Brexit round-up – 08/01/21

The EU-UK Trade and Cooperation Agreement

On 24 December, the UK and the EU agreed the EU-UK Trade and Cooperation Agreement which came into force at 11pm on 31 December 2020. The UK departed from the EU on 31 January 2020 however it remained under the EU’s rules through the transition period whilst negotiations were undertaken. The agreement sets out preferential arrangements in areas such as trade in goods and in services, digital trade, intellectual property, public procurement, aviation and road transport, energy, fisheries, social security coordination, law enforcement, judicial cooperation in criminal matters and thematic cooperation and participation in EU programmes. It is underpinned by provisions ensuring a level playing field and respect for fundamental rights.

Key provisions of the extensive agreement include that that UK manufacturers have tariff-free access to the EU’s internal market, meaning there will be no import taxes on goods crossing between Britain and the continent however there are new checks at borders such as safety checks and customs declarations. The provisions in the agreement do not govern trade in goods between the EU and Northern Ireland, where the Northern Ireland Protocol will apply.

Businesses offering services, such as banking, architecture and accounting, have now lost their automatic right of access to EU markets and will face some restrictions as there will no longer be automatic recognition of professional qualifications for people such as doctors, chefs and architects.

In respect of travel, UK nationals will now need a visa for stays of longer than 90 days in the EU in a 180-day period, EU pet passports will no longer be valid and European Health Insurance Cards will remain valid until they expire and will subsequently be replaced by a new UK Global Health Insurance Card.

In respect of fishing rights, which was a major sticking point in negotiations, over the next five-and-a-half years, the UK will gradually gain a greater share of the fish from its own waters after which it could choose to ban EU fishing boats from 2026, but the EU would be allowed to introduce taxes on British fish in response.

The UK will now have no role in the European Court of Justice and any disputes that cannot be resolved between the UK and the EU will be referred to an independent tribunal instead. The UK is no longer obliged to comply with EU standards of data protection, but data will continue to be exchanged in the same way for at least four months as long as the UK doesn’t change its data protection rules and the UK will no longer have automatic access to key security databases, but should be able to gain access upon request.

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Some EU online retailers refuse delivery to UK

Some EU online retailers have said they will no longer deliver to the UK because of tax changes which came into force on 1 January. Following the UK’s departure from the EU, EU companies now face higher costs in order to comply with UK tax requirements. From 1 January, new VAT rules were brought in by HMRC which requires retailers to pay VAT at the point of sale rather than at the point of importation. This means that overseas retailers sending goods to the UK are expected to register for UK VAT and account for it to HMRC if the sale value is less than €150. Bicycle part firm Dutch Bike Bits said from now on, it would ship to every country in the world except the UK and Belgium-based Beer On Web, said it was now shunning the UK “due to the new Brexit measures.”

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Spain and UK strike deal on Gibraltar after Brexit

Spain and the UK have struck a deal to avoid a hard border in Gibraltar as the UK leaves the EU. Under the terms of the deal, Gibraltar will be part of the Schengen passport-free area with the sponsorship of Spain and follow EU rules, while remaining a British Overseas Territory. This means British citizens will need to go through a Schengen border post to enter Gibraltar through its airport and seaport but EU citizens arriving from Spain or another Schengen country will avoid passport checks. During a four-year transition, the European Border and Coast Guard Agency, called Frontex, will patrol both access points. However, the deal does not address the issue of sovereignty and at present the plan is to have a six-month transition period and then formalise the new arrangements with a treaty. Dominic Raab said “all sides are committed to mitigating the effects of the end of the [Brexit] Transition Period on Gibraltar, and in particular ensure border fluidity, which is clearly in the best interests of the people living on both sides. We remain steadfast in our support for Gibraltar, and its sovereignty is safeguarded.”

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If you have any questions about any of the issues which are raised, or would like to discuss your own organisation’s options during the Brexit process, please do not hesitate to get in touch.