1. Making Sense of Brexit
What will it mean to leave the EU?
29 September 2016
Partner, EU, Competition and Regulatory
Ros Kellaway
SHINE Webinar
2. Eversheds LLP | 04/10/2016 |Eversheds LLP | 04/10/2016 |
Ros Kellaway
Partner, Head of Competition, EU and Regulatory
Ros is head of the Eversheds EU Competition and
Regulatory Group and has been a partner in our
commercial practice since 1989. She has significant
knowledge in the financial services, food, insurance,
energy and automotive, as she acts for major companies
in these industries. She specialises in cartels,
competition investigations, distribution and advice on EU
law.
Her clients include Volkswagen Group, Dairy Crest, RWE,
Karcher, Pentland Brands and The Finance & Leasing
Association.
Ros has been recognised for many years as a leading
individual in Chambers Guide to the Legal Profession and
is currently described in Chambers Europe as an
“absolute expert solicitor with a great tenacious style”.
She is also consistently recognised in Chambers Global,
The World’s Leading Lawyers and Legal 500. She is a
member of CBI Competition Law Committee and also the
Joint Bar Council and Law Society Working Party on
Competition Law.
Ros has researched and spoken extensively on the
subject of Brexit to numerous organisations over the last
six months including The British Chamber of Commerce
in Hong Kong, the Dublin Chamber of Commerce, the
Corporate Legal Innovation Conference 2015, and a
number of regional Chambers of Commerce.
3. 1. Article 50 – when will Brexit happen?
2. EFTA and the EEA
3. Five Brexit models
4. Difficulties with the WTO model
5. Trading with the Rest of the World
6. Does the UK have to comply with EU law?
7. How could Brexit impact your business?
8. How can Eversheds help?
Agenda
4. Eversheds LLP | 04/10/2016 |Eversheds LLP | 04/10/2016 |
• Article 50 sets out the formal mechanism to leave the EU
• UK must take a decision to leave the EU “in accordance
with its own constitutional requirements”
• Outcome of Referendum advisory to the UK Government
- result does not trigger Article 50
• UK Government must formally trigger Article 50 process
by giving notice to the European Council
• Will an Act of Parliament be needed or can the UK
Government use its Royal Prerogative powers?
Article 50 Treaty on the European Union
Mechanism for Leaving the EU (1)
5. Eversheds LLP | 04/10/2016 |Eversheds LLP | 04/10/2016 |
• When will Article 50 notice be given?
• Not in 2016 – expected early-mid 2017
• When will the UK leave the EU?
• Date the withdrawal agreement comes into force; or
• Two years after the notification unless unanimously
extended by the European Council and the UK
Timing
Mechanism for Leaving the EU (2)
6. Eversheds LLP | 04/10/2016 |Eversheds LLP | 04/10/2016 |
• UK/EU negotiate and conclude an agreement setting out
the withdrawal arrangements taking account the
framework for future relationship together
• Two agreements?
• Withdrawal agreement – needs to be agreed by European
Parliament and Council
• Trade agreement – will need:
• European Parliament approval
• Unanimous consent and ratification of all EU Member States
Article 50 Treaty on the European Union
Mechanism for Leaving the EU (3)
7. Eversheds LLP | 04/10/2016 |Eversheds LLP | 04/10/2016 |
• Free trade arrangement founded in 1960 by Austria, Denmark,
Norway, Portugal, Sweden, Switzerland and the UK
• Current members: Iceland, Lichtenstein, Norway and
Switzerland
• EFTA has free trade agreements (“FTAs”) with 37 countries and
is negotiating others
• EFTA States free to negotiate their own FTAs e.g. Switzerland
with China and Japan
• Being a member of EFTA does not give access to the Internal
Market
European Free Trade Area (“EFTA”)
8. Eversheds LLP | 04/10/2016 |Eversheds LLP | 04/10/2016 |
• Founded in 1992 and effective in 1994
• Intended to create closer cooperation between EU and
EFTA, pending EFTA States accession to the EU
• EU Member States and three EFTA States (Iceland,
Lichtenstein and Norway)
• Access to the Internal Market governed by EEA Agreement
– all four freedoms but outside Common Agricultural Policy
and Common Fisheries Policy NB includes free
movement of people
European Economic Area (“EEA”)
9. Eversheds LLP | 04/10/2016 |
Free
movement of
goods
Yes excluding
certain
agricultural &
fishery products
Varies by
product based
on bilateral
agreements
Yes Yes
Yes subject
to WTO
rules
Free
movement of
