So what happens next?
From 11pm (UK time) 31st January the UK has ceased to be a member of the European Union. From here forward the relationship is covered by the transition period in accordance with the terms of the (now ratified) Withdrawal Agreement.
As has been much publicised elsewhere, that transition period is time-limited to last until 31st December 2020. The transition period provides an umbrella for the continuation of “business as usual”, at least as regards trade, commerce and consumers. The UK is no longer represented in the EU institutions and, technically, having ceased to be a Member State of the EU, the UK has become a “third country”, albeit remaining subject to EU laws and regulations.
The transition period is crucial time for the UK to negotiate the future relationship with the EU. During this time the UK can conclude international agreements with third countries and international organisations even in areas of EU exclusive competence, provided that these agreements do not apply during the transition period.
The first six months of 2020 are key for the progress of negotiating the future UK/EU relationship. Whilst it is possible for the transition period to be extended once by up to one or two years, that decision must be taken before 1st July 2020 and be a joint UK and EU decision.
Notwithstanding the cessation of membership, in many important respects the UK is still being treated as a Member State, for example in respect of international agreements with third countries (including free trade agreements). Clearly this is important for continuity. But the uncertainty that we have experienced over the last few years now shifts forward to 31st December 2020 (assuming no extension).
The UK government has ruled out any “off the shelf” models for a trade deal and is looking for an ambitious free trade agreement, based on managed regulatory divergence. The absence of any one-size-fits-all approach confirms our recommendation that it is important to look at the issues on a sectoral basis. We expect to see clarity in some issues and sectors ahead of others.
Against this background, our sector experts are working closely with clients to advise on the legal considerations of Brexit for businesses and individuals and how best to manage their operations and investments in the short term within the current regulatory framework and beyond.
In the articles below we are endeavouring to provide insight, in-depth analysis and an overview on key issues and likely implications for some of the key UK sectors by our industry experts. We will continue to provide guidance and insight when relevant.