Brexit: Status and Outlook

Contents

• Introduction and Issues for Congress
• Brexit Status Overview and Update
• The New Withdrawal Agreement
• Extension Request
• Possible Outcomes
• Parliament Approves or Rejects the Deal
• Another Brexit Deadline Extension
• No-Deal Brexit
• Early General Election
• Brexit and Trade
• Current UK-EU Trade Relationship
• Scenarios for UK-EU Trade Relationship Post-Brexit
• No Customs Union?
• Customs Union?
• Free Trade Agreement?
• Impact on UK Trade and Economy
• Global Britain
• Brexit and Northern Ireland
• Possible Implications of Brexit
• The Irish Border and the Peace Process
• The Economy
• Constitutional Status and Border Poll Prospects
• Implications for U.S.-UK Relations
• Foreign Policy and Security Issues
• Trade and Economic Relations and Prospective U.S.-UK FTA
• Conclusion

Summary

After the 2016 referendum in which 52% of voters in the United Kingdom (UK) favored leaving the European Union (EU), Brexit was originally scheduled to occur on March 29, 2019. In early 2019, however, Parliament repeatedly rejected the withdrawal agreement negotiated between Prime Minister Theresa May's government and the EU without supporting any alternative. In April 2019, the EU granted the UK an extension until October 31, 2019. A further extension is pending.

Recent Developments and Possible Scenarios

On October 17, 2019, EU and UK negotiators reached a new withdrawal agreement altering the Northern Ireland backstop provision, which was a main sticking point to Parliament passing the original deal. Under the new deal, Northern Ireland (part of the UK) would maintain regulatory alignment with the EU (essentially creating a customs border in the Irish Sea) to maintain an open border with the Republic of Ireland (an EU member state) while safeguarding the rules of the EU single market. At the end of a transition period, the UK (including Northern Ireland) would leave the EU customs union and pursue an independent national trade policy. UK Prime Minister Boris Johnson faces numerous challenges as he attempts to secure Parliament's approval of the new deal.

The UK and EU have sought to avoid a no-deal Brexit, a scenario in which the UK leaves the EU without a negotiated withdrawal agreement, due to concerns that it could cause considerable disruption with regard to the economy, trade, security, Northern Ireland, and other issues. In September 2019, Parliament passed legislation that required the UK government to request another extension on October 19. If granted by the EU, the extension could last until January 31, 2020.

The dynamics of Brexit are likely to evolve in relation to numerous unresolved questions. Possible scenarios include Parliament approving or rejecting the new withdrawal agreement, another extension, a no-deal Brexit, and an early general election in the UK.

Brexit, Trade, and Economic Impact

The various Brexit scenarios have considerable implications for the UK's trade arrangements. Outside the EU customs union, the UK would regain an independent national trade policy, a major selling point for many Brexit supporters who advocate negotiating new bilateral trade deals around the world, including with the United States. The UK likely would seek to negotiate a free trade agreement (FTA) with the EU. A Brexit in which the UK remains a member of the EU single market or customs union would provide more barrier-free access to the EU, but the UK would have to follow most EU rules without having a say in how those rules are made. Analysts predict the disruption resulting from any form of Brexit likely will have at least a short-term negative economic impact on the UK. A no-deal Brexit represents the most disruptive and unpredictable scenario, and many businesses in the UK are taking steps to mitigate potential economic losses.

Northern Ireland

Many observers have expressed concerns that Brexit could destabilize the Northern Ireland peace process and lead to a hard border with physical infrastructure and customs checks between Northern Ireland and the Republic of Ireland. Although conditions have improved considerably since the 1998 peace accord (known as the Good Friday Agreement or the Belfast Agreement), concerns about the fragility of peace and security in Northern Ireland remain. A Brexit that results in a hard border likely would have negative economic effects for Northern Ireland and constitute a pressure point in the continuing implementation of the peace agreement.

U.S.-UK Relations and Congressional Interest

President Trump and Administration officials have expressed support for Brexit. Members of Congress hold mixed views. The UK likely will remain a leading U.S. partner in addressing many foreign policy and security challenges, but Brexit has fueled a debate about whether the UK's global role and influence is likely to be enhanced or diminished. In 2018, the Administration notified Congress of its intention to negotiate a bilateral FTA with the UK after Brexit. Congress likely would need to pass implementing legislation before the potential FTA could enter into force. Many in Congress also are concerned about Brexit's possible implications for Northern Ireland's peace process and economy.

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Introduction and Issues for Congress

The United Kingdom's (UK's) pending exit from the European Union (EU), commonly termed Brexit, remains the overwhelmingly predominant issue in UK politics. UK voters favored leaving the EU by 52% to 48% in a public referendum in June 2016. The UK officially notified the EU of its intention to leave the bloc in March 2017, and the UK and the EU began negotiations on the terms of the UK's withdrawal.¹ Brexit was originally scheduled to occur on March 29, 2019, but the UK Parliament has been 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, 2019.²

Pending the resolution of several pivotal questions, conditions surrounding the status and outlook of Brexit continue to evolve. On October 17, 2019, negotiators from the EU and the government of UK Prime Minister Boris Johnson concluded a new withdrawal agreement, but Johnson has faced challenges in securing the UK Parliament's approval of the deal. Meanwhile, Parliament passed a law in September 2019 that obliged the prime minister to request another extension from the EU on October 19, 2019. If granted, the extension could last until January 31, 2020.

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 notified Congress of its intent to launch U.S.-UK trade agreement negotiations after the UK leaves the EU, and Congress may consider how Brexit developments affect the prospects for an agreement.³ Congress would likely need to pass legislation to implement the potential free trade agreement (FTA) before it could enter into force, particularly if it were a comprehensive FTA. Some Members of Congress also have demonstrated an interest in how Brexit might affect Northern Ireland.⁴ 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.⁵ 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.⁶

Brexit Status Overview and Update

Unable to break the stalemate over Brexit in Parliament, Prime Minister Theresa May resigned as leader of the Conservative Party on June 7, 2019. On July 24, 2019, Boris Johnson became prime minister of the UK after winning the resulting Conservative Party leadership contest.⁷ 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.

Immediately after taking office, Prime Minister Johnson asserted that the UK would leave the EU on October 31, 2019, "no ifs or buts."⁸ He also announced that he intended to negotiate a new deal with the EU that discarded the 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.⁹ 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, viewing it 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, the Johnson government began to ramp up preparations for a possible no-deal Brexit.¹⁰

In early September 2019, Parliament passed legislation requiring the government to request another Brexit deadline extension 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 extension would last through January 31, 2020. The request for the extension could be canceled if one of the law's provisions were to be fulfilled by October 30.¹¹

The government also lost its parliamentary majority in the first week of 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 who worked with the opposition parties to limit the government's ability to pursue a no-deal Brexit (see Table 1 for the current party composition in the House of Commons). 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.¹²

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.¹³ The new agreement replicates several 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 remains 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 locations away from the Irish border, with no checks or infrastructure at the border;
• four years after the arrangement comes into force, the Northern Ireland Executive and Assembly must consent to renew it for an additional four years (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 an October 2, 2019, proposal sent by UK Prime Minister Boris Johnson to European Commission President Jean-Claude Juncker.¹⁴ 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.¹⁵

Extension Request

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 has 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 has repeatedly asserted strong opposition to requesting another extension from the EU.¹⁶ 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 European Council President Donald Tusk reiterating Johnson's view that a further extension would damage UK and EU interests and the UK-EU relationship.¹⁷

Possible Outcomes

Several broad scenarios remain in play with regard to possible outcomes. Possibilities include approval or rejection of the new withdrawal agreement, another extension, a no-deal Brexit, and an early general election.

