Brexit Update: U.K. Parliament Sets General Election For December; Brexit Takes Centre Stage

King & Spalding

[co-author: Tony Collins]

On November 6, 2019, the dissolution of the United Kingdom’s Parliament became effective and Prime Minister Boris Johnson officially announced, in accordance with a vote of the Parliament on October 29, 2019, the setting of a general election for the United Kingdom (“U.K.”) on December 12, 2019.

A central focus of the election is to allow the U.K. political system to break the current deadlock on Brexit. Prime Minister Johnson hopes to win a majority at the polls in order to ratify his Withdrawal Agreement before January 31, 2020, in accordance with the extension issued by the other Member States of the European Union (“EU”). Indeed, in the very last days of October, the other members agreed to a so-called Brexit “flextension” until January 31, 2020 or Parliament passes a Brexit deal, whichever is sooner.

Uncertainty remains high regarding the results of the vote. According to surveys in the U.K., the Conservative party is ahead in the polls but, even assuming Johnson wins a majority and his Withdrawal Agreement is ratified before January 31, 2020, a transition period of 11 months - that is, until the end of year 2020 – will begin during which U.K. will remain in the EU’s single market and customs union. This transition period is necessary to negotiate a future trading relationship between the U.K. and the EU.

The situation will be closely watched as discussions over the U.K.’s future trade arrangements with other countries continue. Given the relationship between Prime Minister Johnson and President Donald Trump, a potential trade deal between the United States and the U.K. has also been on the agenda recently. In the interim, the U.K. has already inked 18 deals involving 48 countries or territories to ensure "continuity" following Brexit. These include agreements with the Southern African nations, South Korea, Central America, Norway and Iceland, Israel and Switzerland.

Whether or not the U.K. leaves the EU on the basis of the Withdrawal Agreement or a “no deal” -- which could involve the Withdrawal Agreement collapsing or a failure to settle on a free trade deal with the EU -- the U.K. will revert to its membership in the World Trade Organization as the starting point for all other global trade.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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