Where have the talks got to?
Eight of the planned 10 rounds of UK/EU talks have now been completed. There are 10 separate strands to the talks including trade in goods, trade in services, fisheries, level playing field provisions, judicial cooperation, energy and transport. So while the main media attention has focused on the trade in goods, that is part of a much wider picture.
Hoped-for progress has not been made on the major sticking points, and time is running out if an overarching deal with the EU is to be concluded before next EU summit on 16/17 October. That is widely regarded as the final deadline for concluding such a deal, so that ratification by member states can be completed by the end of the year.
What about negotiations with countries outside the EU?
The UK will lose the benefit of trade agreements the EU has negotiated once the UK leaves the single market at the end of the year. The UK Government is therefore doing what it can to “roll over” these deals where possible.
The UK has been working at this steadily since notice to leave the EU was given in March 2017, and it has signed up new deals with many countries. Japan is the most recent example, but there are still some major economies where this has not yet been achieved, including South Korea and Canada. And of course the EU remains the UK’s largest trading partner by far.
What about the UK internal market?
Leaving the EU single market will require a new framework for internal trade within the UK. This is not only a sensitive matter for the devolved nations, but of concern to the EU, since the Northern Ireland Protocol to the Withdrawal Agreement requires appropriate checks to be made on goods moving between Great Britain and Northern Ireland. That is the price the UK Government has agreed to pay to ensure there is no “hard border” on the island of Ireland next year.
The UK Internal Market Bill (current approaching report stage in the House of Commons) is the vehicle the Government has chosen to make the necessary arrangements. Several clauses have been particularly controversial, since they appear to hand power to UK ministers to override certain provisions of the Protocol in some circumstances. Assuming these provisions pass the House of Commons (as seems likely) they may well be rejected or modified by the House of Lords.
The publication of the Bill has not helped the atmosphere of the UK/EU talks, since the EU sees it as an attempt to renege on commitments made in the Withdrawal Agreement earlier this year. But so far the talks are continuing as planned.
What happens if a deal is not concluded by the end of the year?
The absence of a trade deal will mean the imposition of both export and import tariffs on a range of goods, as well as non-tariff barriers such as border checks to verify the origin of goods and compliance with regulatory requirements. Some border checks will still be required even if there is a trade deal. Disruption at Great Britain’s ports is therefore inevitable, regardless of the outcome of the talks, though the more comprehensive the deal the UK reaches with the EU, the lower the level of disruption.
Given the limited time now remaining until the end of the transitional period, it seems likely that if a trade deal is concluded, it will not be as comprehensive as both sides would have hoped at the start of negotiations. Thus border disruption is likely to be significant, particularly for the first few months.
What can organisations do to prepare now?
The most obvious step is to ensure that arrangements are in place to comply with the necessary customs formalities if your organisation imports or exports goods from or to countries in the single market.
However, there are many other matters to consider which have not necessarily been given the same degree of prominence in the media. These include:
- Checking that services supplied to the EU market will remain legally compliant;
- Assessing any new legal requirements for conducting business in the EU through a branch office, or relating to any UK employed workers based in the EU or travelling to an EU member state for business purposes;
- Ensuring that an appropriate sponsorship license is in place if you wish recruit EU nationals to work in the UK next year;
- Taking the necessary steps to ensure continued protection for your organisation’s intellectual property;
- Auditing data flows to and from countries in the single market, ensuring that you continue to comply with the relevant data protection legislation, particularly for data transfers to the EU.
The following sources of information should be helpful: