Updated: Apr 16, 2020
Since Friday, 31 st January 2020, at 11 pm, the United Kingdom (UK) is no longer a member of the European Union (EU).
Operating outside the EU trading norms that have been in place for decades represents a significant challenge for many businesses trading with the EU and/or the rest of the world. They demand clear and comprehensive information as to how the UK will organise trading arrangements from 1 February 2020 and beyond.
Following departure, from 31 January 2020, 11:01 pm, the UK will EU-UK Withdrawl Agreement (WA) will come into force. Formally it is known as the"Agreement on the Withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community".
This is a result of EU-UK intensive negotiations to agree on the terms of the UK's withdrawal with a view to creating legal certainty once EU law ceases to apply to the UK.
It was formally signed on 24 January 2020 by the President of the European Council, Charles Michel, and the President of the European Commission, Ursula von der Leyen and Prime Minister Boris Johnson in the United Kingdom.
The European Parliament's consented on 29 January, the EU 27 Member States on 30 January 2020.
This has completed full ratification of the Withdrawal Agreement,
Content of the WA
The WA sets out the terms of the UK’s exit from the European Union (and the European Atomic Energy Community) and is applicable even after the transition period ends. Its substantial elements were negotiated in an agreement reached on 14 November 2018.
The agreement brings legal certainty on
Common provisions, setting out standard clauses for the proper understanding and operation of the Withdrawal Agreement.
Citizens' rights, protecting the life choices of over 3 million EU citizens in the United Kingdom, and over 1 million United Kingdom nationals in EU countries, safeguarding their right to stay and ensuring that they can continue to contribute to their communities.
Separation issues, ensuring a smooth winding-down of current arrangements and providing for an orderly withdrawal (for example, to allow for goods placed on the market before the end of the transition to continue to their destination, for the protection of existing intellectual property rights including geographical indications, the winding down of ongoing police and judicial cooperation in criminal matters and other administrative and judicial procedures, the use of data and information exchanged before the end of the transition period, issues related to Euratom, and other matters).
The financial settlement, ensuring that the United Kingdom and the EU will honour all financial obligations undertaken while the United Kingdom was a member of the Union.
The overall governance structure of the Withdrawal Agreement, ensuring the effective management, implementation and enforcement of the agreement, including appropriate dispute settlement mechanisms.
A legally operative solution that avoids a hard border on the island of Ireland, protects the all-island economy and the Good Friday (Belfast) Agreement in all its dimensions, and safeguards the integrity of the EU Single Market.
A protocol on the Sovereign Base Areas (SBA) in Cyprus, protecting the interests of Cypriots who live and work in the Sovereign Base Areas following the United Kingdom's withdrawal from the Union.
A Protocol on Gibraltar, which provides for close cooperation between Spain and the United Kingdom in respect of Gibraltar on the implementation of citizens' rights provisions of the Withdrawal Agreement, and concerns administrative cooperation between competent authorities in a number of policy areas.
as well as a range of other separation issues.
From a business trading with the UK from the EU, or from the EU with the UK, three elements are particularly important:
The WA provides for a so-called "transition period" (EU terminology) or "implementation period" (UK terminology), a time-limited period, starting on 1 February 2020. at least until the end of 2020.
It contains a Protocol on Ireland / Northern Ireland, which explains how to trade with Northern Ireland should be carried out, in the case of no other arrangement being in place at the end of the transition period (see separate blog entry)
Alongside the WA, there is a Political Declaration on the framework of the future EU-UK relationship. This is no more than a declaration of intent, however, it provides "commitments" t0 work towards the closed possible relationship on many areas, including customs & global trade.
The exact terms of the transition period are set out in Part Four of the Withdrawal Agreement.
The European Union Withdrawl Agreement Bill
In addition to this international treaty, there is the UK domestic law, the European Union (Withdrawal Agreement) Bill 2019-20. Please note:
It is the bill that will implement the WA between the EU and the UK.
This is NOT the EU-UK Withdrawl Agreement, but the act which implements this international treaty.
The bill addresses the same issues as the EU-UK Withdrawl Agreement to the EU (logically, as it implements it) including financial contributions, citizens' rights, customs arrangements for Northern Ireland and the planned 11-month transition period as set out in the Withdrawl Agreement.
