If Brexit is effective since 31 January 2020, the official date of withdrawal of the United Kingdom from the European Union, its actual consequences will only be felt, essentially, in the next few months, at the end of the transition period ending 31 December 2020. During this phase aimed at enabling both parties to agree on their future relationship the United Kingdom remains subject to EU rules.
Discussions are blocked in particular on the question of the conditions of fair competition by the United Kingdom: the EU is willing to give access to its internal market provided that the United Kingdom agrees to avoid unfair competition – and that it does not diverge significantly in terms of its standards with respect to the environment, labour, or State aid. Other areas of disagreement: the question of dispute resolution, as the UK refuses to be subjected to the jurisdiction of the CJUE; fishing, with the thorny issue of access by European fishing boats in British waters; or even police and judicial cooperation.
As the fateful date approaches, the parties are engaged in a showdown where each is pretending not to dread the consequences of an exit without a deal. The reality is that a “no-deal Brexit” would be detrimental to both sides and their citizens, even more so in an economic context very severely impacted by the Covid-19 pandemic.
For the time being, and despite modest progress at this stage, both sides seemed willing to find a compromise in order to reach an agreement before the deadline.
However, the imperatives laid out by both sides seem at this time irreconcilable, and it will require a great deal of skill on the part of negotiators to reach convergence before the deadline.
The British, which had until 30 June to request an extension of the transition period which the EU was calling for, definitively closed the door to such an extension on 12 June 2020. The EU’s chief negotiator, Michel Barnier, indicated that in the absence of a renewal of the transition period, a final agreement should be reached before 31 October 2020 in order to leave sufficient time for its ratification by both parties. Unless summer is very productive, this does not allow much time.
Beyond the conflicting positions of each side, there is however room for manoeuvre, particularly on the extent of regulatory harmonisation which will be required from the British. Let us hope that the negotiators will find a way.
The scenario of last minute negotiations is the most likely. And if these negotiations lead to a consensus on the fundamental principles of the future relationship, perhaps the negotiators will agree to an extension of the transition period for the time necessary to finalize the terms of the agreement and to enable its ratification by all the countries of the European Union.
Our Brexit team
Your challenges, our solutions
- On corporate flows (goods and services, personal data, human resources)
- On the supply chain (VAT, customs, excise duties)
- On tax group structure (passive income, tax consolidation)
- Commercial relations, distribution networks, competition rules
- (Re)negotiation, drafting, termination of contracts, anticipation of future fluctuations
- Dispute resolution, resolution clauses
- Redefinition of your location strategy in Europe (transfers of assets and headquarters, restructuring, M&A)
- Acquisition opportunities and strategy in the UK (M&A, financing, etc.)
- HR policy
- Immigration, retirement and social protection
- Matrimonial property regime, wealth structuring and estate planning
- Employment contracts
Whether you are French company developing or wishing to develop your business in the United Kingdom or a British company with interests in France, the repercussions of Brexit on your business are multiple and complex.
To assist you in this transformation, we have set up a dedicated team which can be backed, if necessary, by our UK partner law firm, Mills & Reeve, guaranteeing you:
- A proactive approach that takes into account future opportunities and constraints
- A response tailored to your organizational structure and needs
- A sector-based approach for financial sector players and, more generally, all regulated sectors affected by Brexit
- Access to the very best specialists