Parliament Approves or Rejects the Deal

Prime Minister Johnson's central goal is to convince Parliament to pass the Withdrawal Agreement Bill (legislation need to implement the withdrawal agreement) and subsequently approve the new withdrawal agreement (a "meaningful vote" that is essentially a resolution with political but no legislative effect). On October 22, 2019, the House of Commons voted to advance the Withdrawal Agreement Bill to the committee stage of the parliamentary process but rejected the government's expedited timeline for consideration of the bill, leading the prime minister to "pause" the legislation.¹⁸

Should the legislation resume moving forward, the government faces the risk that amendments could be attached to the Withdrawal Agreement Bill as it undergoes parliamentary scrutiny and debate. For example, MPs could propose amendments that the UK would seek to remain in the EU customs union (an idea strongly rejected by the Johnson government), hold a referendum on the withdrawal agreement, or hold a second referendum on EU membership.

If and when the withdrawal agreement comes to a vote, the result is expected to be close. With 320 votes needed to win the vote, the Conservative Party currently holds 288 seats. There are 35 independent MPs, including 21 former Conservative MPs who were, as noted above, expelled from the party in September 2019. How independent MPs vote is likely to be crucial in determining the outcome. The opposition Labour Party, Liberal Democrats, and Scottish National Party have stated their opposition to the new withdrawal agreement, but 19 Labour MPs voted with the government in favor of advancing the Withdrawal Agreement Bill on October 22, and additional Labour MPs from pro-Brexit constituencies might join them in supporting the withdrawal agreement. The 10 MPs from the DUP have indicated they are likely to oppose the withdrawal agreement on the grounds that it treats Northern Ireland differently from the rest of the UK.

Should the timeline extend beyond the end of October, most analysts expect the EU likely would grant the requested extension, allowing time to continue the process into the end of 2019. Should there be a breakdown in the process (if, for example, the government retracts the Withdrawal Agreement Bill due to amendments), the UK's political parties may attempt to break the deadlock through an early general election.

Another Brexit Deadline Extension

European Council President Tusk reportedly has led consultations with national leaders on how and when to consider the UK's October 19 extension request.¹⁹ An extension requires the approval of the 27 other EU member states. Although EU leaders have expressed frustration with the UK and the Brexit process, they likely would approve another extension, "provided it is justified and has a specific purpose, such as avoiding a 'no-deal' departure, holding general elections or a referendum, revoking Article 50, or approving the Withdrawal Agreement."²⁰ (Article 50 of the Treaty on European Union is the legal mechanism under which a member state may withdraw from the EU.)

No-Deal Brexit

A no-deal Brexit, a scenario in which the UK exits the EU without a negotiated withdrawal agreement, remains a possibility (if the UK government were to not receive an extension or if no withdrawal agreement were reached by the deadline of a further extension). Both UK and EU negotiators have consistently rejected a no-deal scenario, although both sides have been developing contingency plans for such an outcome.

Assessments of the full impact of a no-deal scenario remain subject to many uncertainties. Many observers maintain that a no-deal Brexit could cause considerable disruption, with negative effects on the economy, trade, security, Northern Ireland, and other issues.²¹ In September 2019, a parliamentary motion forced the government to publish a secret document outlining its planning assumptions for a no-deal Brexit. Among other possibilities, the government document discusses border delays for travelers and transport services; a potential decrease in the availability of certain types of fresh food; price increases for food, fuel, and electricity; disruption in the supply of medicines and medical supplies; and a potential rise in public disorder and community tensions.²²

Government officials stressed that the document represents "reasonable worst case planning assumptions" rather than a base scenario. Brexit advocates maintain that fears over a no-deal Brexit are exaggerated, and some ardent Brexit supporters argue that a no-deal Brexit is preferable to a soft Brexit in which the UK would retain certain ties and obligations to the EU.²³

Some analysts argue that there is no such thing as a clean break with the EU. Even in a no-deal Brexit scenario, the UK would likely immediately find itself continuing negotiations with the EU in pursuit of mini-deals seeking to mitigate disruption. The EU, however, might insist the UK agree to many of the terms of the earlier draft withdrawal agreement as the price of securing such deals and establishing a framework for the long-term UK-EU relationship.²⁴

Early General Election

Most observers agree that an early general election in the UK is likely. A general election that produces a clear outcome could serve to break the political deadlock and provide a new mandate for the winner to pursue Brexit plans. On October 24, 2019, Prime Minister Johnson called for MPs to agree to hold an early election on December 12, 2019, if they wished to deliberate on the Withdrawal Agreement Bill past the October 31 deadline.

A snap election in the UK could be triggered by two-thirds of MPs (434 out of 650) backing a motion for an early general election.²⁵ Prime Minister Johnson attempted to pass such a motion in early September, but the motion fell well short, receiving 298 votes. Opposition parties abstained or voted against it on the basis that they did not wish to risk an early election with a no-deal Brexit remaining on the table. Opposition leaders indicated they would be inclined to back calling an early election after a Brexit extension has been secured.

Alternately, the government could attempt to pass a law (requiring a simple majority) calling for an early election, notwithstanding the requirements of current legislation. An election also would take place if no new government could be formed within 14 days of the government losing a vote of confidence.

An election carries significant risks for all of the UK's political parties, as the outcome and composition of the resulting Parliament would be highly uncertain. An October 20-21, 2019, poll showed support for the Conservative Party at 37%, for the Labour Party (led by Jeremy Corbyn) at 22%, for the Liberal Democrats (led by Jo Swinson) at 19%, and for the new, single-issue Brexit Party (led by Nigel Farage) at 11%.²⁶ Projections must take into account the UK's "first-past-the-post" electoral system (similar to U.S. congressional elections), in which candidates compete for a "winner takes all" plurality in 650 constituencies. A party's percentage of overall nationwide votes does not therefore match the percentage of seats it may win in Parliament.

Brexit and Trade

Current UK-EU Trade Relationship

Brexit casts great uncertainty over the future UK-EU trade relationship. At 15% of the EU gross domestic product (GDP) in 2018, the UK is the EU's second-largest economy after Germany (21%). The EU, as a bloc, is the UK's largest trading partner (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.²⁷ UK-EU trade is highly integrated through supply chains and trade in services, as well as through foreign affiliate activity of U.S. 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.²⁸ (See "Implications for U.S.-UK Relations" section for discussion of U.S.-UK trade.)

Figure 1. UK World Trade

Source: Congressional Research Service, (CRS), based on data from the World Trade Organization (WTO), Trade Profiles 2019.

Presently, the UK's trade policy is determined by the EU, which has exclusive competence for trade policy for EU member states. The UK, as an EU member, is in the EU customs union; this makes trade in goods between the UK and other EU member 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.

The UK also is a part of over 40 preferential trade agreements that the EU has with about 70 countries, as well as part of ongoing EU trade negotiations.²⁹ Thus, until Brexit occurs, the UK is a part of the new trade negotiations between the EU and the United States.³⁰

The UK also is part of the EU single market. In addition to providing for the free movement of goods, the single market provides for free movement of services, capital, and people, and 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 UK currently faces the common external tariff; once inside the UK, 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 the UK 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, UK professionals also can move freely in the EU, benefitting from mutual recognition of professional qualifications across EU member states.

