Update on Brexit - October 2020

The EU leaders called for the UK to make further concessions and noted with regret the UK Internal Market Bill. This resulted in a week where the UK refused to meet with the EU negotiating team until Mr Barnier confirmed to the European Parliament that both sides would need to make concessions in order to reach a deal and that work on a joint legal text could commence. Since Thursday 22^nd October both sides have resumed formal negotiations. The discussions had been scheduled to conclude on Sunday 25^th October, however they have now been extended. Below, we summarise the current state of play.

Trade talks extended

On 26^th October, it was announced that trade talks between the UK and the EU would be extended, with any consequent discussions moving to Brussels. It is currently thought that there continues to be disagreement regarding fishing rights and competition rules.

Unresolved issues

1. Fishing: The two sides continue to disagree on each party’s respective rights of access and the process for determining quotas. The French government has been noted to take a particularly hardline approach with other EU countries calling for compromise.

2. Level Playing Field/Competition rules: These provisions, which encompass competition policy, workers’ rights, environmental regulations and state aid remain possibly the thorniest issue. The EU has abandoned its goal for “dynamic alignment” whereby the UK would be obliged to continue adopting future EU State Aid rules, but continues to call for non-regression clauses which go beyond existing EU FTAs. Most recently, Lord Frost has suggested that the UK could agree “principles” for how subsidies are spent which seems to have received a positive response from Mr Barnier on Wednesday 21^st October. Additionally it has been noted that Britain has provided further assurances against subsidies in its recent Free Trade Agreement with Japan which marks the first post-Brexit trade deal with a major economy.

3. Governance: The EU and UK have disagreed over the Governance mechanisms since the spring of 2020, but the recent publishing of the UK Internal Market Bill has hardened the EU approach. Barnier’s team is now adamant that more robust dispute resolution mechanisms are required to address any future divergences by the UK, and to ensure the EU has the right to immediate interim counter-measures.

4. Finally it is worth noting that several members of the European Parliament have threatened to veto any FTA if the UK does not revise or withdraw the UK Internal Market Bill. The European Commission has separately issued legal proceedings, while continuing with the trade talks.

Preparing for the End of Transition

As the end of the transition period (31^st December) is now only two months away, the Law Society continues to encourage members to prepare themselves and their businesses for 2021. The Society has published a range of online guidance which covers various policy fields, and which will be updated in the event that an Agreement is reached between the EU and UK. If a deal is not done, the UK will trade with the EU in accordance with the default rules set by the World Trade Organization.

It also remains to be seen whether the EU will approve the UK application to accede to the Lugano Convention and whether the Commission will determine the UK as adequate for Data purposes. Clarity on both is being urgently sought by the Law Society.

Should you have any queries regarding the information contained within this update, please do not hesitate to contact the Law Society Brussels Office at Marcus.corry@lawsociety.org.uk