For some weeks the British government has been planning a “shock and awe” campaign to warn British businesses that they have less than six months to prepare for Brexit; but the EU has beaten them to it.
As the latest round of talks on the future relationship finished in London yesterday, with Barnier tweeting there were still “significant divergences”, the EU released updated sectoral guidance to businesses on both sides of the Channel.
The document is an ominous and grim portent of the new reality for many sectors and the “far reaching” changes that await us next year. It puts the blame for the coming shock squarely on the British government.
“Negotiations so far have shown little progress” the EU says and adds that:
“The choices made by the United Kingdom’s government on the future relationship and on not extending the transition period mean that these inevitable disruptions will occur as of 1 January 2021 and risk compounding the pressure that businesses are already under due to the COVID-19 outbreak.”
The 35-page document goes on to explain that “these broad and far-reaching changes, will arise under any scenario [emphasis in the original], regardless of the outcome of negotiations between the European Union and the United Kingdom.”
So, what are some of the key points, part of the far-reaching changes that will apply regardless as from 1 January next year?
Customs formalities on goods
Customs rules required under EU law will apply to all goods entering the customs territory of the EU from the United Kingdom, or leaving that customs territory to the United Kingdom. Even if an ambitious free trade area is established with the EU, providing for zero tariffs and zero quotas on goods with customs and regulatory cooperation, all the regulatory non-tariff barriers, usually far more costly in extra paperwork and delays than any tariff, will still apply.
Rules of origin
Again, if we agree a trade deal with zero tariffs, goods traded will have to be shown (with evidence if necessary) to have a minimum percentage of UK content in order for them to be entitled to preferential zero-tariff-zero-quota treatment. It’s worth bearing in mind that most cars manufactured in the UK do not meet the minimum percentage set out in the EU- Korean FTA, for example, which is 55 per cent.
Air carriers holding operating licences granted by the UK licensing authority for the commercial carrying by air of passengers, mail and/or cargo, will no longer be able to provide air transport services within the European Union. EU air carriers and holders of aviation safety certificates will need to ensure and uphold compliance with EU requirements, including airlines’ requirements on principal place of business and EU majority ownership and control, as well as the EU aviation safety acquis communitaire.
Visitors and tourists
UK nationals travelling to the European Union and the Schengen area will be treated as third-country nationals, and therefore subject to thorough checks at the Schengen area border. This means that intended stays cannot have a duration of more than 90 days in any 180-day period, and UK nationals will have to meet the entry conditions for third-country nationals. They can also no longer make use of the EU/EEA/CH fast lanes reserved for persons enjoying the right to free movement when crossing the border.
UK nationals will remain exempt from the requirement to be in possession of visas when crossing the EU’s external borders for short-term stays (up to 90 days in any 180-day period). However, this visa exemption does not provide for the right to work in the EU and is subject to the reciprocity mechanism applying to third countries. In other words, it could be suspended if EU citizens would cease to be given visa-free access to the United Kingdom for short stays.
An EU pet passport issued to a pet owner resident in the United Kingdom will no longer be a valid document for travelling with pets from the UK to any of the EU member states. The requirements for pets accompanying those travelling in the future will be set by the EU.
EU law will no longer guarantee access for UK citizens to roam-like-at-home in the European Union; nor will it be guaranteed for EU nationals travelling to the UK. Both UK and EU mobile operators will thus be able to apply a surcharge on roaming customers should they wish to do so.
Haulage companies and lorry drivers
UK hauliers will no longer be able to operate within the single market.
The access rights that EU operators and UK operators will have to each other’s respective markets will depend on the outcome of the future relationship negotiations. Without an agreement, only the limited quotas under the European Conference of Ministers of Transport (ECMT) will be available for EU operators to conduct journeys to the United Kingdom, and for UK operators to conduct journeys to the EU.
Note the Freight Transport Association estimated in evidence to the House of Lords that “ECMT permits would cover 2 per cent to 5 per cent of [our] transport needs.”
Border formalities will also affect drivers as well as passengers and cross-border workers. This includes border checks on persons – entailing the verification of entry and stay requirements, stamping of passports, and visa requirements if applicable.
Authorisations granted by UK authorities under the EU single market framework will no longer be valid in the EU. This has particular relevance for the areas of financial services, transport, audiovisual media, and energy services.
In order to access the Union market, UK service providers and professionals established in the United Kingdom will need to demonstrate compliance with any rules, procedures and/or authorisations that cover the provision of services in the EU by foreign nationals and/or companies outside the EU. Those requirements are frequently set out in national regimes, meaning a lot of separate negotiating will be required with 27 separate markets.
Certificates issued by UK authorities
Certificates or authorisations issued by UK authorities, or by bodies based in the United Kingdom, will no longer be valid for placing products on the EU market. This means, for instance, that a car with a type approval issued by the UK can no longer be sold in the single market. Where EU law requires certification by an EU notified body – such as for some medical devices, machinery, personal protective equipment or construction products – products certified by UK-based bodies will no longer be allowed to be sold within the single market.
The UK will no longer be covered by EU rules on the recognition of professional qualifications. The recognition of qualifications obtained in EU member states by UK citizens will need to be confirmed by UK law. This means UK nationals, irrespective of where they acquired their qualifications, and EU citizens with qualifications acquired in the United Kingdom will need to have them formally recognised in the relevant member state.
Audio visual services
Businesses established in the United Kingdom will no longer be able to benefit from the country-of-origin principle of the Audiovisual and Media Services Directive. Providers will need to comply with each of the rules of the relevant member state in which they would want to provide their services. This will affect our creative industries, including television and film companies such as the BBC, for whom the single market will no longer exist.
EU rules on the registration, evaluation, authorisation and restriction of chemicals (REACH) will no longer apply in the United Kingdom. Registrations held by manufacturers and producers established in the United Kingdom will no longer be valid in the EU. These companies will have to ensure that their substances are registered with a manufacturer or importer in the EU, or appoint a person in the EU who is legally responsible for that import as official registrant for the substance.
Downstream users will have to check whether substances they use are properly registered.
The UK will no longer be covered by the agreements concluded by the EU or by member states acting on behalf of the EU, or by the EU and its member states jointly. The EU informed its international partners of the consequences of Brexit by way of a ‘note verbale’ sent after signature of the Withdrawal Agreement.
UK nationals and economic operators will no longer be able to benefit from several hundred international agreements of the EU such as free trade agreements, mutual recognition agreements, veterinary agreements or bilateral agreements in relation to air transport or aviation safety. This is an added incentive to businesses to establish in the EU where they will continue to benefit from all existing EU international agreements.
The EU says readiness is the key and that these changes are unavoidable – whatever the outcome of the ongoing negotiations – due to the UK’s decision to withdraw from the EU, the single market and customs union. Free movement of persons, goods and services as provided by EU law will cease to apply at the end of the transition period.
At the end of the EU guidance there is a link (HERE) to 59 readiness notices the EU has published since 16 March 2020 to support stakeholder preparations for the end of the transition period. The EU says the list will continue to be updated on a regular basis as new notices become available.