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Brexit creeping closer – or?

In this column, lawyer Pernilla Norman, tries to sort out the different Brexit options.

The 29 March 2019 is creeping closer by the day. Since the British referendum in June 2016, Brexit has seemed conveniently far off. The efforts and most of the attention have been focused on negotiations of an “exit” agreement, prolonging the phase until the full Brexit, a withdrawal agreement.

The first phase of the exit negotiations was completed in December 2017, when EU and the UK announced an agreement had been reached on three main issues.

  • EU citizens living in the UK and British citizens living in the EU will continue to obtain the same right also after the UK has left the EU.
  • The UK will continue to adhere to its financial duties towards the EU.
  • The border between Ireland and Northern Ireland is unique and there need to be a special arrangement to avoid a hard boarder.

During the second phase the parties negotiated the text of the withdrawal agreement, with the agreed principle as a starting point. In March 2018 an interim period was preliminary agreed. This period would prolong the effects of Brexit until December 2020. Thus for 19 months (March 2019 – December 2020) things would to a large extent stay the same as with the UK within the EU.

The negotiations on the withdrawal agreement where completed and the agreement was approved by EU 25 November 2018. However adoption came to a halt in the UK. The planned vote in the UK parliament was postponed and in schedule to take place in the middle of January (which is after this article has been written). The British Prime Minister Theresa May had further discussions with EU leaders in December 2018, but got the firm answer that negotiations would not be re-opened. In December the European Court of Justice has ruled that the notice under Art 50 to leave the EU can one handed be withdrawn by the UK. It is thus the prerogative of the UK to stop the Brexit process all together. A scenario could be that the British government withdraws the Art 50-notice to hold a second referendum. This is however not considered the most likely option. At the time of writing this article, it has been known that the British government is considering asking for additional time under Art 50. Such a request is said to be granted by the EU in what case Brexit would not be on 29 March.

So will there be a Brexit at all?

Strong voices in the UK are advocating a second referendum. Even though the Prime minister Theresa May refuses and though it seems quite unlikely, a referendum might still be held. The outcome of which could be that Brexit will not take place. However, Brexit is still most probable.

If the withdrawal agreement is passed by the UK parliament, the present EU rules will continue to apply until the end of 2020. The status thereafter is still unknown, as negotiations for the long term relationship between EU and the UK have not started, all though a declaration on the principles were adopted in December.

Should the UK not adopt the withdrawal agreement, there will be a so called “hard Brexit” on 29 March 2019 or any later date that is decided. This means that there will not be any measures in place concerning the relationship between EU and the UK. EU citizens living in the UK will be regarded as third county citizens, and similarly for UK citizens living in an EU country. Trade with the UK will be subject to customs duties and customs procedures in the same way as third country trade.

The legal situation within the UK will be most uncertain as EU-law is an integral part of British law. All EU-law will not automatically cease being applicable in the UK as a lot of EU legislation has been implemented into British law, but a lot of legislation will. Further, the UK will no longer be bound by the EU courts. Thus legislation based on EU law might develop in different directions within the EU and the UK. An illustrative example is data protection (GDPR) where the European Commission has issued a letter to the extent that after Brexit the UK will be regarded as a third country.

In conclusion, it can be said that even though the present situation as regards Brexit is highly uncertain, the most likely scenario is that the EU and the UK will agree on a withdrawal agreement prolonging the present status until the end of 2020. This would mean that EU business trading with the UK can continue “business as usual” for two further years. By that time a trade agreement should be in place. However, two years pass quickly thus it is advisable to start planning and take measures for business post Brexit.

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