Welcome to Brexit Business Brief, our regular newsletter looking at Brexit developments in a legal and business context. You're receiving this newsletter because you've subscribed for Brexit Insights from Osborne Clarke.

Exit

The United Kingdom leaves the European Union at 11.00 p.m. (UK time) on Friday 31 January 2020. The UK will then enter the status quo transition period which will last until at least the end of 2020.

Everything stays the same…

During the transition period, ‘everything stays the same’. The UK will remain a member of the Single Market and of the Customs Union. Trade and sectoral agreements between the EU and third countries continue to apply to the UK. EU law continues to be directly applicable in the UK.

…except no representation

However, in one important respect, not quite everything stays the same. In the transition period, the UK will have no representation at the EU and no participation in its deliberations (save for some limited exceptions under the Withdrawal Agreement).

The UK will have no EU Commissioner and no MEPs, and no input into EU legislative processes.

Extending the transition?

The transition period can be extended beyond 2020, to the end of either 2021 or 2022. Any decision to extend can be taken only once, must be taken jointly by the EU and the UK, and must be taken by the end of June 2020.

The UK government is adamant that there will be no extension of the transition period beyond the end of 2020.

The negotiations: timeline

During the transition period, the EU and the UK will negotiate their future relationship. That is, their relationship after the end of the transition period across a wide and deep range of topics.

Unpicking

Of most interest to business will be the negotiations on – deep breath – data protection; the movement of goods (including customs, tariffs and regulatory aspects); services generally (including market access and non-discrimination, and regulatory aspects); financial services; digital; capital movements; intellectual property; public procurement; movement of people; transport; energy… and of course fisheries.

This is the unpicking of a 46 year marriage, so the negotiations will go well beyond trade, also covering defence and security, cybersecurity, foreign policy, justice and law enforcement, and the governance of the relationship.

Timeline

This is our timeline for the negotiations. The contents of that timeline come principally from the Withdrawal Agreement and the Political Declaration.

From that timeline, I would particularly pick out these dates in 2020:

  • 25 February: The General Affairs Council is expected to sign off on the EU’s negotiating mandate. This means that formal negotiations will not start until early March.
  • June: The parties are to meet to ‘take stock of progress’.
  • End of June: Financial services equivalence assessments due under the terms of the Political Declaration.
  • End of December: Data adequacy decision due under the terms of the Political Declaration.
  • End of December: Details of the Ireland / Northern Ireland protocol to be agreed under the Withdrawal Agreement.

The expectation is that the negotiations will need to be wrapped up at some point in autumn 2020, to allow time for ratification by EU Member States.

Ratification

How that ratification is done – in short, can it simply be ratified by each national government, or does it also have to be approved at national or regional parliament level under some States’ constitutional arrangements – will be determined by the nature and contents of the future relationship agreement(s).

A deeper ‘mixed competency’ agreement covering a wide range of areas will need to be ratified by those parliaments, whereas a ‘thinner’ agreement limited to just some areas (such as movement of goods, for example) can be done at government level.

In the next edition of Brexit Business Brief, I will look at what we know about the UK and EU’s opening negotiations positions.

Useful links

Commission discussion documents: The European Commission is currently holding seminars for Member States as part of its internal preparatory discussions ahead of the negotiations.

The Commission is publishing the slide packs for those sessions and they are a very useful guide to the EU’s approach. So far we have the slides on personal data protection (adequacy decisions); on cooperation and equivalence in financial services; on level playing field and sustainability; on energy; on transport; and on the future free trade agreement. They can be found here on the new EU ‘Task Force for Relations with the United Kingdom‘ site.