Remember Brexit?
2020 has been quite a year. 2021 will likely have some further twists and turns as we (hopefully) find a vaccination for Covid and the UK leaves the European Union. There is a lot of information and news about Brexit, but there’s still not a great deal of clarity about what it will mean in practice.
The UK formally left the EU on 31 January 2020 and is now coming towards the end of the transitional period, under the terms of the Withdrawal Agreement. The transition period ends on 31 December 2020 and the deadline for extending the transition has now passed.
If the UK government does not reach a trade deal with the EU, the UK will automatically drop out of the EU’s single market (all countries within the EU share common rules on product standards and access to services, for example) and customs union (countries within the EU don’t charge tariffs on the sale of goods within the EU) on 1 January 2021.
Whilst the UK’s future trading position with the EU remains unclear, there are some key areas that businesses can focus on to help prepare:
People
If the UK leaves without a trade deal, the UK will no longer participate in the EU freedom of movement rules. This potentially has an impact on employees travelling abroad for work and/or for employees living overseas.
Import/Exports
Businesses sending goods to and from the UK to Europe should confirm what the new rules are for imports/exports and confirm the rates of tax and duty which will apply.
Commercial contracts
If you do a lot of trade in Europe, do your contracts give you scope to make changes to take account of any consequences of Brexit? This might include cost increases as a result of the UK leaving the EU (to take account of tariffs or tax, for example), it might also include the right to make changes to laws/standards which apply to the contract. Does your contract contain a force majeure clause which might be triggered by Brexit?
Data privacy and data protection
If your business transfers personal data to/from the EU, the UK leaving the EU has the potential to be hugely significant. In the short term, continued compliance with the GDPR is highly likely. The Withdrawal Agreement notes that the UK will continue to recognise the EU regime and so it will permit transfers of data to the EU and to the other countries which the EU has determined have equivalent data protection rules (an eclectic group of a dozen countries at present), unless and until the UK government changes its position.
However, from 1 January 2021, if no trade deal is reached, the UK will become a ‘third country’ for the purposes of EU data protection law. This means that that transfer of data from an EU country to the UK will now be subject to the international data transfer rules. In practice, this will mean that contracts which transfer data from the EU to the UK will need to contain the EU standard contractual clauses and businesses will need to ensure compliance. This position will become easier if the EU confirms that the UK has ‘adequacy status’, and so joins the group of 12 countries which the EU considers to have data protection laws equivalent to the EU rules, but this is likely to take some time. In terms of transfers to/from other countries outside of the EU, this will largely depend on what deals the UK can strike with each country.
If you’d find it useful to discuss any of these issues and the impact on your business, please contact Julia.ellis@ignition.law
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