Scenarios for UK-EU Trade Relationship Post-Brexit

Potential outcomes for the post-Brexit UK-EU trade relationship vary in their level of single market access, obligations to implement EU rules and regulations, opportunity to participate in EU decisionmaking, requirements to contribute to the EU's budget, and political feasibility.

No Customs Union?

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 (FTAs) with other countries. This has been a key rationale for many Brexit supporters.

Several scenarios could lead to an outcome where the UK is not in the EU customs union. One such scenario is a no-deal Brexit, under which the UK would no longer have preferential access to the EU market and World Trade Organization (WTO) terms would govern the UK-EU trade relationship (see text box).³¹ In a no-deal Brexit, trade between the UK and the EU would no longer be tariff-free, and nontariff barriers such as new customs procedures also would arise, adding costs to doing business.

Other examples of arrangements that preclude a customs union are the trade relationships that Norway and Switzerland have with the EU. Norway and Switzerland are non-EU countries that are not in the customs union, but have tariff-free access to the EU (with some exclusions, such as agriculture and fisheries for Norway and some services for Switzerland). Norway and Switzerland have no say on EU decisions on rules and regulations and must accept free movement of workers. They must also pay in to the EU budget. Norway's access to the EU market is through its membership in the European Economic Area (EEA). Switzerland (not in the EEA) has more complicated access through over 100 sectoral agreements with the EU. The government of former UK Prime Minister May essentially rejected a Norway- or Switzerland-style model for Brexit because the UK did not want to accept EU rules and regulations, especially without having a say in EU decisionmaking.

Customs Union?

Alternatively, the UK could remain in the EU customs union or develop another customs arrangement with the EU. To do so, however, means that the UK would not regain control over its trade policy. This could occur if a UK-EU deal keeps the UK in the customs union permanently or during an extended transition period.

Turkey is an example of a non-EU country in a customs union relationship with the EU. Like Norway and Switzerland, Turkey has no voice on EU decisions; unlike Norway and Switzerland, Turkey does not contribute to the EU budget. Turkey-EU trade is tariff-free on covered products (most goods and processed agricultural products). Turkey has adopted the EU common external tariff and must apply tariff reductions that the EU negotiates with other countries. Preferential access that the EU gains to these other countries, however, does not automatically apply to Turkey, which would need to negotiate its own agreements with these other countries.

If the UK were to participate in the customs union, it potentially could negotiate with other countries on areas outside the scope of the customs union (e.g., services, digital trade, public procurement, intellectual property, and regulatory cooperation). However, to the extent that a customs union represents a desire for the UK to keep its trade with the EU as frictionless as possible, the UK may not wish to depart from EU regulatory and other approaches and risk introducing nontariff barriers. This stance would limit the UK's negotiating flexibility in trade negotiations with countries outside of the EU. Additionally, the EU may be unwilling to agree to a customs union arrangement without seeking regulatory commitments in order to maintain a level playing field. A customs union also could limit UK trade policy, such as by applying trade remedies or developing country preference programs.

Free Trade Agreement?

A third possibility is that the UK and the EU could conclude a trade agreement, as envisioned in the political declaration attached to the original withdrawal agreement. If the UK exits the EU without a deal, it also may seek to negotiate a trade agreement in the future. No UK trade agreement with the EU likely would be able to replicate existing single market access. For instance, the EU bilateral FTAs with Canada and Japan eliminate most tariffs but have a number of exceptions, such as in services. Negotiations could be lengthy; EU negotiations with Canada and Japan took, respectively, seven and four years. EU FTAs have varied in their scope of trade liberalization and rules-setting. The EU has said that the UK cannot have a better trade relationship with the EU outside of the single market than within it.

Impact on UK Trade and Economy

The precise impact of Brexit on UK trade with the EU and the economy would depend on what form Brexit takes. Nevertheless, in most scenarios, Brexit would raise the costs of UK trade with the EU through higher tariffs and nontariff barriers.³² Costs may be greater in the short term, until commercial disruptions are smoothed out. If the UK exits the EU without a deal, costs may be mitigated to some degree if the two sides subsequently negotiate an interim deal or 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 in a no-deal Brexit. 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).³³

UK importers may face higher costs, as the UK may impose its own MFN-level tariffs on imports from the EU. Presently, the UK government is considering a tariff regime where the majority (87%) of total imports into the UK by value would be eligible for tariff-free access for 12 months while the UK aims to negotiate a new tariff regime with the EU. However, tariffs would remain on other goods imported to the UK, including some meat and dairy, vehicles, ceramics, and fertilizers, in an effort to support farmers and manufacturers.³⁴

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.³⁵

Nontariff barriers to trade also would arise with Brexit. The UK would become a "third country" from the EU's perspective, and the UK's regulatory frameworks—although currently aligned with those of the EU—would no longer be recognized by the EU. The EU would have to make determinations on whether measures of the UK comply with the corresponding EU regulatory framework. The UK has issued plans to maintain regulatory alignment with the EU post-Brexit until the UK can negotiate an agreement with the EU on future trade relations.

New administrative and customs procedures would 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.³⁶ 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 are preparing for Brexit, including a no-deal scenario, 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. Other companies are waiting to see how Brexit unfolds.

Certain sectors of the UK economy may be particularly affected by Brexit.³⁷ Examples include the following:

• 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 2018.³⁸ The EU accounts for 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, which are also significant in EU-UK trade.³⁹ In a no-deal scenario, 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.⁴⁰ 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).⁴¹ Post-Brexit, 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.⁴²
• Financial Services. 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.⁴³ The EU has made clear that the UK will no longer be able to benefit from financial passporting after Brexit. 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.⁴⁴ 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 are planning to shift) some jobs and assets from London to other European cities, such as Amsterdam, Dublin, Frankfurt, and Paris.⁴⁵ By one estimate, financial companies have already committed to moving over £1 trillion in assets from the UK to other parts of the EU as part of no-deal Brexit contingency planning.⁴⁶
• Business Services. 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)—accounting for 39% of these exports from the UK.⁴⁷ Determinations of professional certification qualifications may need to be made.
• Data Flows. Presently, data flows freely between the UK and other EU member states, underpinning much of UK-EU services trade.⁴⁸ If the UK is outside of the EU, the EU would no longer recognize the UK's personal data protection regime. Through a process known as an adequacy decision, the EU would have to determine whether the UK's standards for protecting personal data meet EU standards under the EU General Data Protection Regulation (GDPR).⁴⁹ The potential blockage of data transfers could have serious implications for UK companies seeking to transfer personal data out of the EU—including not only technology companies but also health care companies and other service providers.⁵⁰

Global Britain

For Brexit supporters, a major rationale was for the UK to regain a fully independent trade policy. What might this trade policy look like? 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.⁵¹

If it were no longer a part of the EU customs union, the UK could negotiate trade agreements with other countries and aim to tailor those agreement to its specific interests. The UK is the world's fifth-largest economy, with a gross domestic product (GDP) of $2.8 trillion in 2018, but it may have less leverage in trade negotiations on its own compared to negotiating as part of the EU.⁵² As a member of the EU, the UK's negotiating leverage arguably is greater because the EU, with a GDP of $18.8 trillion in 2018, encompasses the collective economic weight of its member states.⁵³ The UK may therefore face difficulty rolling over or negotiating trade agreements that match its current trade terms as a member of the EU.

