A truism: Brexit is a process, not an event. So, 100 days after the UK left the Single Market and the Customs Union, how are five major topics in EU-UK trade – the trade agreement itself, business travel, data adequacy, financial services, and movement of goods – developing?
The EU-UK Trade and Cooperation Agreement
The TCA, the treaty that governs trade in goods and services between the EU and the UK, remains only provisional in its application. The European Parliament has delayed its consideration of the TCA in order to express disapproval of the UK's extension of grace periods for checks on goods entering Northern Ireland. Without the Parliament's sign off, the TCA cannot be formally ratified.
However, for practical purposes, this delay in ratification is irrelevant. The TCA is in force, if only provisionally, and has been since the start of 2021. And the Parliament is expected finally to give the nod at the end of April.
We looked at the TCA's impact across 17 areas of business regulation in our recent Regulatory Outlook.
Once the Brexit transition period ended, so did free movement between the UK and the EU. For non-business travel, such as tourism, into the EU, the rule of thumb is "90/180"; visa-free travel into the EU is permitted for 90 days in every 180 days.
For business travel, a challenge will be understanding the new regime constructed by the TCA – which few businesses have yet had to do, with travel restricted by the pandemic. There is no overarching mobility chapter in the TCA; instead, it will, as a general approach, be necessary to analyse the purpose of each business visit against both the provisions of the TCA and local rules in each EU Member State.
Some short-term business trips from the UK into the EU are permitted without the need for a work permit or visa, where (in summary) the visitor is not engaged in selling goods or supplying services to the general public and is not being paid on their own behalf – the TCA contains a list of the activities in which such short-term business visitors are allowed to engage (but even there, some local "non-conforming measures", that is, specific Member State exceptions, may apply). These trips would also have to take account of the general 90/180 rule.
For other business travellers – such as contractual service suppliers, independent professionals, and intra-corporate transferees – the rules set out in the TCA will apply, and then the local position in the relevant Member State will need to be checked.
The result for business travellers from the UK into the EU is a suddenly more complex regime. Some fly-in, fly-out business travel will go ahead as straightforwardly as it did when the UK was a Member State (except there will be a different passport queue); but in many other cases the purpose of the visit or trip and how it is classified will then drive the analysis of whether a work permit, visa or other permission is required.
We discuss Brexit's impact on business travel from the EU into the UK here.
The TCA created a four month period, extendable by two months, for the EU to decide whether the UK has an "adequate" regime for the protection of personal data. The period, if extended, expires at the end of June 2021; otherwise, at the end of this month.
If the UK were deemed not adequate, it would make the transfer of personal data from the EU to the UK more difficult than it is under the current regime (which is, in effect, simply a carry-forward of the General Data Protection Regulation rules which applied when the UK was a Member State and then during the transition period).
In February 2021, the European Commission adopted a draft decision finding the UK regime adequate. As we discuss here, the opinion of the European Data Protection Board, approval from representatives of EU countries and final adoption by the European Commission are still to come before the UK is finally deemed adequate, and that must happen by the end of June. For now, the wind appears set fair for an EU adequacy decision to be given…though any final decision may well be challenged by privacy activists.
With two relatively minor exceptions, the EU has yet to find any aspects of UK financial services regulation worthy of an "equivalence" decision. Equivalence findings make financial services operations, and the marketing and selling of financial services products cross-border, easier.
As the EU's former chief Brexit negotiator Michel Barnier has said, “the EU will consider an equivalence decision when it is in the EU’s interest" – and it follows that a mercantilist approach may make for a long wait. For its part, the UK is frustrated that the EU is holding it, in the words of the governor of the Bank of England, to a "standard that the EU holds no other country to and would, I suspect, not agree to be held to itself". (Both quotes from the FT here.)
Positions on financial services are becoming entrenched. Passporting is long gone; now, thoughts of mutual equivalence decisions recede. A more positive sign has been the conclusion of technical negotiations on a Memorandum of Understanding which, once concluded, would create the framework for voluntary regulatory cooperation in financial services between the UK and the EU. However, a twice-yearly forum may do little to bring the EU and UK closer as each now seems set on pursuing policies of competitive autonomy in financial services.
Movement of goods
The most media-friendly aspect of post-Brexit trade, the problems that have faced exporters from GB to the EU have been well-chronicled.
We have advised businesses on some of the most complex challenges of moving goods through the new customs, sanitary and phyto-sanitary and other regulatory regimes applicable to foodstuffs and other exports. The decision by the EU and UK negotiating teams not to allow for a further mutual transition period after 1 January 2021 to enable importers and exporters to adapt to the new regime – the details of which only became clear days before the end of 2020 (and, for some industries, not even then) – certainly concentrated minds in many businesses. That may have been the intention, but the costs for some have been high.
The UK did, unilaterally, allow for some grace periods on imports from the EU, and in March 2021 extended many of these to 1 January 2022, with the result that full border checks on goods entering Great Britain from the EU will not start until that date.
Separately, for goods going into Northern Ireland, the UK, as mentioned, has lengthened the time before the introduction of the full checks and processes required under the Northern Ireland Protocol, provoking the start of legal action by the Commission. Tension may be allayed by the UK and EU agreeing ways to mitigate or better implement some of the Protocol's provisions on goods movement from Great Britain into Northern Ireland; negotiations that are being reported in the UK media.
In these five areas, we see Brexit's nature as an ongoing process, and, in some, "Brexit" becoming a series of episodic, topic-specific negotiations between the EU and the UK.