Today marks the second anniversary since the historic vote upon our future membership of the European Union. Negotiations remain highly charged with some progress being made towards future working relations; here is an update and our assessment.
Where are we now?
EU proposal on backstop (in case of no solution on NI) is for NI only to stay part of Customs Union and relevant parts of the Single Market. UK proposal is to have the whole of the UK as part of the relevant parts of CU and SM – with an end date to this arrangement. EU has dismissed this approach
EU Withdrawal Bill
Ping-pong between Commons and Lords over the last two weeks over the EU Withdrawal Bill, with a focus on a ‘meaningful vote’. A compromise has now been reached and Government was not defeated – but it is unclear whether it will actually give MPs sufficient opportunity to amend the deal. Brexiteers consider a no-deal option to still be on the table.
Future customs arrangements
Cabinet is still deciding on its two options of a New Customs Partnership vs Highly Streamlined Customs Arrangement. Members’ views (gathered at a roundtable in Leeds in late 2017) along with those from the wider British Chambers’ network were shared at a meeting with Cabinet ministers this week
Some areas – such as regulatory alignment and VAT – have not even seen any proposals to date
EU Free Trade Agreements with third party nations
On cumulation, the European Commission issued a note stating it will not seek for UK+EU origin cumulation when exporting to FTA partners; there is material threat that substitution of UK products will take place in the EU (UK suppliers replaced by EU suppliers in order to maintain ‘Made in the EU’ status). Government continues to push for cumulation to ensure there is no damage to UK manufacturing companies
Migration / EU citizens
EU citizens and their families who have lived in the UK for at least five years will be eligible for a new “settled status” after Brexit
EU citizens who arrive in the UK before the end of December 2020 will be eligible for “pre-settled status,” a status that will convert to settled status after five years of continuous residence
The Migration Advisory Committee published an interim report in March 2018 sharing findings from its public consultation about future immigration policy. The final report will be published in September 2018 which will set out its recommendations and will consider a wide range of impacts: on wages, unemployment, prices, productivity, training, the provision of public services, public finances, community cohesion and well-being.
What happens next?
EU Council Summit 28-29th June:
It is hoped the summit will progress on to talks about our future relationship
3/4 of the Withdrawal Agreement is done – except for personal data, Geographical Indicators, Ireland and governance
Chequers Away Day w/c 2nd July:
A decision on future customs arrangements is likely to be made
Government White Paper published w/c 9th July:
This should set out the Government’s vision for future relationship
Thoughts from the European Union
In our conversations we have picked up the following messages from EU representatives
EU businesses consider this to be largely a British problem but do see the UK as an attractive location to do business
A Northern Ireland backstop is acceptable; a UK-wide backstop is not
Extending the transition has to be written into the Withdrawal Agreement
It is difficult to find common language about the future
There will be a need to accelerate negotiations at some point
Strong hints for the UK to consider ‘Norway option’/EEA
No cherry picking of the ‘four freedoms’ continues to be the mantra coming from the European Commission
What should companies be thinking about now?
It is unclear whether trademarks registered in the EU would be applicable to the UK in the future. We are asking companies to check the ownership of their intellectual property
Some of the terms in existing contracts may no longer be relevant post Brexit, or may raise legal or practical questions in future. We are suggesting that companies should review contracts and check whether they make reference to the UK being a member state and whether contracts rely on EU regulation.
VAT registration in the EU
do companies need to set up a VAT registration in all of the EU countries they currently trade with
it is assumed that the UK will also leave the EU VAT area and therefore import VAT may be payable at the border on goods imported from the EU. There may be potential cash flow issues for smaller businesses
A comprehensive list of actions to consider can be found on our Brexit checklist here
Representing your views
Your views are shared with colleagues at the British Chambers of Commerce who discuss with key government departments as part of their regular engagement programme
Members have been able to share their views in meetings held locally with Westminster and Whitehall representatives from:
Department for International Trade
HM Revenue & Customs
Department for Exiting the European Union
Brexit Select Committee
Department for Business, Energy and Industrial Strategy
We will continue to ensure your voice is heard on what will be the largest, peacetime economic event in recent history.
If you are interested in attending future meetings on this subject then please email email@example.com