The Transition Period (01.02.2020 - 31.12.2020)
The EU-UK WA and the UK domestic EU-WAB confirm the 11-month transition period after 31 January. It is currently foreseen that the transition period ends on 31 December 2020 (It can be extended once by up to one to two years. Such a decision must be taken jointly by the EU and the United Kingdom before 1 July 2020).
What will the EU do?: The EU will treat the UK as if it were a Member State, with the exception of participation in the EU institutions and governance structures.
What does this mean?
The UK will cease to be an EU member.
The UK will be classed as "third country", which means
It will no longer participate in the EU's decision-making processes.
It will no longer be represented in the EU institutions, agencies, bodies, EU agencies, offices or other bodies.
Purpose: The transition period will help in particular administrations, businesses and citizens to adapt to the withdrawal of the UK. The purpose of the transition period is to give time for the UK and EU to negotiate their future relationship, including a trade deal.
Will EU law still apply in the UK from 1 February 2020?
No, the UK will no longer be bound by EU legislation formally and directly under the Lisbon Treaty. However, from 1 February 2020, the EU-UK Withdrawal Agreement and the UK Withdrawl Bill apply, which give effect to EU law in the UK for as long as it is in force as per the above.
This means, legally speaking
that all institutions, bodies, offices and agencies of the European Union continue to hold the powers conferred upon them by EU law in relation to the United Kingdom and to natural and legal persons residing or established in the United Kingdom throughout the transition period.
The Court of Justice of the European Union continues to have jurisdiction over the United Kingdom during the transition period. This also applies to the interpretation and implementation of the Withdrawal Agreement.
The UK can conclude international agreements with third countries and international organisations even in areas of EU exclusive competence, like FTAs, provided that these agreements do not apply during the transition period.
What does it mean for EU and UK citizens and businesses in general?
"It will be business as usual for citizens, consumers, businesses, investors, students and researchers in both the EU and the United Kingdom". (Q&A, 24 January 2020)
What does it mean for UK businesses trading with the EU? In the week before Brexit HM Revenue & Customs (HMRC) has sent letters to business to advise on actions they need to take before the end of the transition/implementation period,
In the short time frame between 1 February 2020 and 31 December 2020. HMRC specified that:
The movement of goods between the EU and the UK during the implementation period continues unchanged.
The current Customs, VAT and Excise rules and regulations, that are based on EU law, such as the 6th EU VAT Directive (as amended). EMCS provisions, Union Excise Law and the Union Customs Code (UCC) remain in effect as today and do not change (unless they change for the EU).
What does it mean for EU businesses trading with the UK?
The EU Commission specified that: "All EU law, across all policy areas, will still be applicable to and in the United Kingdom, with the exception of provisions of the Treaties and acts, which were not binding upon and in the United Kingdom before the entry into force of the Withdrawal Agreement. The same is true for acts amending such acts".
She further clarifies that the United Kingdom will:
remain in the EU Customs Union and in the Single Market with all four freedoms, and all EU policies applying;
be subject to the EU's enforcement mechanisms, such as infringement procedures;
have to respect all international agreements the EU has signed, and will not be able to apply new agreements in areas of EU exclusive competence unless authorised to do so by the EU.
What about Sanctions and external action during the transition period?
The EU's Common Foreign and Security Policy (CSDP) will apply to the United Kingdom during the transition period.
EU's restrictive measures, like sanctions and embargoes, will continue to be applicable to and in the United Kingdom.
Wherever there is a need for coordination, the United Kingdom will be consulted, on a case-by-case basis.
So, take away?
Business as usual, except that preparations now need to be stepped up to get ready to trade outside the EU.
No customs formalities are to be applied between EU-UK trade and vice-versa.
Trade Agreements remain in effect, and so does preferential trade
Export Control and Sanctions law do not change.
Withdrawal Agreement & Political Declaration https://www.gov.uk/government/publications/new-withdrawal-agreement-and-political-declaration
Q&A from EU: Commission https://ec.europa.eu/commission/presscorner/detail/en/QANDA_20_104
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