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

• Negotiating its own WTO schedule of commitments on goods, services, and agriculture. Schedule 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 would 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.⁵⁴ 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.⁵⁵ In terms of other WTO 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 until February 27, 2020, in part because of the delay in Brexit.
• Working to replicate existing EU deals with non-EU countries. The UK is 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 would lose its preferential access to these markets after leaving the EU. To avoid this outcome, the UK has been working to replicate the EU's trade agreements with other countries.⁵⁶ To date, the UK has signed 13 "continuity" deals covering 38 countries or territories, including South Korea and Switzerland.
• Negotiating sector-specific regulatory agreements. As a member of the EU, the UK is a part of EU regulatory agreements with certain non-EU countries for conformity assessments on product standards and regulations in certain sectors.⁵⁷ In its preparations for Brexit, the UK government is aiming to replicate the key provisions of existing EU mutual recognition agreements (MRAs) with third-countries, including the United States, to assure continued acceptance by UK and partner country regulators of certain product testing and inspections by the other.
• 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.⁵⁸ 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 would be 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) has been a key goal, and a major stumbling block, in negotiating and finalizing the UK's withdrawal agreement with the EU.

Deciding upon arrangements for the post-Brexit border between Northern Ireland and the Republic of Ireland is complicated by Northern Ireland's history of political violence. Roughly 3,500 people died during "the Troubles," the 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 tensions over Brexit also have contributed to the largely stalled negotiations in Northern Ireland between the unionist and nationalist communities' respective political parties on reestablishing the regional (or devolved) government, more than two years after the last legislative assembly elections. (For more background, see Appendix B.)

Figure 2. Map of Northern Ireland (UK) and the Republic of Ireland

Source: Graphic created by CRS using data from Esri (2017).

Possible Implications of Brexit

The Irish Border and the Peace Process

Many on both sides of Northern Ireland's sectarian divide worry that Brexit could lead to a return of a hard border with the Republic of Ireland that could destabilize the peace process. Police officials warn 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.⁶⁰

Security assessments suggest 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 fear that any such violence could lead to a remilitarization of the border and that the violence could spread beyond the border regions.⁶¹ 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 seek 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 recent failed bombings have been attempted in border areas (especially Londonderry/Derry, a key flashpoint during the Troubles).⁶²

Many in Northern Ireland and Ireland also are 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 a crucial aspect of ensuring a lasting peace in Northern Ireland. Establishing customs checkpoints would pose logistical difficulties, and many people in the border communities worry 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.⁶³ 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.⁶⁴

UK, Irish, and EU leaders have asserted repeatedly that they do not want a hard border and have 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 (and any physical infrastructure), and protect north-south cooperation on the island of Ireland. Analysts contend, however, that reaching agreement on the backstop 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 discussed previously, the backstop arrangement reached in November 2018 by UK and EU negotiators emerged as the primary sticking point in gaining the UK Parliament's approval of the draft withdrawal agreement. Prime Minister Johnson opposed the backstop but also has asserted a desire to avoid a hard border on the island of Ireland.⁶⁵

Some advocates of a hard Brexit contend that the border issue has been exploited by the EU and those in the UK who would prefer a soft Brexit, in which the UK would remain 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 Ireland, however, argue that although the Good Friday Agreement may not mandate an open border, an open border has become intrinsic to peace, and a hard border would violate the spirit of the peace accord (a position subscribed to by former Prime Minister May). The Irish government and others also contend that a hard border would violate the provisions in the Good Friday Agreement that call for north-south cooperation on cross-border issues (including transport, agriculture, and the environment).⁶⁶

Some advocates of a hard Brexit, frustrated by the Irish border question, have ruminated on whether the Good Friday Agreement has outlived its usefulness, especially in light of the stalemate in reestablishing Northern Ireland's devolved government. The UK government of former Prime Minister May responded that it remained "fully committed" to the Good Friday Agreement, and Prime Minister Johnson also has asserted his commitment to upholding the 1998 accord.⁶⁷ Prime Minister Johnson and DUP leaders contended, however, that the backstop mechanism—in establishing different regulatory requirements for Northern Ireland and thus effectively dividing Northern Ireland from the rest of the UK—would violate the Good Friday Agreement's 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 Irish government and the EU rejected this view of the backstop. Many analysts point out that the consent principle in the Good Friday Agreement applies specifically to a change in Northern Ireland's constitutional status (i.e., whether the people of Northern Ireland wish to remain part of the UK or wish instead to be part of a united Ireland).⁶⁸

Some UK officials suggest that if a devolved government in Northern Ireland cannot be formed by the Brexit deadline, and especially in the case of a no-deal Brexit, the UK government would have to reinstate direct rule (in which ministers in London would make governance decisions for Northern Ireland).⁶⁹ Since the devolved government's collapse in 2017, civil servants have effectively run Northern Ireland, but they lack the power to take political decisions or pass new laws, which may be necessary to manage Brexit's consequences. Nationalists in Northern Ireland would be strongly opposed to direct rule as would the Irish government, which would likely seek to play a consultative role in Northern Ireland's affairs in the event of direct rule and in accordance with certain provisions in the Good Friday Agreement. Many in Northern Ireland, however, likely would view the reimposition of direct rule as a significant blow to the peace process.⁷⁰

Although the UK and Ireland have escalated contingency planning for a no-deal Brexit, the Irish government has resisted making plans for physical infrastructure on the border. It maintains that there will be no hardening of the Irish border under any circumstances. Irish Prime Minister Leo Varadkar admits that a no-deal scenario would entail "difficult discussions" with the EU and the UK.⁷¹ Some analysts assert, however, that in the event of a no-deal Brexit, protecting the integrity of the single market would be an EU priority, which would necessitate customs checks and some sort of border infrastructure somewhere. In September 2019, Prime Minister Varadkar appeared to concede that a no-deal Brexit might require some checks on certain goods and live animals "near" the border.⁷²

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.⁷³ 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, which are responsible for the vast majority of Northern Ireland exports to Ireland. Although sales in 2017 to other parts of the UK (£11.3 billion) surpassed the value of all Northern Ireland exports (£10.1 billion) and were nearly three times the value of exports to Ireland (£3.9 billion), large- and medium-sized Northern Ireland firms dominated in sales to the rest of the UK.⁷⁴

Analysts suggest that a hard Brexit or a no-deal scenario in particular could jeopardize integrated labor markets and industries that operate on an all-island basis. Northern Ireland's agri-food sector, for example, would face 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 end 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.⁷⁵ The Ulster Farmers' Union—an industry association of farmers in Northern Ireland—has asserted that a no-deal Brexit would be "catastrophic" for Northern Ireland farmers.⁷⁶ 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.⁷⁷

In addition, Brexit could have other economic ramifications for Northern Ireland. Some experts argue that access to the EU single market has been 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).⁷⁸

UK officials assert that the government is determined to safeguard Northern Ireland's interests and "make a success of Brexit" for Northern Ireland.⁷⁹ UK and DUP leaders maintain that the rest of the UK is more important economically, historically, and culturally to Northern Ireland than the EU. UK and DUP officials insist that Northern Ireland will continue to trade with the EU (including Ireland) and that Brexit offers new economic opportunities for Northern Ireland outside the EU.⁸⁰

Constitutional Status and Border Poll Prospects

Brexit has revived questions about Northern Ireland's constitutional status. Sinn Fein—the leading nationalist party in Northern Ireland—argues that "Brexit changes everything" and could generate greater support for a united Ireland.⁸¹ 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; Sinn Fein contends that a border poll should be held immediately in the event of a no-deal Brexit and/or a hardened border.⁸² The Good Friday Agreement provides for the possibility of a border poll, in line with the consent principle noted above. Any decision to hold a border poll on Northern Ireland's constitutional status rests with the UK Secretary of State for Northern Ireland, who 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."⁸³

