Business before and after Brexit by David O’Reilly

01 April 2021

By David O’Reilly

Business before and after Brexit by David O’Reilly

Brexit will have a huge impact on the way Irish and UK businesses operate, from how they sell their services in each EU member state to the requirements UK companies must comply with if they employ EU citizens. The UK is out of the Single Market and Customs Union and therefore the seamless trade enjoyed between Ireland and the UK has been disrupted. After four and a half years of intense negotiations, the EU and the UK have finally reached a Trade and Cooperation Agreement (the Agreement) on their future relationship. To ensure the implementation of the Agreement, the EU and the UK are to form an over-arching Partnership Council co-chaired by a Member of the European Commission and a representative of the UK Government. This deal means that there will be zero tariffs and zero quotas on trade between the UK and the EU in all goods that comply with the appropriate rules of origin. There will be no tariffs or quotas on the trade of compliant goods between the EU and the UK. The UK and the EU have agreed a rigorous ‘Rules of Origin’ Chapter which ensures that only ‘originating’ goods are able to benefit from the Agreement. Products must be from the EU or the UK or have been sufficiently processed within the respective jurisdiction to qualify as ‘originating’ there. As of 1 January 2021, the EU and the UK constitute two separate regulatory regimes. This means that all products exported from the UK to the EU will have to comply with the EU’s regulations and vice versa.

The EU and the UK have committed not to lower the overall level of labour protection, social protection, environmental protection and climate protection in a way that impacts trade or investment. The Agreement reaffirms the regulatory autonomy of the UK and the EU but equally acknowledges that trade and investment between the EU and the UK require conditions that enable a level playing field for open and fair competition that ensures that trade and investment take place in a manner conducive to sustainable development.

The Agreement also sets out preferential arrangements for the trade of services. The coverage for services is similar to other EU free trade agreements such as the EU-Canada and EU- Japan agreements. The Services Chapter has a number of exemptions, and local EU Member State rules will apply in certain circumstances. This is because the EU Single Market for services is not yet complete and therefore individual Member States have their own rules. In practice, UK businesses will need to look at domestic regulations on service access in each EU Member State in which they seek to operate. In addition, the provisions on services do not apply to ‘Financial Services’. As expected, as of January 1 2021 ‘Passporting’ rights no longer apply to UK financial services firms.

The British Irish Chamber welcomes the non-binding commitment from both Parties to agree a Memorandum of Understanding establishing a framework for regulatory cooperation on financial services by March 2021. Like Financial Services, the curtailment of Legal Services for UK lawyers servicing clients within the EU was flagged well in advance of the Deal. The Agreement allows for a lawyer of the other jurisdiction to advise clients on that lawyer’s home law, except where EU Member States have placed specific limits on this activity. The Agreement also allows a law firm of the other jurisdiction to establish a branch in the opposite territory through which designated legal services are supplied subject to conditions.

The Agreement also includes a Chapter on ‘Entry and temporary stay of natural persons for business purposes’. Freedom of movement as applied within the Single Market when the UK was a member is no longer the case (this excludes the unique UK–Ireland arrangement within the Common Travel Area). However, the EU and the UK have agreed to allow short-term business visits (with conditions) for business visitors for establishment purposes, contractual service suppliers, independent professionals, intra-corporate transferees and short-term business visitors. As of 1 January 2021, as a general rule, UK nationals (irrespective of where they acquired their qualifications) and EU citizens with qualifications acquired in the UK will need to have their qualifiications recognised in the relevant Member State on the basis of each country’s existing individual rules applicable to the qualifications of third-country nationals.

However, the Agreement does provide a framework for the potential future mutual recognition of professional qualifications through the Partnership Council. It has been agreed that for a four-month period the transmission of personal data from the EU to the UK shall not be considered as a transfer to a third country under EU law, provided that the data protection legislation of the UK remains unchanged from the end of the transition period. This interim period can be extended by two months and will end once the European Commission makes a decision on adequacy. Going forward, the British Irish Chamber of Commerce will be a key channel for UK and Irish interests looking to build on this Deal to continuously improve the conditions for trade and investment between the two islands. The Chamber will develop close links with the specialised committees that will oversee the operation and implementation of the Agreement. We will also continue to work with the Commission, Council and Parliament of the EU, the Irish and UK Governments and the devolved administrations to ensure that the views of our members and the sectoral committees that represent them are fed into their decision-making processes. This deal should be considered a progressive first step in the post-Brexit EU-UK trading relationship. For the Chamber’s members, this deal will help to protect the nearly €90bn in trade across the Irish Sea which sustains 400,000 jobs throughout these islands. The Chamber is determined to play a central role in developing it further to enhance UK-Irish trade and relationships in the years ahead.

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