Following the Trade and Cooperation Agreement between the UK and the EU, otherwise known as the Free Trade Deal/Agreement (FTA), which was agreed last Christmas Eve, regulatory changes have appeared across a wide field of trade, fishing, services, immigration, travel, education, borders and security control.
We discuss below several key areas of change and give you, our clients and visitors to our website, an indication of where issues lie and where, we as a firm, could be of assistance.
Currently, there is a 6-month transition period (4 months with an automatic renewal of another 2 months, unless the UK or the EU unilaterally object to the extension).
This formula avoids a “cliff edge” for data transfers for the present.
In the meantime, the EU is reviewing an adequacy decision over the next 6 months which could allow data transfers to continue unimpeded, and therefore preserve some semblance of the status quo.
If no adequacy decision is present at the end of this transition, then Standard Contractual Clauses (SCCs) will have to be put in place in agreements and/or an EU representative will appointed in an EU member state if data flows are to be maintained.
W Legal are familiar with preparing Standard Contractual Clauses and how to incorporate them into contracts and we can assist clients in maintaining data transfers during this new Post- Brexit era.
For SME’s shipping into the EU, there are going to be tax (VAT) and customs forms (rules of origin and regulatory compliance certification) that will need to be completed.
Ultimately, it will be a cost-benefit analysis for UK and EU- based businesses to decide if they have the financial resources to ship their products into and out from the EU, while meeting the specific requirements and vice versa.
New VAT rules will apply for non-UK internet platform businesses delivering goods into the UK.
W Legal can assist with providing trade/tax expertise in certain areas, which will be required to cover the new rules on origins, components, safety standards such as how to navigate the complexities of what items can be shipped and which cannot (there is a list of Prohibited Items, for example, that outlines what items cannot be posted through supply delivery companies). Already UK- based exporters are reporting issues with delivering certain packages into the EU and to Northern Ireland. Hauliers are experiencing difficulties at the borders and there are new barriers to sales of fish in EU countries.
We are still awaiting clarification for securities and fund distribution, advisory, management and marketing for services as these are all impacted by the removal of cross-border passporting.
Similar issues are presented for banking, payments and insurance provision.
W Legal can assist with advice around establishing a regulated presence in the remaining 27 EU countries, using reverse solicitation and new operating compliance procedures.
For financial services, relatively little has been settled by the FTA, and the position is complicated because, whilst the EU Commission itself has yet to make a clear decision, the individual Member States were allowed to put in place interim regimes in the event of a No Deal Brexit or where there was no agreement covering financial services (which is now the case).
A number of Member States did implement interim Transition Arrangements before the 31 January 2020 Withdrawal Agreement came into operation. Some of these interim arrangements are still applying after the end of the 2020 Transition Period.
They are considered generally to be interim, light touch regimes, but they can allow, in certain member states, for the continuation of existing advice, management and distribution agreements in certain jurisdictions and even allow new opportunities to be developed as the UK is treated as a third country regime. It is a patchwork position which means that, where there is a possibility that you may be giving advice or distributing funds which may or may not be permitted, you may need to consult with advisers, such as W Legal, to clarify the position and we may need to liaise with legal advisers in specific jurisdictions to establish what is and is not permitted.
New working and health & safety standards are expected as the UK has greater licence to develop new regulatory standards. On the other hand, the goal of achieving a level playing field means that both the UK and the EU need to maintain common standards on labour, social and environmental regulation or matters will be referred to a new adjudication body, the Partnership Council.
The position is made more involved because the regulations do not need to match in all fields and are not defined by either current EU or UK standards, but will be subject to a “Rebalancing clause” designed to resolve disputes between the parties.
This area, as well as that relating to trade terms and state subsidies, are subject to fair competition criteria and to ensuring that neither side creates unfair advantages – ie to meet the aim of preserving the level playing field.
The new points-based system can be a difficult area to navigate for employees and employers, for students and longer-term visitors, who need to decide how to work/travel between the UK and the EU. New immigration rules in the UK will mean tighter restrictions for those who want to come, live and work in the UK, especially, if those from the EU did not complete their Settled Status application before the end of the Transition Period.
It will also depend on which Member State the prospective employee decides to settle in, as specific immigration rules could vary from country to country within the EU.
Issues around curtailment of access to criminal databases will impact police investigations of financial crime and money laundering operations; extradition as well as offences involving motoring, illegal exporting and importing. Furthermore, the UK is now no longer a member of Europol and does not have access to the European Arrest Warrant. However, the UK and the EU have agreed to recognise the need to continue cooperation between national police and judicial authorities.
New Governance Framework
The new Partnership Council will be established to decide on controversial regulatory changes by the UK/EU member states as the European Court of Justice is dispensed with. New review committees will operate and create a new level of regulatory review with either side able to trigger a review of the entire agreement and the imposition of tariffs, if either party has diverged in key areas in such a systematic way that the overall agreement is unbalanced.
State Subsidies/Level Playing Field
This is a specialist area where legal advice may be needed in order to ensure that new agreements and new business projects meet the FTA requirements for non-regression of standards.
Health & Medical Insurance Costs
Whilst current EHIC (European Health Insurance) cards will continue to give access for free health treatment for UK individuals to EEA member states until their expiry data, the new Global GHIC card will be phased in with the intention that the UK will conclude equivalent medical treatment access exchange rights with countries other than only the EEA member states.
If you are facing issues around health treatment abroad, ensure that you have adequate travel insurance cover and, if in doubt, our team can assist in clarifying what is and is not available under the new arrangements.
Northern Ireland is still part of the EU Customs Union and the Single Market and is, therefore, still applying EU law. A regulatory border now effectively exists down the Irish Sea in the sense that the transfer of goods between Britain and the UK will need to be regulated, checked and origin/content forms completed. Already, it appears that the new “border checking” procedures are creating delays and new bureaucratic challenges.
The Irish Protocol was put in place to avoid a hard border between the Republic of Ireland and Northern Ireland, and therefore avoid a breach of the Good Friday Agreement. Additional Committees are in place to regulate the operation of the new protocol and the new relationship between the Republic of Ireland and Northern Ireland.
A separate agreement affecting Gibraltar was reached before the end of last year regarding Brexit. The major difference, however, is that within 6 months, the physical border between Spain and Gibraltar will disappear and, in its place, will be a new EU Border Force (Frontex). Gibraltar will be joining the Schengen Area and will be able to benefit from other EU policies, such as a customs regime for the trading of goods, always with the intermediation and support of Spain, and guaranteeing aligning in terms of taxation, environmental issues and work relations. This separate agreement between Gibraltar and Spain is up for review in 4 years’ time when the operation of this agreement will be reviewed
Please do contact one of the W Legal team if you feel you need advice in navigating any of these areas or wish to discuss other concerns around the new Brexit regulatory regime.