Brexit: is it still 50:50 on B-Day minus 50?

B-Day minus 50

Today marks 50 days before the UK is scheduled to leave the European Union (EU). The question now is not so much will the UK leave the EU but on what terms?

Unless there is a last minute short extension, which should not be ruled out, it looks likely that the UK will leave the EU in 50 days’ time on 29 March 2019 at 23:00 hours London time. 

Whilst nothing is certain, it looks more likely, that a deal will eventually be done. It may be cobbled together before the deadline or even over that weekend. There could be an extension but the odds of a No Deal Brexit, while high, are now less than 50% (as of now).

Brexit is a legal issue

Businesses are realising more and more that Brexit is fundamentally a legal issue. 

What is being debated and changed are legal instruments – EU treaties, regulations, directives, decisions and so on as well as national laws and rules. Businesses need legal input to interpret and understand the changes. If the Withdrawal Agreement is adopted then that is yet another instrument of EU law.

Business leaders of a certain age and experience are realising that Brexit is the reverse of “1992” - a kind of “Minus 1992”. Some 27 years ago, the then European Community relaxed a number of rules in a package of 279 measures (strongly supported by Margaret Thatcher) to make business run more smoothly. Economic forecasts said that by removing those “barriers to trade”, growth would increase and activity would be stimulated. In fact, the practical experience of breaking down those barriers proved even more positive for economic growth across Europe than most of the economic forecasts.

Brexit is fundamentally about reinstalling many of those barriers to trade. Some elements of border control will be reintroduced, there will be the adoption of more national rules rather than EU-wide rules and there should be more "flexibility" (i.e. less standardisation and more customisation). Just as the barriers were removed by the so-called 1992 Single Market Directives and other laws, so too is Brexit being built by legislation now being adopted in Westminster and at the EU level.

At B-Day minus 50, what are businesses asking us about?

New issues are emerging daily. The obvious ones are about licences, consents, permissions and passports which are based on EU law. But, there are other issues now emerging too:

  • The law on transporting and stockpiling goods (e.g. raw materials, parts, foodstuffs, medicines)
  • Changes in compliance because of Brexit
  • Data and GDPR
  • Contract terms (e.g. what if you are a distributor of a product for the "European Union", will you still be the distributor for the "UK" post-Brexit?)
  • Does Irish law (e.g. Acts of the Oireachtas (the Irish Parliament)) permit trade involving a UK entity to continue post-Brexit?
  • What about issues relating to labelling, pricing and parallel trade / cross-border trade in 50 days' time?
  • The effect of a 'New-Deal Brexit'
  • Employment law issues
  • Passporting / licensing / permits
  • Enforcement of judgments post-Brexit
  • Governing law clauses
  • Pension issues
  • Transport law issues

There is almost no end to the list of Brexit questions because there is almost no end to the areas of business life on which the EU has rules. Removing the EU rules leads to the obvious questions: "what may we legally do / not do then?"

Outlook

Predictions are always difficult. It is impossible to be precise but the odds are still favouring a Deal-Based Brexit. The thousands of possible issues have been (so far) netted to just one – the 28-page "Protocol on Ireland/Northern Ireland" and much of that is uncontroversial. 

The Irish and UK Governments have a good record of reaching agreements on difficult issues. The EU tends to reach agreements on issues even if it is at the last minute. There are solutions available and while no solution will be perfect, politicians will probably prefer to be seen as having succeeded rather than being in charge when things went horribly wrong. 

Perfection will be the enemy of the possible. Politics and pragmatism should probably get us over the line. But remember, this is just the first stage of an even longer road ahead!

For more information in relation to this topic, please contact Vincent Power, Partner, or any member of A&L Goodbody's EU, Competition & Procurement team.

Date published: 7 February 2019