The UK has given notice of its intention to withdraw from the EU, which has started a two year period in which the UK and the EU will negotiate the terms of withdrawal. The UK remains a Member State during this process. Read the letter to President Tusk here.
If no agreement on the arrangements for the UK’s withdrawal is reached, Brexit will occur once the two year period is over, with no terms in place and Theresa May has said that the default position, in that case, would be to leave on World Trade Organisation terms. The two year period could, however, be extended if negotiations are incomplete, but only with the unanimous consent of the European Council (the Heads of State or Government of all 28 EU Member States). The two year period will include time at the start when the Commission will seek a negotiating mandate from the Council and time at the end when the Council and Parliament consider the terms of the agreement, so the available period for negotiation is less than two years.
What will change when we cease to be an EU member state?
The UK’s membership of the EU is significant because it provides access to the single market of the 28 EU Member States, both to UK businesses and to international businesses that operate in the UK. The single market provides the benefit of the “four freedoms”: the free movement of products, services, people and capital, as well as harmonised regulatory regimes and cross border trade within the world’s largest trading bloc.
EU membership also requires UK businesses or businesses with operations in the UK to comply with EU law whether they operate solely within the UK or across EU borders.
Two main types of EU legislation shape UK law:
- EU Regulations - these are “directly applicable” in the UK, which means that they do not need to be separately enacted through UK legislation to have effect. These will fall away on exit unless substituted.
- EU Directives - these have to be implemented into UK legislation. Following an exit by the UK, the national implementing legislation will remain in force in the UK unless repealed by the UK Parliament but there will be no obligation to follow any subsequent amendments to the EU directives. Whilst other (secondary) legislation will only remain in force until the repeal of the European Communities Act 1972, unless expressly retained by the UK Parliament or substituted.
To preserve legal certainty, the UK Government has said that it will propose a Great Repeal Bill which, if enacted, would annul the European Communities Act 1972 (the ECA) on the day the UK formally leaves the EU but which would simultaneously enact all EU law into domestic legislation, so that the first day following exit does not place the UK in a legal vacuum. Theresa May has said that the UK Government will publish a White Paper on this on 30 March 2017.
UK’s future relationship with the EU
Theresa May has made it clear that the UK will not seek membership of the European Economic Area (EEA) or Single Market. Instead, she wants the UK to negotiate a Free Trade Agreement between the UK and the EU.
The letter to President Tusk sets out the UK’s proposed principles for the discussions which are: to engage with one another constructively and respectfully, in a spirit of cooperation; always put our citizens first, work towards securing a comprehensive agreement, work together to minimise disruption and give as much certainty as possible, pay attention to the UK’s unique relationship with the Republic of Ireland and the importance of the peace process in Northern Ireland, begin technical talks on detailed policy areas as soon as possible, but prioritise biggest challenges and continue to work together to advance and protect shared European values.
The letter also states that the UK’s objectives for its future partnership with the EU remain those set out in Theresa May‘s speech of 17 January and the Government White Paper of 02 February.
The White Paper includes:
- ensuring the UK is no longer under the jurisdiction of the Court of Justice of the European Union - so that all domestic legislation, even that which is derived from EU law, will be interpreted by UK courts
- controlling immigration - the Government plans to restrict the numbers of EU nationals entering the UK. As a consequence, the UK is unlikely to be granted access to the Single Market as "freedom of movement" is a key pillar of the EU and access to the Single Market is usually only granted to a country if this pillar (along with the other three “freedoms”) is accepted
- ensuring free trade with European markets - the Government wants to form “a new strategic partnership with the EU”, with the freest possible trade. It explicitly notes it will not be seeking membership of the Single Market, but wants an arrangement which allows both the EU and UK system to work together (although it may accept elements of the Single Market arrangements), and
- seeking a mutually beneficial new customs agreement with the EU (but not remaining a member of the Customs Union).
What areas of law will be affected?
As it is still not clear what the post-Brexit relationship with the EU will be, it is not possible to specifically state how UK law will be impacted. Set out below are examples of some areas of law that may be affected.
We will issue regular updates as more information becomes available and you can sign up to receive those updates by registering on elexica here.
We have also created a series of guides designed to help you understand the benefits and drawbacks of setting up your business in key European jurisdictions. We provide a summary of the key issues and processes involved in setting up in France, Germany, Ireland, Italy, Luxembourg, The Netherlands, and Spain which are available here.
This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.