Brexit

Britain left the EU on 1 February 2020, but for the most part most businesses haven’t noticed any real difference in the way they operate because we went straight into the Transition Period, so kept almost all the same rules governing our relationship with the EU.

 

The Transition Period will however end on 31 December 2020, and the terms of our trading relationship with the EU after this point are currently still unclear (see below for the main sticking points in the negotiations).  Our recent survey indicated that the majority of businesses are unprepared for the end of the Transition Period, and for the most part this is because they are unsure how to prepare or what to prepare for. What is clear however is that whatever the shape of the eventual trading relationship we have with the EU from 1 January, there will be significant changes in almost all areas for business. 

 

Regardless of the terms of any deal agreed between now and 31 December, there will be customs and regulatory checks on trade to and from the EU and the UK, and different rules for UK businesses providing services in the EU.  For our business clients, the areas likely to be most affected immediately are in employment and immigration, data flows and intellectual property and supply chain, so it would be prudent to understand and prepare for the most likely position coming out of the Transition Period.  Dive into the detail in our dedicated areas below.

 

If you haven’t yet started Brexit preparations, take a look at our initial guidance https://www.crippspg.co.uk/brexit/brexit-planning-business-start/ .  We wrote it in November 2017, but the advice remains pretty much the same. 

Exactly what will change on 1 January 2021 is currently still unsettled.  Although much has been agreed between the negotiators (with some divergence on both sides from the agreed principles set out in the original “political declaration” ), the message from both sides is “nothing is agreed until everything is agreed”.   This “all or nothing” approach could still see us ending the arrangements under the Transition Period with no negotiated trade deal to replace them.   As the Government did not request a formal extension, the end of the Transition Period will be on 31 December.  Both sides had originally envisaged negotiations on the future relationship would be concluded by the European Council meeting of 15 October, which would have allowed ratification of an agreement to take place before the end of the Transition Period.  However, by the time of that meeting there were still substantial areas to be agreed on, as outlined below.

 

Governance: One of the main areas of difference is over “governance”.  In brief, the EU wants to have an overarching institutional framework (an association agreement), under which would sit “chapters” and linked agreements relating to the separate areas of cooperation (economic partnership, including the free-trade agreement and employment, as well as a security partnership).  But this approach is not popular with the UK government, because having one agreement would mean there was only one body in charge of overseeing compliance with the association agreement, a common dispute resolution mechanism (referred to as “governance”) and crucially, the EU want this to involve the UK continuing to be bound by rulings from the European Court of Human Rights and the European Court of Justice (CJEU), so the UK is instead arguing for a series of separate agreements each with their own governance provisions.

 

The level-playing field: This concerns competition law and state-aid (government subsidies) in particular.  The EU fears that the UK could reduce levels of regulation and protection in areas such as competition and state aid as well as tax, employment and environmental standards, and so gain a competitive advantage over EU members.   The UK however sees the ability to diverge from the standards set by the EU as a key advantage to leaving the EU.  The UK has strongly rejected any obligations for the UK’s laws to be aligned with the EU’s or for the EU institutions (like the European Court of Justice) to be make rules binding the UK.

 

Fisheries: The UK’s position is that fisheries negotiations should be separate from trade and market access issues and the wider economic partnership, but the EU is keen to deal with the issues together.  EU member states are concerned about the loss of access to UK waters and want to maintain the status quo for activities, access and quotas.  The UK government wants annual negotiations.

Whether or not the UK and EU do manage to agree a full trade deal before 1 January 2021, this will still mean the UK will be outside the Single Market and Customs Union and the trading situation will change.  Until we get further clarity from the Government over the details of a likely future trade deal, businesses need to be aware and if necessary take steps to prepare for a more distant relationship with Europe.  No matter what the shape of the future trade deal however, businesses moving goods into and out of Europe will need to make customs declarations and all businesses will need to ensure their workers who are EU citizens have got or applied for settled status if necessary.

 

Supply Chains and Commercial Contracts

Data protection

Employment

Intellectual property