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Brexit: With four months to go, half of the trade agreements still remain unsettled

  • Estonia

    03-07-2020

    Last Tuesday, June 30 was the deadline for the United Kingdom to apply for the extension of the transition period. The UK did not ask for the extension, therefore, the transition period will end in six months (31.12.2020) and as of January 2020, the United Kingdom will no longer be a member of the European Union.

    The same date also has importance from the perspective of workers – June 30 was the deadline for EU citizens living in the UK to register themselves as living in the UK in order to obtain settled status. Eversheds Sutherland Ots & Co partner Risto Rüütel explained that until December 31, 2020 i.e. until the UK is still a part of the EU, free movement of people will apply. As of that date, however, UK residents who failed to register themselves on time may face issues at the border. Rüütel added that while employers will not face any additional obligations in relation to existing workers, an employee getting stuck at the border may disturb work and such disturbances must be taken into account.

    According to the EU, any trade agreement with the UK must be agreed upon in four months’ time at the latest (i.e. October), taking into account the inspection and ratification of the agreement by the Member States, as well as the British and European parliaments. The Government of the UK aspires to finish the negotiation in two months. When looking at the slow progress in the negotiations so far and great disagreements that remain unresolved, it doesn’t seem likely that a concise and comprehensive agreement will be achieved. Risto Rüütel further added, that if there are no significant developments in the trade agreement negotiations process in the next four months, a no-deal Brexit is likely.

    As at the beginning of July the UK has rolled over around 20 of the roughly 40 trade agreements that the EU is party to, which, while a good result, leaves much uncertainty regarding the rest of the agreements. This is especially the case in respect of the agreements with the US and Japan, according to Risto Rüütel, Everseds Sutherland Ots&Co partner. Furhermore, Rüütel added: „This means that all the companies that have their headquarters in the UK or those operating internationally through the country may have to take into account the applicable additional regulations. Without a trade agreement WTO rules will apply, which include, among others, full customs procedures and additional tariffs.

    It was agreed in the UK Withdrawal Agreement that EU law, which is in force at the time of leaving the EU, will be transposed into the UK legal system in its entirety. However, after leaving the EU the two judicial systems may start to diverge from one another if the UK decides to regulate certain areas differently in the future and not remain bound by EU law.

    The results of the negotiations also have a significant impact on data protection – if the UK becomes a third country, whose data protection laws are not recognised by the EU, states that export data into the UK must thoroughly consider how to protect data and fulfill the obligations arising from GDPR.

    Background: Eversheds Sutherland is one of the largest global law firms, connecting over 5000 professionals in more than 70 law offices around the world. In Estonia, Eversheds Sutherland Ots & Co has helped clients in all business matters for over 20 years.

    Additional Information: Risto Rüütel, Eversheds Sutherland Ots & Co partner, e-mail: risto.ruutel@eversheds-sutherland.ee

    This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full terms and conditions on our website.

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