4 June 2020

Brexit Bulletin – May/June 2020

It’s all over for the ‘hybrid Parliament’ this week as MPs are expected to return to the House of Commons. For the Brexit negotiation teams, the next round of talks begin this week too. With this the final chance to reach an agreement before the 30 June deadline to extend the Transition Period, it’s clear that June is going to be a critical month for the Brexit process.
 
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In this month’s Bulletin:

1. Brexit update
2. Give me just a little more time (again)
3. Northern Ireland update
4. Customs support funding
5. Latest publications

1. Brexit update

The talks which begin this week are the final round planned ahead of the June 30 extension decision headline. Both sides have already conceded that a resolution is unlikely.

Letters sent between Chief Negotiator David Frost and his EU counterpart Michel Barnier in late May, in which Frost accused Brussels of treating the UK as ‘an unworthy partner,’ have not helped matters. Frost wrote that the UK Government’s proposed free trade deal is very close to that signed with Canada, that the draft fisheries proposal is akin to that between the EU and Norway, and that on aviation the UK is not seeking more than that given to other non-EU countries. In response, a senior EU official said there was a risk of stalemate if the EU did not see progress on its vital interests, including how to ensure fair competition, or a level playing field, between British and EU companies under a free-trade deal.

Lack of resolution will mean a mid-June meeting between Boris Johnson and European Commission President Ursula von der Leyen. They will need to decide whether to extend the Transition Period (something the Prime Minister has repeatedly insisted he will not countenance) or a ‘no-deal’ scenario exit from the Single Market, and the implementation of World Trade Organization (WTO) terms going forward.

Research from the Social Market Foundation, published on May 3, reached a simple conclusion: 

• The Government’s proposed deal (Free Trade Agreement) = medium-size negative impact on GDP.
• Leaving without a deal in place (World Trade Organization rules) = large negative impact on GDP.

You can read the full press release and report here.

If the Transition Period is not extended, there is still the possibility of a last-minute trade deal in October or November.

2. Give me just a little more time (again)

Without an extension to the Transition Period, there is a widespread concern that businesses will not have adequate time to prepare for Brexit on WTO terms. One of the ways suggested to tackle this is for the UK and EU to agree to a temporary deal to allow traders to adapt to a no-deal scenario. This would mitigate circumstances where some businesses implement costly preparations for no-deal, and risk losing out to less conscientious competitors if an agreement is reached at the last minute. The IoG says that allocating a specific period of time during which Government and businesses could focus exclusively on preparing for a no-agreement scenario, could reduce the chances of this happening.

The Institute for Government has outlined this, and another three ways in which extra time might be secured:

• Amend the end date of the Transition Period in the Withdrawal Agreement – this could in theory be done at any point after June. But it would almost certainly require the European Court of Justice to give a legal opinion first.
• Create a new Transition Period to begin on 1 January 2021 – this would mean striking a new, complex agreement and a lengthy ratification process, alongside future relationship negotiations.
• Include an implementation phase as part of the future relationship treaty – this would give businesses time to make investment decisions and adapt supply chains.
• Create an implementation phase to prepare for a potential no-deal exit – agree a temporary deal to allow traders to adapt to a no-deal scenario in the event that talks break down.

3. Northern Ireland update

On 23 May, the Government published its Approach to the Northern Ireland Protocol document. It confirms that there will be Brexit checks on animals and food goods entering NI from the rest of the UK from next January.

The announcement comes months after Boris Johnson pledged there would be no checks on trade crossing the Irish Sea – telling businesses that if anyone asked them to fill in new paperwork, they could “throw it in the bin.”

The arrangements have been put in place as part of the deal struck between Boris Johnson and the EU in January to avoid a hard border on the island of Ireland.

4. Customs support funding

HMRC has extended the deadline for businesses to apply for customs support funding to 31 January 2021. There is still at least £7.5 million available so that more businesses can hire or train experts to deal with customs declarations. Visit the Funding Portal (managed by PWC), by clicking here.

5. Latest publications

We've trawled through the latest publications about Brexit of particular relevance to the printing industry.