people
Yes
Yes - for
employed
persons
No Possible No
Free
movement of
services /
establishment
Yes Yes – industry
specific
No Possible No
EU
representation
No but veto
through EEA
No No No No
EU budget Yes (reduced) Yes (reduced) No No No
Bound by
EU/Third
Country FTAs
No - can
negotiate alone
or through
EFTA
No - can
negotiate
alone or
through EFTA
Must apply
EU’s common
external tariff
to third
countries
No No
Five Brexit Models
10. Eversheds LLP | 04/10/2016 |Eversheds LLP | 04/10/2016 |
• Each WTO member has a schedule of commitments
setting out trading terms (e.g. tariffs)
• Currently no UK specific schedules as UK currently trades
as part of the EU’s schedules
• Before trading under the WTO, UK would have to detach
itself from the EU and regularise its position within the
WTO before signing its own trade agreements
• UK could copy the EU commitments and become a full
WTO member but all 164 WTO members must agree
Difficulties with the WTO model
11. Eversheds LLP | 04/10/2016 |Eversheds LLP | 04/10/2016 |
• On Brexit, UK will lose benefit of EU’s FTAs but will be able
to negotiate its own free trade agreements
• Already interest from a number of countries – Australia,
Canada, China, Ghana, India, Mexico, New Zealand, South
Korea, US
• UK can negotiate terms of FTAs but cannot conclude them
before Brexit – exclusive EU competence
Trading with the Rest of the World
12. Eversheds LLP | 04/10/2016 |Eversheds LLP | 04/10/2016 |
• Yes – nothing changes until the UK actually leaves the EU
• Existing laws – continue to exist and apply to UK
businesses until the UK leaves the EU
• New EU laws – UK required to apply/implement them
into UK law until the UK leaves the EU
• Any decision to the contrary would put the UK in breach of
its obligations under international law
Does the UK have to comply with EU law?
14. Eversheds LLP | 04/10/2016 |Eversheds LLP | 04/10/2016 |
• Status of UK citizens working in the EU and vice-versa?
• If no free movement of workers, more difficult for
businesses to employ EU citizens to work in UK (and vice-
versa)
• Work permits?
• Many UK employment laws derive from EU law –
considered workplace norms but could change e.g. part-
time and fixed term workers’ rights, business transfers
Workforce
15. Eversheds LLP | 04/10/2016 |Eversheds LLP | 04/10/2016 |
• Where Brexit is not dealt with in a contract, what impact
will it have?
• Could Brexit amount to force majeure or trigger a right to
terminate?
• If new tariffs or higher tariffs are imposed, could this give
one party the right to unilaterally change the prices?
• Eversheds’ Brexit Risk Analysis and Brexit Proofing
Service can identify the potential risks to trading
arrangements arising from Brexit and put measures in
place to protect against those risks
Contracts
16. Eversheds LLP | 04/10/2016 |Eversheds LLP | 04/10/2016 |
• Depending on the Brexit model, UK may no longer be
bound by EU law
• UK likely to continue with EU standards in the short-term
but this could change over time
• Regulatory divergence could drive up costs on exports
from the UK to the EU (and vice-versa)
• UK businesses could lobby the UK Government to continue
complying with EU product standards
• Businesses could influence product regulation by lobbying
the EU through EU subsidiaries
Product Regulation
17. Eversheds LLP | 04/10/2016 |Eversheds LLP | 04/10/2016 |
• GDPR automatically bites across the EU on 25 May 2018 –
UK likely to still be in the EU
• Post-Brexit GDPR as an EU Regulation falls away unless
the UK takes action
• Practically need to maintain DP parity with the EU
• UK expected to legislate to maintain GDPR
• Even if GDPR dropped, UK companies targeting sales
towards EU citizens/monitoring their behaviour will be
caught by it
Data Protection – what will happen to the GDPR?
18. Eversheds LLP | 04/10/2016 |Eversheds LLP | 04/10/2016 |
• Brexit will not impact all sectors equally – each business needs to
consider what it will mean for them
• Eversheds has a team of experts that can advise you on the
potential impact Brexit will have on your business
• We can help you identify the specific risks, challenges and
opportunities for your business to manage your exposure and help
you prepare a “Brexit ready” plan
• We can help you lobby for Brexit arrangements for your sector
• Further information is available on Eversheds’ Brexit webpage -
www.eversheds.com/brexit
How can Eversheds help?