A week before the UK leaves the EU ‘single market’ and the EU ‘customs union’, it is still not clear if there will be a new UK-EU agreement at 23:00 GMT on 31 December.
There are thousands of changes whether or not there is a ‘deal’. A Parliamentary briefing, published yesterday, sets out key changes and UK and EU preparations.
It builds on Prime Minister, Boris Johnson’s statement that there is a “strong possibility” that the UK and EU would not reach an agreement – and that it is time for the public and businesses to prepare for this scenario on 1 January 2021.
Without an agreement in place, UK-EU trade will revert to World Trade Organization (WTO) rules and current co-operation arrangements in several areas will cease.
Leaving the single market and the customs union
The UK is due to leave the single market and customs union at 23:00 GMT on 31 December 2020. This will be the case both under the UK Government’s stated objective of a free trade agreement with the EU, or if no agreement is reached.
The European Commission emphasises, “there will be broad and far-reaching consequences for public administrations, businesses and citizens as of 1 January 2021 – regardless of the outcome of negotiations.”
EU chief negotiator, Michel Barnier, explained that even with a “best-in-class” free trade agreement as long as the UK is outside the ‘single market’ and customs union, there will be “two separate markets”. He highlighted examples of things that would change, including the need for customs checks and rules of origin (to determine where a product or its components were made). In addition, UK goods entering the EU would be subject to regulatory checks to ensure they comply with EU product standards. UK financial services suppliers would also no longer have the passporting rights they previously had.
Cabinet Office Minister, Michael Gove, told the House of Commons that “leaving the single market and customs union will herald changes, and significant opportunities, for which we all need to prepare—Government, business and individual citizens.”
The end of free movement
Free movement for UK citizens travelling to the EU – or living and working in the EU – ends on 31 December, as it will for EU citizens in the UK.
UK citizens will not need visas to enter the EU for short trips. The EU has said that UK citizens coming to most EU states for a short stay – 90 days cumulatively in any 180 day period – will be allowed visa-free travel. For longer stays, Member States’ own rules are likely to apply. The UK Government has said that EU citizens visiting the UK will be able to do so without visas for six-month periods.
Government guidance warns UK citizens they will need six months on their passports when travelling to the EU – and may no longer be able to use the border control lanes for EU citizens. They may need additional documentation for other reasons: the EHIC health card providing cover for visits to the EU may no longer be valid, and an international driving permit may be needed for driving in the EU.
The existing pet passports scheme are no longer be valid. Pet owners will need to get the appropriate vaccinations and certificate for them in advance of travel.
Replacing international agreements
The EU’s wide range of international agreements cease to apply to the UK at the end of the transition period. The Government is trying to negotiate new or replacement trade agreements and 23 of 58 have been ‘rolled over’ on the same terms. The Government has not provided a recent update on progress on these agreements.
UK preparations for end of transition
The Government will introduce import controls in three phases: in January, April and July 2021. There are 80 new combinations of reporting to complete, depending on the nature of the goods. There are dozens of new or upgraded IT systems to come on line – and thousands of new civil service posts in Border Control, veterinary and plant certification, and HMRC that take effect on 1 January.
Gove announced a new border operating model in October – and a public information campaign to help businesses and individuals to prepare for the seismic changes.
In a final review of preparations in November, the Government watchdog – the National Audit Office reported that the UK border and systems will not be for the change. This, potentially, will lead to even more severe issues than have been witnessed this week resulting from the Covid-19 border closures – and no legal route to overcome them.
EU preparations for end of transition
The European Commission published a communication on “readiness at the end of the transition period” highlighting “changes happening in any scenario.” Sectors covered included trade in goods and services, financial services, transport, recognition of professional qualifications, data protection, intellectual property, and the EU international agreements which no longer apply to the UK. The Commission has published 89 “readiness notices” across a wide range of policy sectors and technical issues. These advise administrations, businesses and citizens on what they have to do to prepare for the changes at the end of the year.
The bottom line is that none of these notices is new for EU businesses – they exist already for non-EU – or ‘third countries’. The UK is simply added to this list on 1 January.
EU ‘no deal’ contingency plans
On 10 December, the European Commission published some temporary ‘no-deal’ mitigation measures:
- Basic air connectivity: to ensure the provision of certain air services between the UK and the EU for 6 months, provided the UK ensures the same.
- Aviation safety: to ensure various safety certificates for products can continue to be used in EU aircraft without disruption.
- Basic road connectivity: to allow for continuing road freight, and road passenger transport for 6 months, provided the UK assures the same to EU hauliers. This would be subject to the application by the UK of fair competition, social and technical rules equivalent to those of the EU.
- Fisheries: providing a legal framework to agree reciprocal UK-EU fisheries access for 2021.
The Commission emphasised that contingency measures could not provide continuity or replicate the benefits of EU membership or of the transition period.
Gove said the UK would “look closely at the EU no-deal contingency plans” – but whilst aviation and road transport measures sounded positive, fisheries was “of greater contention“.
Under the Withdrawal Agreement (WA) the UK and EU could have agreed an extension to this period – but a decision on this had to be made before 1 July 2020. The idea of a new treaty providing for a short “standstill period”, which would enable some or all of the current arrangements to continue for a time limited period, has been revived by some political and business commentators. This is viewed as a possible way of overcoming the difficulties presented by the very short period left before the end of December for both sides to conclude and ratify the deal. Such an arrangement might be politically difficult to agree for both sides, and legally difficult for the EU. There is no indication from the UK or EU that this has being seriously considered.
The European Parliament’s deadline for organising a consent vote on a UK-EU deal passed on 20 December.
On 21 December there were renewed calls for an extension of the transition, but the UK Government rejected the idea.