Arthur Cox is continuing to closely monitor Brexit developments, and to advise our clients in Ireland, the UK and further afield on the potential legal implications for their businesses. We are also mindful of the implications of Brexit for Northern Ireland and free movement of goods and people across the border. Together with our colleagues in our Belfast office, we have an all-island perspective on these issues.
Following months of negotiations between the EU’s negotiating team and the UK Government, a draft Agreement was published on 19 March 2018, setting out the progress made so far.
It is now clear that, when the two-year negotiation period under Article 50 expires on 29 March 2019, there will be a 21-month transitional period under which the UK will continue to apply EU law. That transitional period will expire on 31 December 2020 (i.e. the UK will remain a part of the single market and customs union until that date). The UK will not, however, be involved in the formulation of EU law from 29 March 2019 onwards, but will be consulted on certain matters. The draft Agreement does not allow for an extension of the transitional period beyond 31 December 2020, but it is possible that this could be provided for in the final form of that Agreement.
Agreement has been reached on a financial settlement and in relation to the rights of citizens and workers. However, no agreement has yet been reached on certain intellectual property matters, data protection, police and judicial cooperation in criminal matters, the recognition and enforcement of judgments, the jurisdiction of the European Court of Justice, and how disputes between the UK and the EU regarding the interpretation and application of the Agreement should be dealt with.
Regarding Northern Ireland, the draft Agreement contains a Protocol on Ireland/Northern Ireland – this reflects the policy objectives of both sides, but still requires detailed negotiation. While the Joint Report of the negotiating teams published on 8 December 2017 outlined three potential options for avoiding a hard border between Ireland and Northern Ireland, the Protocol is (pending any alternative agreement being reached) drafted on the basis of the third option: that Northern Ireland remain fully aligned with the EU (referred to as the ‘backstop’ option).
The EU Council welcomed the draft Agreement following a meeting of EU leaders on 22 and 23 March 2018, but cautioned that “nothing is agreed until everything is agreed”. The EU Council’s Guidelines, published when that meeting concluded, reiterated that there can be no “cherry picking” by the UK in respect of participation in the Single Market, and that any free trade agreement should include “robust guarantees which ensure a level playing field”. Particular emphasis was placed regulatory alignment, cooperation in law enforcement and judicial matters, cooperation in the areas of foreign, security, and defence policy, and equivalent standards of data protection.
While the Governor of the Central Bank recently observed that Brexit may generate both economic and financial volatility, the Central Bank has commented that “authorisation activity proceeds apace in an orderly and well-structured manner”, with concerns about regulatory arbitrage reducing considerably in light of the work done to date by regulators, the Single Supervisory Mechanism and the European Supervisory Authorities.
We will issue updates and relevant briefings as developments occur.
In the meantime, if you have any questions on Brexit, please get in touch with your usual Arthur Cox contact or any member of our Brexit team.
Our previous Brexit briefings provide further background on Brexit-related developments:
- Brexit: Central Bank FAQ
- Brexit Guidance for the Pharmaceutical Industry
- Brexit: ESMA publishes sector-specific opinions on relocations
- Brexit: ESMA highlights importance of supervisory convergence
- Brexit Update May 2017
- Brexit: The Great Repeal Bill
- 50 triggered: Brexit negotiations can begin
- January 2017 Briefing on the Supreme Court decision on Article 50
- November 2016 Brexit Update
- November 2016 Briefing on the High Court ruling on Article 50