At present, most 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 Northern Ireland's position within the UK, although some surveys suggest that views may be shifting and that a "damaging Brexit" in particular could increase support for a united Ireland. One recent poll found that 46% of those polled in Northern Ireland favored unification with Ireland, versus 45% who preferred remaining part of the UK.⁸⁴

Irish Prime Minister Varadkar asserts that a border poll in the near future would be divisive and disruptive. Some observers suggest that Prime Minister Varadkar's current priority is ensuring an orderly Brexit, and any support or planning for a poll on Irish unification could fan unionist fears and impede this goal. Others note that the extent of public and political support in the Republic of Ireland for unification is uncertain, given the potential economic costs of unification and concerns that it could spark renewed loyalist violence in Northern Ireland.⁸⁵

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.⁸⁶ President Trump counts leading Brexit supporters, including Boris Johnson and Brexit Party leader Nigel Farage, among his personal friends.⁸⁷ 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."⁸⁸

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.⁸⁹ 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."⁹⁰ Vice President Pence expressed his hope that an agreement would "also provide for an orderly Brexit."⁹¹

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 strongly 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.⁹² Prime Minister May disagreed with the Trump Administration's recognition of Jerusalem as Israel's capital, calling the move "unhelpful in terms of prospects for peace in the region."⁹³ She also expressed "deep concern" about the President's March 2018 decision to introduce tariffs on steel and aluminum imports to the United States.⁹⁴

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.

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."⁹⁵ 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.⁹⁶ 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 diminishing 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.⁹⁷ 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 is expected to be 2.13% of GDP in 2019).⁹⁸

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.⁹⁹ 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.¹⁰⁰

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). In 2018, the UK was the United States' fifth-largest goods export market, seventh-largest goods import supplier, and largest services trading partner. U.S trade in goods and services with the UK ($263 billion) accounted for about one-fifth of U.S. trade with the EU ($1.3 trillion) in 2018.¹⁰¹ The UK is also a leading source of and destination for foreign direct investment, and affiliate activity is significant. Brexit presents commercial uncertainty for the about 42,000 U.S. companies exporting to the UK and for the U.S. firms operating in the UK, which include some 4,000 majority-owned subsidiaries (2017 data).¹⁰² Presently, WTO terms govern U.S.-UK trade (like U.S. trade with the rest of the EU), and these terms would apply after Brexit unless the two sides secure more preferential access to each other's markets through the conclusion of a bilateral FTA.

On October 16, 2018, the Trump Administration notified Congress under Trade Promotion Authority (TPA) of its intent to enter into negotiations with the UK on a bilateral trade agreement, which many Members of Congress support. 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.¹⁰³

As the UK cannot formally negotiate or conclude a new agreement until it exits the EU, the United States and UK established a bilateral working group in July 2017 to lay the groundwork for a potential future bilateral FTA post-Brexit and to ensure commercial continuity in U.S.-UK ties. They also 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.¹⁰⁴ The United States and UK have signed agreements on insurance and derivatives trading and clearing, as well, to ensure regulatory certainty.¹⁰⁵

Figure 3. U.S. Trade and Foreign Direct Investment with the UK, 2018

Source: CRS, with U.S. Bureau of Economic Analysis data. Note: Trade data are on a flow basis, whereas foreign direct investment data are on a stock (historical-cost) basis.

Should the UK regain independence over its trade policy, prospects for a U.S.-UK FTA are mixed. 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 caution against the likelihood of a "quick win," particularly as some trade irritants have reemerged.¹⁰⁶ For instance, U.S. demands for greater access to the UK market raise UK food safety and other regulatory concerns about U.S. industry practices of disinfecting chicken with chlorine and treating beef with hormones. Key issues also could include financial services, investment, and e-commerce.

Some U.S. businesses see the proposed negotiations as an opportunity to 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.¹⁰⁷ 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.

The United States, meanwhile, may be hard-pressed to negotiate with the UK without clarity on the future UK-EU relationship. Another uncertainty is how the proposed U.S.-EU trade negotiations to defuse transatlantic trade frictions on tariffs and other issues may affect the outlook for the U.S.-UK trade negotiations. In addition, some stakeholders support using the trade negotiations as an opportunity to engage the UK on other issues, such as its approach to digital services taxes.

Should U.S.-UK trade agreement negotiations formally commence, it remains to be seen whether the United States and the UK would take a comprehensive approach in a "single undertaking" or seek a more limited agreement focused on certain issues or sectors. Under the Trump Administration, the United States has taken both approaches, for instance, taking a comprehensive approach with the U.S.-Mexico-Canada Trade Agreement (USMCA), which is the renegotiated North American Free Trade Agreement (NAFTA), and a more limited approach with the bilateral trade negotiations with Japan.¹⁰⁸

It also remains to be seen whether a potential final FTA would meet congressional expectations or TPA requirements. Congress is expected to continue consultations with the Administration over the scope of proposed negotiations and to engage in oversight during negotiations. Congress would need to approve implementing legislation for a potential final trade agreement to enter into force.

Conclusion

More than three years after the Brexit referendum, the terms and timing of the UK's exit from the EU remain unclear, unresolved, and the subject of pronounced political division in the UK. Pending developments which provide further clarity and direction, a wide range of scenarios remain in play as possible outcomes, varying from a no-deal Brexit to a cancellation of Brexit. In between those two results, other possibilities include a hard Brexit, meaning a full departure from the EU single market and customs union and a full restoration of the UK's sovereignty over issues such as immigration and trade, as well as a soft Brexit in which the UK would retain considerable ties and obligations to the EU. Regardless of the precise turn of events, the topic of Brexit is expected to remain a primary focus of UK politics and a leading concern for the EU.

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 free trade agreement may be a particular area of congressional interest. Congress also may consider how Brexit could affect Northern Ireland and the Northern Ireland peace process. Members of Congress may have an interest in monitoring political developments in the UK should there be an early general election tied to political deadlock over Brexit.

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.¹⁰⁹ 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.¹¹⁰ 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 £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.¹¹¹ 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 speaks of 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 period—that is, at the end of 2020—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, have 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).¹¹² 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.¹¹³ 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 argue that the withdrawal agreement prolongs 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.¹¹⁴ 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 Agreement—or Belfast Agreement—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.¹¹⁵

At the core of the Good Friday Agreement is the consent principle—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 government—the transfer of specified powers over local governance from London to Belfast—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.¹¹⁶ 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.

Current 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 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 issues—including Brexit, giving the Irish language the same official status as English, and legalizing same-sex marriage—contributed to Sinn Fein's decision to force snap Assembly elections. 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.¹¹⁷

Two and a half years after Assembly elections, Northern Ireland remains without a devolved government. Negotiations have proceeded in fits and starts but have 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. The DUP and Sinn Fein also are at odds over Brexit; Sinn Fein strongly opposes Brexit, whereas the DUP is the only major Northern Ireland political party to support it. Others note that Brexit has consumed UK and Northern Ireland politicians' time and attention and largely overshadowed negotiations on a new devolved government.¹¹⁸

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 new, more intensive effort to revive talks with Northern Ireland's political parties on forming a new devolved government. Negotiations are ongoing. The UK and Irish governments have pledged to put forward compromise solutions to the political parties on key issues. Many observers, however, view the talks as largely deadlocked and appear skeptical of an imminent breakthrough in the negotiations.¹¹⁹

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.¹²⁰ 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 pose significant concerns for Northern Ireland's still-tenuous peace process and its future political and economic development.

