Seoul Trader

Faisal Islam, Political Editor at Sky News, today reported that the Trade Secretary Liam Fox is visiting Korea, a key trade partner of the UK.

I noticed that Islam tweeted what has long been suspected regarding the possible rollover of the EU-Korea FTA, namely that “the EU has not and will not write key letter to Seoul and the other dozens of trade partners asking them to treat UK as a continuing EU member in transition for purposes of trade until Withdrawal Deal done. Limbo.”

A little background: the EU has an FTA in force with Korea. As a matter of law, that will cease to apply to the UK when it leaves the EU on 29 March 2019. Earlier in the year the EU agreed to write a letter to Korea, and its other FTA partners, requesting that the UK is treated as a continuing member of the EU during the transition period into which the UK will move, assuming that a Withdrawal Agreement can be finalised before 29 March 2019 (which despite recent blips I think is still probable, if not certain). If they all say yes, this prevents the scenario under which the UK is effectively treated as a member of the EU by the EU and itself until 1 January 2021, but it falls out of the FTAs, third countries not being bound by the Withdrawal Agreement.

A Withdrawal Agreement is unlikely to be finalised until next month at the earliest. At that point, the EU will ask Korea whether the FTA can still apply to the UK. Korea may say yes, it may say no, or it may say yes subject to conditions/concessions. It may not assent, if it assents at all, before 29 March 2019.

Many UK businesses consider that if the UK enters into transition, nothing will change until 1 January 2021. That may largely be true, although no business should assume that the UK will enter into a transition period and avoid a cliff-edge Brexit next year, and businesses should have advanced “no deal” plans by now. But the EU-third country FTA issue could be a problem for some businesses even if the UK goes into transition.

Any UK business that trades with Korea, or any other country with which the EU has an FTA, needs to consider what might happen if that FTA ceases to apply in March 2019. So does any business in a country like Korea that has an FTA with the EU that trades with the UK.

Undoubtedly Dr Fox will have raised this point with his counterpart in Seoul. But Islam is correct that businesses are in limbo on this point as much as they are on whether the UK will get a “deal” with the EU. Businesses need to ensure it is on their Brexit checklists.

Brexit Timetable – Where will the European Court of Justice Opinion on the Draft Withdrawal Agreement fit into the equation?

Brexit Clock

The clock is ticking! With only seven months left until the leaves the EU on 29 March 2019.  With the European Council Summit on 18 October 2018 eagerly anticipated by all parties there is some expectation, that until that date it will not be resolved whether the UK and EU are able to agree on a Withdrawal Agreement, which would form the basis of the Transition Period from 30 March 2019 to 31 December 2020.

An open issue remains on whether or not any agreed final draft Withdrawal Agreement, will be submitted to the European Court of Justice (ECJ) for the usual legal opinion the ECJ renders under Article 218 (11) Treaty of European Union (TEU) in respect of international agreements the EU enters into.

Continue Reading

Preparing for the Withdrawal of the UK from the EU

Brexit Tearing of FlagsOn 19 July 2018 the EU Commission published a paper on “Preparing for the withdrawal of the UK from the EU on 30 March 2019”.

The paper deals both with a “Deal Scenario” where the EU27 and the UK enter into a binding Withdrawal Agreement prior to 29 March 2019 and also with a “No Deal Scenario” setting out the consequences of no Withdrawal Agreement being entered into.

The Preparedness Paper in particular lists and summarizes the 68 sector and industry specific Notices to Stakeholders which the EU Commission has issued during recent months.

Continue Reading

Never a dull moment in Brexitlandia…

On Friday, the British Cabinet met in Chequers, the Prime Minister’s country retreat, to agree among itself, a position to propose to the EU27 on its intended future relationship with the EU after Brexit. A mere two years after the referendum. Key points involved agreeing to maintain a “common rulebook” for all goods and agricultural products and the establishment of a “combined customs territory”, under which the UK would apply its own, possibly lower, tariffs and policies for goods for the domestic market, and EU tariffs and policies for goods entering the EU. These, the Cabinet considered, would go some way to enabling the UK to maintain a frictionless, or close to frictionless, border in Ireland and mainland Europe, while giving it an independent trade policy, particularly in relation to services. On jurisdiction, the UK would pay “due regard” to EU case law in respect of the common rulebook, but would not technically be bound by its decisions, nor would the ECJ resolve disputes between the UK and the EU. Free movement would end and be replaced with a “mobility framework”.

A Government White Paper is expected to be published on Thursday, with considerably more detail than the three-pager that was published at the start of the weekend. In its current form, the proposal may not fly in Brussels. It looks like the fabled “cherry picking” of the UK requesting the benefits of EU membership without fully signing up to the Four Freedoms, and the fear in Brussels is that it would give the UK a competitive advantage that other members states do not have. But it is at least the first document emerging from the UK government that explicitly accepts trade-offs will need to be made.

Continue Reading

Brexit Transition Period Insight

Please see below our latest insight into the legal position of the proposed Brexit transition period.

Firstly we have examined the legality of the transition period; if the transition period applies in the domestic jurisdictions of the other 27 Member States; taken a closer look at identifying any gaps in EU law during the transition period and finally, if the European Court of Justice can decide on the lawfulness of the transition period and other aspects of the withdrawal agreement.

Statement of Intent for EU Citizens

Brexit FAQThe Home Office recently published details of its EU Settlement Scheme with information on how EU citizens in the UK can apply for settled or pre-settled status when the scheme is phased in towards the end of 2018. Our Brexit FAQs provide practical guidance on the key points of the scheme and can be forwarded directly to any of your EU/EEA employees with questions or concerns about what Brexit means for them.

Continue Reading

How difficult will it be to hire EU workers after the Brexit transition period?

Navigating Brexit: The Migration Minefield

This week we’ve partnered with EEF on a new report ‘Navigating Brexit: the Migration Minefield’. The report highlights the need for clarity, simplicity and urgency in the Government’s messaging to stem the flow of EU citizens from the UK, taking their much needed skills with them.  A copy of the full report can be accessed online.

The next big question is –  what hurdles will manufacturers face when seeking to hire new EU arrivals after the Brexit transition period?

Continue Reading

VAT to the Future

Some surprises have been unearthed in a report from Parliament’s European Scrutiny Committee on the future of VAT in the UK after Brexit. Published in accountingweb.co.uk this week, Jeremy Cape examines the report and demystifies what it means.

The European Scrutiny Committee, chaired by long-time eurosceptic Sir William Cash, published its report on VAT: EU proposals for reform and the implications of Brexit on 3 April 2018. While this report attempts to look in isolation at the EU’s proposals for the “true” single EU VAT area, Brexit intrudes at every turn.

The committee identified that in relation to VAT, Brexit presents a trade-off and urges the government to set out how it intends to balance competing pressures with respect to trade, the Irish border and how the UK will sit post-brexit in the EU VAT system.

The committee states that: “any decision by the UK to diverge from the harmonised standards that underpin the common VAT system could have unforeseen consequences, potentially rendering the whole cross-border system that allows for border controls to be waived technically unworkable”.

Jeremy examines the report in more detail here.

LexBlog