Brexit Business Brief | Wrapped in a mystery

Written on 6 Sep 2018

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Summer’s over: what happened?

In our last edition we briefly surveyed what happened over the summer, from the publication of the UK government’s Chequers plan, through the European Commission’s late July paper on preparations for both a transition period and for a “no deal” Brexit, to the UK White Paper on “Legislating for the Withdrawal Agreement“.

Since then, the principal development has been the publication of the first 25 (of an expected 84) of the UK’s no deal preparedness notices. The accompanying, contextualising paper is worth a read for all in-house lawyers dealing with Brexit. Of the notices themselves, I found the ones on:

pretty useful. Papers on more specific topics include Horizon 2020 funding, exporting controlled goods, VAT, medicines, medical devices and clinical trials regulation, and (for the teenager in your life) Erasmus+.

Winter is coming: what happens now?

Negotiations continue in Brussels. What follows is a sketch of the official position of how the UK and EU teams still hope the coming months will play out.

First, the Withdrawal Agreement needs to be settled. The main outstanding points are: how to keep the border on the island of Ireland frictionless; future governance and dispute settlement arrangements; and (important for the EU) the protection of geographical indicators for certain goods, such as champagne. And, of course, the declaration on the framework for the future relationship between the EU and the UK, which is what the Chequers paper is all about – but which is widely expected to be little more than a short “heads of terms” style annexure to the Withdrawal Agreement.

For a long time, the European Council summit on 18 October 2018 was seen as the deadline for settling the Withdrawal Agreement. Both “sides” are now signalling that that deadline may slip into November. Perhaps even December.

Second, assuming the Withdrawal Agreement is settled, it must be consented to by the European Parliament, and approved by the UK House of Commons in a “meaningful” vote. That vote, if it happens, will be the crunch vote in the UK Parliament. If the government loses that vote, then what happens next is (to borrow from Churchill on Russia) “a riddle, wrapped in a mystery, inside an enigma”.

Chapter 5 of the UK paper “Legislating for the Withdrawal Agreement” is an excellent description of the procedure for approving and implementing the Withdrawal Agreement in the UK.

Third and finally, if the votes in the European Parliament and House of Commons are carried, then the expectation is that the Withdrawal Agreement would be ratified by the UK and the EU. That would mean that the UK leaves the EU on 29 March 2019, entering into a “status quo” transition period until 31 December 2020.

As I say, that is what is meant to happen. This paper from the Institute for Government sets out in a good infographic on page 3 how alternative scenarios could result in “no deal”.

Sector developments

Over the summer, we published a special edition of our Regulatory Outlook dedicated to Brexit. Looking across 16 areas of business regulation, it discusses how Brexit may affect the regulatory environment in which businesses operate. It is good stuff.

The various UK no deal notices to which I refer above will be relevant to many sectors.

On the question of whether Brexit would render the performance of cross-border financial contracts “illegal, impractical or impossible in some way”, this paper from the FMLC is the best thing I have read.

For financial services generally, the FCA’s Brexit page pulls together the regulator’s main Brexit publications, including details of the temporary permission regime and its statement on the transition (implementation) period. The Bank of England page on the temporary permission regime is here.

The UK government wrote to the health and care sector setting out how it expects the sector to prepare for a no deal situation.

And the UK also set out what the implementation period means for the life science sector and “some facts on the future of intellectual property laws” after Brexit.

Legal developments

In the world of UK Brexit legislation, the Taxation (Cross-border Trade) Bill is back in the House of Lords this week; the House of Lords Library has published a good briefing on what the Bill does.

The Trade Bill starts its second reading in the House of Lords next week. Those Stakhanovites in the House of Lords Library are on the case here.

The Haulage Permits and Trailer Registration Act 2018 received Royal Assent on 19 July 2018. This Act is important to the logistics sector; the government press release is here and the (rather more informative) Explanatory Notes to the Act are here.

The government is drip-feeding out the hundreds of statutory instruments that will be required to make the incorporation of EU law onto the UK statute book (i.e. “retained EU law”) “work” after Brexit. The UK government website for those is here, but seems lacking. For those with access to Practical Law and who really want to get into the weeds of this, I recommend signing up instead to their Brexit SI updater.

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