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Footnotes

1.	The United Kingdom (UK) notified the European Union (EU) by formally invoking Article 50 of the Treaty on European Union, the legal mechanism under which a member state may withdraw from the EU.
2.	European Council, European Council Decision Taken in Agreement with the United Kingdom Extending the Period under Article 50(3)TEU, April 11, 2019.
3.	Office of the United States Trade Representative, "Trump Administration Announces Intent to Negotiate Trade Agreements with Japan, the European Union and the United Kingdom," October 16, 2018. Also see CRS Report R44817, U.S.-UK Free Trade Agreement: Prospects and Issues for Congress, by Shayerah Ilias Akhtar.
4.	See CRS Report RS21333, Northern Ireland: Current Issues and Ongoing Challenges in the Peace Process, by Kristin Archick.
5.	Simon Carswell, "Pelosi Warns No US-UK Trade Deal if Belfast Agreement Weakened by Brexit," Irish Times, April 15, 2019.
6.	Senator Chuck Grassley, "Grassley Joins Colleagues in Letter Pledging to Back Britain After Brexit," August 6, 2019.
7.	Catherine Haddon and Lee Wratten, Conservative Party Leadership Contests – How Do They Work?, Institute for Government, May 24, 2019.
8.	Prime Minister's Office, Boris Johnson's First Speech as Prime Minister: 24 July 2019, July 24, 2019.
9.	See footnote 8.
10.	See David Klemperer, No Deal Brexit Preparations, Institute for Government, August 1, 2019. Also see Department for Exiting the European Union, UK Government's Preparations for a No Deal Scenario, December 21, 2018.
11.	See European Union (Withdrawal) (No. 2) Act 2019, http://www.legislation.gov.uk/ukpga/2019/26/contents/enacted.
12.	See Fixed-Term Parliaments Act 2011, http://www.legislation.gov.uk/ukpga/2011/14/contents.
13.	Department for Exiting the European Union, New Withdrawal Agreement and Political Declaration, October 19, 2019, at https://www.gov.uk/government/publications/new-withdrawal-agreement-and-political-declaration.
14.	Office of the Prime Minister, UK Proposals for a New Protocol on Ireland/Northern Ireland, October 2, 2019.
15.	See Office of the Prime Minister, Commitments to Northern Ireland, December 8, 2017.
16.	Charlie Cooper, "Boris Johnson Would Rather Be 'Dead in a Ditch' Than Delay Brexit," Politico, September 5, 2019.
17.	Rowena Mason, "UK's Three Brexit Letters to EU: 'We Must Bring This to a Conclusion,'" Guardian, October 20, 2019.
18.	Chris Morris, "What is the Withdrawal Agreement Bill?," BBC News, October 22, 2019.
19.	David M. Herszenhorn, "EU27 Ponder How to Deal with UK Request For Brexit Delay," politico.eu, October 20, 2019.
20.	European Parliament, Brexit: New European Parliament Reaffirms Wholehearted Support for EU Position, September 18, 2019.
21.	See The UK in a Changing Europe, No Deal Brexit: Issues, Impacts, Implications, September 4, 2019.
22.	Cabinet Office, Government Response to Humble Address Motion, September 11, 2019.
23.	"UK's Hammond attacks 'Terrifying' Views of Brexiteer Rees-Mogg," Reuters, July 17, 2019.
24.	John Springford, How Would Negotiations After a No-Deal Brexit Play Out?, Centre for European Reform, September 3, 2019.
25.	The UK's most recent general election took place in June 2017, and the next election must occur by May 5, 2022.
26.	YouGov, Political trackers (14-15 Oct update), at https://yougov.co.uk/topics/politics/articles-reports/2019/10/16/political-trackers-14-15-oct-update.
27.	Matthew Ward, Geographical Pattern of UK Trade, UK House of Commons Library, August 16, 2019. Hereinafter, Ward, Geographical Pattern of UK Trade.
28.	Ward, Geographical Pattern of UK Trade.
29.	European Commission, "Overview of FTA and Other Trade Negotiations," updated July 2019, at https://trade.ec.europa.eu/doclib/docs/2006/december/tradoc_118238.pdf.
30.	CRS In Focus IF11209, Proposed U.S.-EU Trade Agreement Negotiations, by Shayerah Ilias Akhtar, Andres B. Schwarzenberg, and Renée Johnson.
31.	The most-favored-nation (MFN) tariff is the normal nondiscriminatory tariff that a World Trade Organization (WTO) member charges on imports from another WTO member, excluding preferential tariffs under FTAs and other schemes or tariffs charged inside quotas.
32.	For instance, one study estimates that a loss of preferential access to the EU market in a no-deal Brexit would result in UK export losses of at least $16 billion (about 7% of UK exports to the EU currently) due to an increase in tariffs on UK exports to the EU. Actual losses would be "much greater because of nontariff measures, border controls, and disruption of existing UK-EU production networks." Pamela Coke Hamilton and Alessandro Nicita, "The Trade Cost of a No-Deal Brexit to the United Kingdom," United Nations Conference on Trade and Development, September 3, 2019. Hereinafter, Hamilton and Nicita, "Trade Cost of a No-Deal Brexit."
33.	Hamilton and Nicita, "Trade Cost of a No-Deal Brexit."
34.	UK Government, "Temporary Tariff Regime for No Deal Brexit Published," March 13, 2019; and Jim Pickard and George Parker, "Ministers to Overhaul Planned Tariff Plan for No-Deal Brexit," Financial Times September 17, 2019.
35.	Rules of origin are laws, regulations, and procedures for determining the nationality of imported products. See CRS In Focus IF10754, Rules of Origin, by Vivian C. Jones.
36.	What if There's No Brexit Deal?, UK House of Commons Library, February 8, 2019.
37.	Oliver Wyman and Clifford Chance (consulting firms), The "Red Tape" Cost of Brexit, March 2018.
38.	Ward, Geographical Pattern of UK Trade.
39.	Automotive News Europe, "Automakers Warn Millions of Jobs at Risk in No-Deal Brexit" (Reuters), September 23, 2019; and European Automobile and Manufacturers Association, Brexit and the Auto Industry: Facts and Figures, March 2019.
40.	Georgina Hutton, Brexit and Chemicals Regulation (REACH), UK House of Commons Library, September 19, 2019. Hereinafter, Hutton, Brexit and Chemicals Regulation (REACH).
41.	Registration, Evaluation, Authorisation and Restriction of Chemicals Regulation (REACH) requires registration of chemicals with a European Economic Area regulatory body and has rules to control or restrict the use of hazardous chemicals.
42.	Hutton, Brexit and Chemicals Regulation (REACH).
43.	Based on 2017 data. Matthew Ward, Statistics on UK-EU Trade, UK House of Commons Library, July 24, 2019.
44.	Silla Brush and Alexander Weber, "London's Fight to Remain a Financial Hub After Brexit," Washington Post, July 3, 2019.
45.	Joe Wallace and Mischa Frankl-Duval, "Mapping Brexit: Where the Finance Jobs are Heading," The Wall Street Journal, December 23, 2018.
46.	EY, "EY Financial Services Brexit Tracker: Financial Services firms put contingency plans in action as asset and job relocation continues to increase," March 20, 2019, at https://www.ey.com/uk/en/newsroom/news-releases/190320-fs-brexit-tracker. Based on monitoring of financial statements of 222 of the largest financial services firms with UK operations.
