Dear clients and professional colleagues,
The UK formally left the EU on 31 January 2020 and is due to end transitional arrangements on 31 December 2020, yet there is no clarity what the future trading relationship between the UK and the EU will involve – a comprehensive free trade agreement, WTO terms or something in between? The opening salvos suggest that the EU and the UK start from positions which are poles apart in their pressurised negotiations to have a new future relationship in place by the end of the year.
The reality is that negotiating postures are inevitable and insider views expect a shift closer to the deadlines, in particular now that the UK's ask has moved to a pure third party relationship like Canada or Japan. In the time available, any new arrangements in place at the beginning of 2021 seem likely to be concentrated on trade in goods or otherwise limited to the scope of existing friendly third party treaties. Many matters will inevitably be left for discussions over the years ahead.
The UK now has a strong government committed to the development of the UK outside of the EU. We should wish both it and the EU a good dialogue and common sense in their negotiations to achieve a fair deal which avoids damaging protectionism, promotes freedom of trade and consumer choice, and enables businesses in the UK and across the continent of Europe to trade successfully with each other.
Our Brexit Legal Guide covers the key issues that will affect businesses in the UK and its trading partners over the coming months and into the future:
- the position that applies for the transition period that covers the rest of 2020;
- the realistic options for agreement of a new future relationship between the UK and the EU;
- the continuation or development of trading relationships between the UK and non-EU countries;
- the legal position across a range of practice areas and the practical consequences for business if, at the end of 2020, the transition period ends with or without any new arrangements being put in place; and
- the new legal order that will apply in the UK after the end of transition, including "retained EU law" and the range of other laws specifically passed to enable the UK to operate effectively outside the EU and to safeguard existing rights of businesses and EU citizens.
Today we have launched updated versions of the 'Leaving the EU: The process and preparations' and 'Withdrawal Agreement Q&A' sections of our Legal Guide and in the following days and weeks we will be updating the other sections as well as releasing a series of related podcasts.
Throughout the Brexit process our team at Herbert Smith Freehills continues to work across our firm to help clients in all markets and parts of the world in preparing for this major change. Across a range of sectors, clients have set up new subsidiaries, acquired new regulatory approvals in the EU or the UK, prepared for changed distribution channels and sought to protect their people working across countries.
For those who had to make significant changes in order to continue to carry on business in the EU, particularly financial institutions, many of these changes were made in time for the original leaving date of 29 March last year but may not be fully implemented until the end of this year, when most service businesses appear to face a high risk of reversion to WTO terms, ameliorated only by unilateral actions in the UK and the EU.
For businesses that trade in goods between the UK and the EU, however, although careful plans have been laid, the time of testing will not come until the rules at the frontiers and within the EU and the UK actually change – this is likely to be at the end of this year, potentially softened significantly by the outcome of the negotiations on the future relationship.
Our differentiating expertise has been recognised both by external commentators and by our close involvement in working with governments and regulators to develop solutions to Brexit related challenges for businesses. Our long tradition of involvement at the interface of law and public policy development is one to which we remain committed.
If you would like to discuss specific arrangements for support through the risks of the move to an uncertain future relationship, on how you might express the concerns of your business to governments, on dispute risks that may arise, or on any other questions or challenges you have, please do contact your regular Herbert Smith Freehills relationship contacts, or otherwise any of our experts listed here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.