After long and difficult negotiations, 25 November 2018 the EU and the United Kingdom have reached an agreement on the conditions for a Brexit.
The Brexit deal still requires the approval of the British parliament. It is unclear if a majority of the British House of Commons will vote in favour of the Brexit Deal on 11 December 2018. Pressure is high as an alternative deal is not available. However, earlier this year parties agreed on on a transition period from 30 March 2019 to December 2020. The transition period allows parties to keep the borders open for trade in the near future. Parties aim to end the transition period on 31 December 2020 as a new multi-annual financial framework for the EU is going to start per 1 January 2021.
In this blog Aram van Bunge summarizes some key points in the pending Brexit Deal:
- during a 21-month transition period, the United Kingdom will adopt existing and new European rules. Consequently, the borders between the EU and the United Kingdom remain open for traffic of goods. The European rules will also apply in judicial and defence cooperation. The United Kingdom is no longer member of the EU and therefore will not be allowed to vote on new European regulations;
- a so-called ‘backstop’ is agreed upon. In short, this means that the transitional period will be extended as long as there is no agreement on the trade relationship between the EU and the UK. This backstop is aimed at avoiding a ‘hard’ border between Ireland and Northern Ireland directly after 2020. The exact formulation is incredibly complex because the backstop is about the relationship between Northern Ireland and the EU and the relationship between the EU and the rest of the United Kingdom, and how these agreements relate to each other;
- as long as there is no trade agreement between the EU and the UK and the backstop is in force, the United Kingdom cannot enter into a trade agreement with third countries. After all, the UK is still part of the European customs union. This only applies to trade in goods;
- as long as there is no agreement on fishing, EU vessels will not fish in British waters, and the EU will impose import duties on British fish products;
- the system of reciprocity (‘equivalence’) is going to apply to financial services. Both parties will recognize each other’s standards as long as they serve the same purpose, regulations may not be much stricter or looser;
- Disagreement on regulations will be dealt with by an independent panel. However, if it specifically concerns European legislation, the European Court is competent to decide;
- EU law applies to cross-border conflicts during the transitional period;
- the rights of UK citizens living in the EU for five years or longer before the end of the transitional period and of EU citizens resident in the UK for five years or longer before the end of the transitional period will continue to be guaranteed. They retain social rights and obligations, and their right to freely move between the UK and the EU. The British can impose restrictions on the stay in, and access, to the UK after 29 March 2019;
- the British will comply with all financial obligations they have entered into, as agreed in April 2017. The agreement does not mention a specific amount, only the way in which the amount is calculated. Current calculations imply the amount involved is approximately 40 billion euros.
Brexit Impact Scan
Due to the many questions the Brexit raises, the Dutch government has drawn up a ‘Brexit Impact Scan’. This scan is intended for all companies in the Netherlands. Based on a number of questions, this scan shows the impact of the Brexit for your company. Issues that are discussed are import, export, intellectual property, use of digital services, transport and suppliers. It is available via: https://www.brexitloket.nl/impactscan. The scan is part of a broader information service called Brexit loket (https://www.brexitloket.nl/).
The British Chamber of Commerce recently introduced a Brexit checklist:
In addition, the European Parliament has published a voluminous document on the legal consequences of Brexit.
Topics that are discussed are:
- Future personnel needs
- UK / EU customs controls
- Potential delays at the border between the UK and the EU
- Tariffs for trade between UK and EU
- Rules of origin in trade between the UK and the EU
- EU trade agreements with third countries
- Customs facilities, reliefs etc.
- Customs/export training
- Import VAT
- VAT registration in the EU
- Currency risk
- Intellectual property
- Contract assessment
- EU regulations
- Competition policy and state aid
Dutch Government also introduced Brexit vouchers (valued at EUR 2,950) to pay for advice on the Brexit. A company can request a Brexit voucher for:
- advice on alternative markets for the export and/or import of goods and services;
- identifying consequences for the company in the field of logistics or the free movement of employees, goods and services.
If you are seriously considering doing business with the British, it is advisable to become a member of the Dutch/British Chamber of Commerce. Our firm is already a member of this organization and the membership has proved to be very useful in connection with the many business contacts that can be made within this organization. Brexit is also at the top of this organization’s priority list.
If you require further information in specific areas, please feel free to contact me.