47.	Ward, "Geographical Pattern of UK Trade."
48.	CRS In Focus IF10896, EU Data Protection Rules and U.S. Implications, by Rachel F. Fefer and Kristin Archick.
49.	European Commission, "Data Protection," https://ec.europa.eu/info/law/law-topic/data-protection_en.
50.	Mehreen Khan, Jim Pickard, and Janina Conboye, "No-Deal Brexit: How Prepared Are the UK and the EU?," Financial Times, July 31, 2019.
51.	UK Government, "Foreign Secretary Crosses the Atlantic to Expand Post-Brexit Opportunities for Global Britain," press release, August 6, 2019.
52.	World Bank, GDP (current U.S. dollars), at https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?.
53.	See footnote 52.
54.	For tariff-rate quotas, rates for imports inside a quota are lower, and in many cases significantly so, than for those outside the quota.
55.	See, for example, World Trade Organization, Council for Trade in Goods, "Members Call on EU and UK to Use Brexit Extension to Resolve Market Access Concerns," April 12, 2019.
56.	UK Government, Department for International Trade, "UK Trade Agreements with Non-EU Countries in a No-Deal Brexit," Guidance, last updated September 20, 2019.
57.	The EU has mutual recognition agreements with Australia, Canada, Israel, Japan, New Zealand, Switzerland, and the United States. See European Commission, Mutual Recognition Agreements, at https://ec.europa.eu/growth/single-market/goods/international-aspects/mutual-recognition-agreements_en.
58.	UK Government, "Trade with Japan," September 20, 2019, at https://www.gov.uk/government/consultations/trade-with-japan.
59.	Also see CRS Report RS21333, Northern Ireland: Current Issues and Ongoing Challenges in the Peace Process, by Kristin Archick.
60.	William Booth, "Northern Ireland Has Become an Unexpected Hurdle for Brexit," Washington Post, February 28, 2018.
61.	Sarah Lyall, "On Irish Border, Worries That Brexit Will Undo a Hard-Won Peace," New York Times, August 5, 2017; Henry McDonald, "Police Chief Says 'Hard Brexit' Irish Border Would Be Paramilitary Target," Guardian, February 7, 2018.
62.	Julian O'Neill, "Q&A: Why Is Dissident Republican Activity On the Rise?," BBC News, September 15, 2019.
63.	In comparison, there are 137 land crossings on the 3,700-mile eastern frontier that separates the EU from Belarus, Moldova, Russia, and Ukraine. Brian Hutton, "Ireland Has 208 Border Crossing, Officials from North and South Agree," Irish Times, April 26, 2018; Maeve Sheehan, "Irish Army Identifies 300 Border Crossing Points," Belfast Telegraph, December 17, 2018.
64.	The UK government asserts there are 15 principal crossing points along the Northern Ireland-Ireland land border and "many" other crossing points; it estimates there are 110 million person border crossings annually. UK Government, "Additional Data Paper: Common Travel Area Data and Statistics," The UK's Exit from the European Union: Northern Ireland and Ireland – Position Paper, August 16, 2017. Also see Bryn Colton, Sam Dodge, and Rodney Jefferson, "The 310 Miles Breaking Brexit," Bloomberg.com, September 9, 2019.
65.	"PM Johnson Stands by Peace, No Hard Border Whatever Brexit Result," Reuters, July 31, 2019.
66.	John Campbell, "Brexit: Does the Irish Peace Accord Rule Out a Hard Border?," BBC News, January 30, 2019; Tom McTague, "Brexit's Ulster Problem," Politico Europe, June 12, 2019.
67.	"UK Fully Committed to Good Friday Agreement," Belfast Telegraph, February 19, 2018; Peter Geoghegan, "Brexiteers Launch Broadside at Northern Ireland Peace Deal," Politico Europe, February 22, 2018; "Boris Johnson: I Am Committed to Good Friday Agreement," BBC News, July 31, 2019.
68.	"DUP Leader Foster To Meet PM for Brexit Talks in Belfast," Belfast Telegraph, February 4, 2019; Jonathan Gorvett, "Northern Ireland Politics Are Broken," Foreign Policy, August 27, 2019; Denis Staunton, "Backstop Compatible with Belfast Agreement, Says Coveney," Irish Times, September 6, 2019.
69.	Northern Ireland was governed through direct rule throughout most of the Troubles (from 1972 to 1999) and intermittently between 2000 and the 2007 DUP-Sinn Fein power-sharing agreement.
70.	Enda McClafferty and Jayne McCormack, "Brexit: Julian Smith and Boris Johnson Clash over Parliament Suspension," BBC News, September 5, 2019; George Parker and Arthur Beesley, "Johnson Clashes with Varadkar on Direct Rule in N. Ireland," Financial Times, September 9, 2019.
71.	As quoted in, John Campbell, "Brexit: David Sterling Warns of 'Grave' No-Deal Consequences," BBC News, March 5, 2019.
72.	John Campbell, "Brexit: What Does Ireland Do If There's No Deal?," BBC News, December 13, 2018; Daniel Boffey and Jennifer Rankin, "No-Deal Brexit Would Mean Hard Irish Border, EU Confirms," Guardian, January 22, 2019; "'No Breakthrough Expected from Johnson Meeting' - Varadkar," BBC News, September 6, 2019.
73.	Report of the UK House of Lords European Union Committee, Brexit: UK-Irish Relations, December 2016.
74.	Northern Ireland Statistics and Research Agency, Overview of Northern Ireland Trade, June 19, 2019.
75.	Sean Clarke, Daniel Levitt, and Pablo Gutierrez, "A Typical Hour in the Life of the Irish Border," Guardian, September 3, 2019.
76.	Lisa Smyth, "UFU Warns No-Deal Brexit Will Be Catastrophic for NI's Agriculture Industry," Belfast Telegraph, August 3, 2019.
77.	Simon Marks, "Brexit Is (Maybe) the Ruin of Irish Whiskey," Politico Europe, March 3, 2017; Colm Kelpie, "Brexit: How Would No-Deal Affect Northern Ireland?," BBC News, September 22, 2019.
78.	Brexit: Impact Across Policy Areas, UK House of Commons Library, August 26, 2016.
79.	UK Government Press Release, "Brokenshire Holds Inaugural Meeting of Northern Ireland Business Advisory Group," September 1, 2016.
80.	Stephen Walker, "Brexit: Northern Ireland Can Be Success Outside EU," BBC News, October 4, 2016; Pat Leahy, "No Return to Hard Border Post-Brexit, Says Theresa May," Irish Times, January 30, 2017.
81.	Sinn Fein Discussion Document, Towards a United Ireland, November 2016.
82.	"Brexit: Sinn Fein Repeats Call for Border Poll If No Deal," BBC News, July 30, 2019.
83.	UK Government, Northern Ireland Act 1998.
84.	Jonathan Bell, "Brexit Impact on Northern Ireland Could Sway Border Poll Result," Belfast Telegraph, October 25, 2017; Nick Eardley, "Brexit: 'Very Real' Chance of Irish Unity Poll If No Deal," BBC News, February 8, 2019; "Slight Majority for Unification in Northern Ireland – Poll," Irish Times, September 11, 2019.
85.	Mark Devenport, "Border Poll Not Priority for Leo Varadkar Post-Brexit," BBC News, August 7, 2019; Naomi O'Leary, "In Brexit Talks, Belfast Loyalists See Risk of Return to Violence," Politico Europe, September 23, 2019.
86.	Sam Levin, "Donald Trump Backs Brexit, Saying UK Would Be 'Better Off' Without EU," Guardian, May 5, 2016 and Justin Wise, "Trump Says He Supports UK Leaving EU Without a Brexit Deal ," The Hill, June 2, 2019.
