As expected, the United Kingdom gave notice in March that it will be leaving the European Union (EU), invoking Article 50 of the Lisbon Treaty. Article 50 sets a two-year window to renegotiate a new legal basis for Britain’s trade relationship with the EU. Prime Minister Theresa May began the formal steps for Brexit after triggering Article 50, kicking off Britain's withdrawal from the EU.

During a recent Webcast hosted by Integration Point, John Grayston, Solicitor – England & Wales, Member (EU List) Barreau de Bruxelles shared his thoughts on Brexit.

 Now, he answers your most pressing questions from the Webcast:

 Q: What about England and Wales only? (The Cyprus model?)

There are plenty of reasons why parts of the UK could try to negotiate their way back into the EU, however, for both Northern Ireland and for Scotland, there are real political obstacles in the way, meaning that it is not at all clear whether there is real support.

If there was real support then a whole other set of issues would emerge to make life difficult--e.g. the fact that the UK special deal may not be available in which case the new candidates would have to apply the Euro.

Now, the debate seems to be increasingly focusing on where powers would be repatriated when UK leaves EU--would this be to London or to the regions.

Q: Do you think the two-year period will be extended (existing rules) or will they use the transitional rules option after the two years?

I cannot see anything other than a simple out deal being concluded within the two-year timetable. The issue for me is whether the Article 52 period is extended-- in which case UK remains in the EU pending its conclusion;  or do we leave and then move to an initial transitional period outside the EU. We will know more on this once the real negotiations get underway in the coming months.

Q: It is our understanding that the Country of Origin marking & labeling requirements accepts "made in EU.” Do you foresee any changes in this matter?

For the EU I do not see any reason for any change at all. The point is that the UK being no longer in the EU will need to have its own origin rules and requirements – initially a copy across of the EU rules.

Q: What are the chief hurdles for the UK regaining WTO status?

I think that the main obstacle is to agree to specific schedules with each of the members and this would be a huge task. The route to a solution could be linked to an EU UK transitional arrangement. Of course, the UK would be able to apply WTO rules in any event.

Q: What role will the UK now play in regulatory approval for mergers and acquisitions? For instance, in the Bayer acquisition of Monsanto?

The first answer is easy—the UK would not be involved in or covered by any EU review of a merger. UK would have to apply its own rules--with the potential for the UK to conclude differently from the EU. I see this as more of a cost than a substantive threat. Absent any special conditions of competition in the UK, I would expect the EU decisions to remain the most important and potentially the most likely to result in a negative prohibition decision.

Q: What do you think the chances are of EU trade agreements being re-negotiated if the UK is no longer a part?

I can only suggest that this is the very last thing that the EU would ever countenance.

Third countries could try it but I fear they would receive a sharp response. Equally, I would think that the UK would have difficulty negotiating provisions, which differ from those offered by the EU.

Q: What is the greater risk for trade--customs duties or the administration of movements at a hard border?

I see the physical issues being a real concern. Longer term, it is the additional administration burden that will be affected the most--far outweighing the customs duties.

For certain products and sectors, customs duties will become a major issue--especially for those sensitive products for which the EU (and other third countries) may decide are suitable for the adoption of anti-dumping or anti-subsidy measures.

Q: How long will it actually take the UK to leave the EU?

So many ways to answer this….

  • It already has…in political terms
  • Two years from 29 March 2017--in strictly legal terms
  • Five to ten years for a transitional period to unwind those areas in which the UK is still an on-going participant
  • Never (the most cynical answer) in the event that the UK fails to find a way to develop its own position in the world and is constrained to follow religiously all EU rules and measures (for economic and policy bandwidth reasons) but without having any political influence anymore

Q: At what point would it be too late for the UK to change its mind?

It must remain a possibility at any time up to the end of the Article 50 period. However, right now, this looks like a very unlikely outcome indeed.

 Post-Article 50 we lose the deal we currently have with the EU. In addition, this would ensure that we do not bounce back as a new candidate!

Q: Can Northern Ireland remain part of the Customs Union while the rest of the UK leaves?

Yes--and this would make administrative sense. However, politically there are real obstacles to making this happen.  

Q: Should the UK change its rules on Customs and Customs Duties as soon as possible?

The UK will be preparing in function of the on-going negotiations to look at new procedures to mitigate the impact of being outside the Customs Union--specifically for logistics based companies. Long term, the need for change should be tempered with an awareness that as the EU changes UK will need to consider the potential costs of not following the EU lead.

 

On September 13, 2016, Integration Point and Morley Consulting held a free webcast on Brexit and the effect on customs operations in the United Kingdom. We highlighted the latest news on Union Customs Code (UCC) changes, logistic opportunities around the world, the future of customs legislation, and more.

During the webcast, some questions were unanswered due to time constraints. You can view the on-demand webcast here.