” ACTUALLY MEAN?
In a word – chaos. It would mean the UK leaves the European Union without formal agreement on the future between the two entities.
It would mean no “transition” period which is currently proposed.
There could be a temporary shortage of some medicines and foods which the UK gets from the EU.
There could be long queues at border ports as goods are subject to customs checks which they’ve not had before.
There could be long queues at airports and disruption to air travel.
It could see residency rights of EU citizens living in the UK and UK citizens living in the EU disappear overnight.
A no-deal would see tariffs imposed on goods going between the EU and the UK. Trade rules would revert to those set out by the World Trade Organisation which for some industries like the UK’s farming sector, it could mean tariffs of 40 per cent.
But Theresa May says it’s better the leave the EU with no deal than a bad deal.
The International Monetary Fund warns that a no-deal scenario would be the most disruptive to both economies.
All these are worst case scenarios but also possible outcomes of a “no deal”.
WHAT DOES BUSINESS THINK?
Businesses are being told to prepare for the two options, and be prepared in the event of no deal.
Big companies like Panasonic and Unilever are moving the headquarters to European cities... and many banks, such as HSBC, Lloyds and Barclays, are doing the same so they can stay under the EU's jurisdiction.
Even big companies like Airbus and BMW are looking to move parts of their operations to Europe.
There is a lot of uncertainty.
WHAT ABOUT THE DOMESTIC POLITICAL ISSUES IN THE UK? HOW DOES THAT AFFECT BREXIT?
Even if Theresa May gets a deal signed off with the EU, she then must get it approved by her Parliament.
Some say this will be an even bigger battle than securing a deal with the 27 other EU member states.
Currently there is minimal support for her Chequers deal and there is widespread condemnation from inside her party about her plan. Some say it keeps the UK too closely aligned with the EU, others say it isn’t close enough.
It’s a very divisive issue and there are real risks that Theresa May won’t have the numbers to push it through.
WHAT ABOUT A SECOND REFERENDUM?
There’s a campaign at the moment called “People’s Vote” which is calling for another referendum saying that UK voters should be given the option of leaving with the proposed deal (if there is one), or staying on current terms.
It’s well-funded, and has support from the likes of London Mayor Sadiq Khan, and even some EU leaders such as the Czech Prime Minister.
But Theresa May is adamant this is NOT going to happen. She says the people of Britain have already spoken and that Britain will exit the EU on the 29th of March.
WHAT DOES THIS ALL MEAN FOR KIWIS?
As no one really knows how this is going to end, it’s a bit hard to say what it will mean for New Zealand with any certainty.
However, the UK has made it clear that New Zealand will be one of the first countries it negotiates a new free trade deal with when it’s free from the European Union.
A new report also suggests it might be good news for Kiwis on their OE.
Currently it’s quite difficult to get visas to stay in the UK after the normal two-year visa period (unless you fit the stringent criteria), but the post-Brexit immigration system should make it easier for higher-skilled workers to come into, and stay in, Britain, including Kiwis.
The Migration Advisory Committee proposes no special treatment for EU nationals and no visa cap.
SO WHAT NOW?
Wait and see.
Time is running out. The EU hopes a deal will be sorted by its October summit, but it has just announced an extra one in November in case it needs more time.
Both sides are in an apparent deadlock over a number of issues with no one really knowing how this is going to end.
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