87.	Steve Holland and Guy Faulconbridge, "Ahead of UK Visit, Trump Praises Brexit-Supporting 'Friends' Johnson and Farage," Reuters, May 30, 2019.
88.	Max Greenwood, "Trump: Boris Johnson Would 'Make a Great Prime Minister'," The Hill, July 12, 2019.
89.	Adam Taylor, "John Bolton Promises Britain Will Be 'Front of the Trade Queue' After Brexit, Says E.U. Treats Citizens Like 'Peasants'," Washington Post, August 13, 2019, and "UK 'First in Line' for US Trade Deal, Says John Bolton," BBC News, August 13, 2019.
90.	Suzanne Lynch, "Pence's Brexit Backing Catches Dublin Unawares," The Irish Times, September 3, 2019.
91.	Alexandra Alper, "Pence Says He Hopes for Orderly Brexit Amid Showdown," Reuters, September 4, 2019.
92.	Foreign and Commonwealth Office, Foreign Secretary's Statement on the Iran Nuclear Deal Following Brussels Meeting, January 11, 2018.
93.	Prime Minister's Office, PM Statement on US Decision to Move Embassy to Jerusalem, December 6, 2017.
94.	Christopher Hope and Julie Allen, "Theresa May Urges Donald Trump Not to Start a Trade War as She Tells Him of Her 'Deep Concern' at Tariff Plan," The Daily Telegraph, March 4, 2018.
95.	Foreign and Commonwealth Office, Cabinet Office, and Prime Minister's Office, Global Britain: Delivering on Our International Ambition , September 23, 2019, at https://www.gov.uk/government/collections/global-britain-delivering-on-our-international-ambition and Jeremy Hunt, "Britain Has Been Shaping the World for Centuries. That Won't change with Brexit," Washington Post, March 28, 2019.
96.	Emilio Casalicchio, "UK Will Be 'Diminished' After Brexit, Rutte Warns Tory Leadership Hopefuls," politico.eu, June 20, 2019, and "UK to Lose Global Influence After Brexit - Lord Hague," BBC News, July 6, 2017.
97.	International Institute for Strategic Studies, The Military Balance 2019, pp. 21.
98.	NATO Public Diplomacy Division, Defence Expenditures of NATO Countries (2012-2019), June 25, 2019.
99.	See, for example, Steven Erlanger, "Austerity-Battered U.K. 'Retreating Behind a Nuclear Shield'," New York Times, April 27, 2019 and Ewen MacAskill, "US Defence Secretary Intervenes in UK Military Budget Row," Guardian, July 2, 2018.
100.	Stephanie Hofmann, "Brexit Will Weigh Heavily on European Security. Here's Why," Washington Post, October 18, 2018.
101.	U.S. Bureau of Economic Analysis.
102.	U.S. Census Bureau, Profile of U.S. Importing and Exporting Companies, 2016-2017, September 26, 2019, see Table 5a: 2017 Exports by Company Employment Size to World Areas and Selected Countries, and U.S. Bureau of Economic Analysis, Activities of U.S. Multinational Enterprises, 2017, August 23, 2019, p. 8.
103.	See, for example, Speaker of the House, "Pelosi Statement on Potential Post-Brexit U.S.-UK Trade Agreement," press release, August 14, 2019. Senator Chuck Grassley, "Grassley Joins Colleagues in Letter Pledging to Back Britain After Brexit," August 6, 2019.
104.	Office of the United States Trade Representative (USTR), "USTR Signs Mutual Recognition Agreements with the United Kingdom," press release, February 2019. U.S. exports to the UK of products covered in these agreements was over $5 billion 2018 (total U.S. goods exports to the UK were $67 billion).
105.	U.S. Department of the Treasury, "Treasury, USTR Finalize Bilateral Agreement with the UK on Prudential Measures Regarding Insurance and Reinsurance," press release, December 11, 2018; and U.S. Commodity Future Trading Commission, "Joint Statement by UK and U.S. Authorities on Continuity of Derivatives Trading and Clearing Post-Brexit," press release, February 25, 2019.
106.	Emre Peker and Jason Douglas, "Trump-Backed U.S.-British Trade Deal Faces Hurdles," Wall Street Journal, August 27, 2019.
107.	See, for example, USTR, Trade Policy Staff Committee, Public Hearing on Negotiating Objectives for a U.S.-UK Trade Agreement, January 29, 2019.
108.	The USMCA was signed by the leaders of the three countries on November 30, 2018. Congress would need to pass legislation to implement the agreement before it can enter into force. See CRS In Focus IF10997, Proposed U.S.-Mexico-Canada (USMCA) Trade Agreement, by Ian F. Fergusson and M. Angeles Villarreal. The U.S.-Japan trade agreement has been concluded "in principle." CRS In Focus IF11120, U.S.-Japan Trade Agreement Negotiations, by Cathleen D. Cimino-Isaacs and Brock R. Williams.
109.	HM Government, Department for Exiting the European Union, The United Kingdom's Exit From, And New Partnership With, The European Union, February 2, 2017.
110.	European Commission, Draft Agreement on the Withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and Political Declaration Setting out the Framework for the Future Relationship Between the European Union and the United Kingdom, 14 November 2018.
111.	See CRS Insight IN10869, Northern Ireland, Brexit, and the Irish Border, by Kristin Archick and Derek E. Mix
112.	Patrick Grafton-Green, "Brexit Deal Latest: Boris Johnson and Jacob Rees-Mogg Hit Out at Theresa May as Divorce Deal 'Reached'," Evening Standard, November 13, 2018.
113.	Department for Exiting the European Union, Withdrawal Agreement Explainer and Technical Explanatory Note on Articles 6-8 on the Northern Ireland Protocol, November 14, 2018.
114.	In 1921, the mostly Catholic, southern part of Ireland won independence from the United Kingdom, resulting in the establishment of the Irish Free State in 1922 within the British Commonwealth. The Irish government formally declared Ireland a republic in 1948 and severed its remaining constitutional links with the UK. The Republic of Ireland, with a population of roughly 4.9 million, consists of 26 counties and encompasses about five-sixths of the island of Ireland; Northern Ireland, with approximately 1.9 million people, is composed of six counties and encompasses the remaining one-sixth of the island.
115.	Northern Ireland Office, The Belfast Agreement, April 10, 1998, at https://www.gov.uk/government/publications/the-belfast-agreement.
116.	The IRA has been on ceasefire since 1997 and officially ended its armed campaign in 2005.
117.	Harry McGee, "DUP Smarting from Close Encounter with Sinn Fein Crocodile," Irish Times, March 3, 2017; Enda McClafferty, "Assembly Elections a Brutal Result for Unionism," BBC News, March 4, 2017.
118.	Peter Hain, "Deal with DUP Means London Is No Longer Honest Broker on North," Irish Times, June 13, 2017; William Booth and Amanda Ferguson, "A Battle over Language Is at the Heart of Northern Ireland Crisis," Washington Post, February 9, 2018.
119.	Gareth Cross, "Little Sign of Progress in Stormont Talks Says O'Neill As DUP Questions If Sinn Fein Want Assembly Return," Belfast Telegraph, August 10, 2019; Jayne McCormick, "Stormont: Efforts to Break NI Political Deadlock to Intensify, Says Government," BBC News, September 4, 2019.
120.	Paul Nolan, "Two Tribes: A Divided Northern Ireland," Irish Times, April 1, 2017.