UK & EU: What will actually change after the UK leaves the EU on Brexit day?

 

Now that the UK Brexit Bill has been formally approved by the Lords and MPs, the UK must turn its attention to the next stage of the complicated process – formulating a future agreement with the EU.

The Withdrawal Agreement Bill (WAB) was passed in Parliament on 23 January 2020 after the Lords, who had been trying to secure changes to it to protect EU nationals and child refugees, admitted defeat and accepted the draft legislation. No ifs, no buts, 31 January is Brexit day!

What happens on 31 January 2020?

At 23:00hrs (UK time) on 31 January 2020 the UK will officially leave the European Union and cease to be a member state. After this, revoking article 50, the formal process of exiting the EU, is no longer possible. The UK will have passed the point of no return and will no longer be a member of the EU.

Under the terms of the Withdrawal Agreement with the EU, the UK will then enter a transitional period during which time the UK will abide by EU rules despite no longer being a member.

It will allow businesses and the government to prepare and adjust to new post-Brexit arrangements and was designed to prevent a sudden change to trade rules, laws, immigration and regulations which could have caused significant damage to both the UK and EU.

The transition period will be used to negotiate what the new UK-EU relationship will look like.

What will stay the same during transition?

• The UK will remain in the customs union and the single market, meaning trade will carry on as normal.
• EU citizens arriving in the UK, and UK citizens arriving in the EU, will enjoy the same freedom of movement rights.
• The UK will still be part of existing EU trade deals but will be able to negotiate future trade deals.
• Security co-operation will continue between the UK and EU.
• The UK will still be subject to EU law and the rulings of the European Court of Justice.
• The WAB specifies that, during the transition, there will be a special process for scrutinising any new EU laws made during this period.

 

The latter is because there will no longer be any British MEPs in the European Parliament, where EU law is approved. There will also be no UK commissioner, and UK ministers will no longer attend meetings of the EU Council.

How long does the transitional period last?

The transitional period is currently scheduled to end on 31 December 2020, which was the date originally agreed by former Prime Minister Theresa May.

The transitional period can, however, be extended once by up to two years, if the UK and EU jointly decide to do so before 1 July 2020.

Prime Minister Boris Johnson has, however, declared that he will not extend the transitional period. He even included legislation in the WAB which prevents a minister from agreeing any extension to the transition period. Previously ministers had the power to agree an extension to the transition period, if the House of Commons had approved it, but this added section of the bill prevents it.

It is still in the UK Parliament’s power to change the law, however. For this to happen it would require further primary legislation to be approved.

Then what?

As mentioned, the transition period will be used by the UK and EU to agree on what the future trade agreement and relationship will look like.  At the end of the transition this relationship will be shaped by whatever has been agreed in the 11-month period.

Prime Minister Johnson has indicated he would prefer a relatively loose free trade agreement that would see the UK leave the single market and customs union.

If a deal is not reached on time the UK would resort back to international conventions for security and trade on WTO terms, which would be very similar to a so-called “no-deal Brexit” or “Hard Brexit”.

Northern Ireland, however, would be an exception as its trading relationship with the EU would be covered by the provisions in the Northern Ireland protocol.

In terms of law, the UK would be able diverge from EU rules at the end of the transition period and would no longer be obliged to follow EU law.

Under the terms of the Withdrawal Agreement with the EU, citizens’ rights would continue to be protected even if a deal is not agreed by the end of December 2020.

If you have any questions this year to prepare your business for continuing to trade across borders post Brexit, please do not hesitate to contact:

Steen Rosenfalck, Senior Partner

ebl miller rosenfalck, London

e:  sr@millerrosenfalck.com 

t: +44 (0)20 7553 9931

 

The material contained in this note is provided for general purposes only and does not constitute legal or other professional advice. Appropriate legal advice should be sought for specific circumstances and before action is taken.

 

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