Following the referendum held on 23 June 2016, the UK government notified the European Council in March 2017 of its intention to withdraw from the Union, officially triggering a two-year negotiating period stipulated under the EU Treaties (article 50 TEU).
The negotiations opened on 19 June 2017 in Brussels, headed by the EU’s Chief Brexit Negotiator, Michel Barnier, and the UK Secretary of State for Exiting the European Union, David Davis MP, and aim to be ready for ratification by October 2018. The first phase of the negotiations covering withdrawal issues such the financial settlement, citizens’ rights and the Irish border officially concluded on 15 December 2017 following the European Council’s decision that ‘sufficient progress’ had been reached.
After several rounds of intense negotiations, the EU has now agreed to a ‘standstill’ transition period for 20 months after the UK leaves the EU in March 2019 and to engage in preliminary and preparatory discussions on the future trade relationship. The terms of the transition agreement mean that the UK will effectively remain in the Single Market and EU Customs Union until the end of 2020 – being legally required to implement EU rules but no longer able to vote on making them. While that has given a degree of comfort to business by providing some much-needed assurances, a possible cliff-edge at the end of 2020 is now a concern. What sort of cliff-edge depends on the outcome of negotiations on the future (post-transition) trading relationship. At present, the trajectory appears to be towards a Free Trade Agreement similar to CETA but falling short of the UK government’s aims. The next steps will see the UK and EU27 address outstanding policy gaps and enter into initial discussions on the future partnership with a view to concluding the final Withdrawal Agreement and political declaration by the Autumn 2018.
Businesses for whom the UK is an important export market, or UK businesses that trade with the rest of the EU, need to prepare for all scenarios, including the possibility of no agreement being reached and both parties falling back onto their WTO commitments. While positions on the terms of the transition appear to be converging, details are scarce and time is short. The contours and substance of a future trade agreement are yet to be determined and the next few months offer a key window of opportunity for businesses to make their views, concerns and preferences known to decision makers in London, Brussels and other EU capitals. Only companies who become more agile in an inherently uncertain political environment will be in a position to maximize their bottom-line opportunities and secure their interests.
How Fipra can help
Fipra can help firms assess potential risks, plan for the different scenarios that may arise, and engage with policy makers to ensure that their concerns are heard and understood. Our Brexit practice draws on the expertise of our senior advisers, with experience of both the EU institutions and complex trade negotiations.
Fipra’s Brexit team includes Lucinda Creighton (former Minister of European Affairs in Ireland, including during the 2013 Irish EU Presidency), Juan Prat y Coll (a former Director-General for External Affairs within the European Commission and former Spanish Ambassador to Italy and the Netherlands), Peter Chase (former Vice President, Europe for the US Chamber of Commerce, with responsibility for negotiations on the Transatlantic Trade and Investment Partnership) and Dirk Hudig, the Head of our Brussels office and formerly Secretary General of UNICE (now BusinessEurope).
With offices in Brussels, London and every EU Member State, Fipra is in a unique position to draw on political insight and analysis from across our network, providing up-to-date assessments of the direction in which negotiations are moving and advice on next steps. To read more about our Brexit team please refer to our Brexit Leaflet and for more information please call Daniel Furby on +32 2 613 2828 or contact: firstname.lastname@example.org