As the UK leaves the EU, in light of the seismic result of the United Kingdom referendum on June 23, 2016, there will be an immense amount to do, for the UK and the remaining EU, and for companies that are either based in, or have interests in the UK. It will be necessary both to consider the existing positions of companies and individuals and how to achieve the best solutions in any future relationship between the UK and the remaining EU. The key theme is “whether specific solutions can be agreed” as illustrated below.
Initially, there will be tremendous uncertainty, because it is not known what the UK will seek, or what the remaining EU Member States will accept, as an agreement on their future relationship.
The most relevant ideas so far focus on an ad hoc bilateral agreement between the UK and the remaining EU (e.g. starting from the agreement between the EU and Switzerland, but with variations) to a more distant, World Trade Organization (“WTO”) based relationship. The arrangement that Norway has with the EU would appear to be a non-starter in the UK, since it requires Norway to accept all EU Single Market legislation, including free movement of people across the EEA (the EU, plus Norway, Iceland and Liechtenstein).
Both the UK and the EU also have complex internal political issues and agendas now. The UK will be seeking to maintain as much continuing EU Single Market access as possible. The EU will be concerned not to undervalue market access and/or give an incentive for others to seek similar referenda. The relevant meetings will start shortly.
In every area, precise assessments will be necessary. A few legal points are clear already:
1. Article 50 of the Treaty of European Union provides for the leaving Member State to give notice to leave and negotiations on exit to take place within a two year period from notice.
2. In principle, the UK will lose access as of right to the EU Single Market.
3. UK based companies also may have to move production into the EU.
4. A great many existing commercial relationships will be called into question unless specific solutions are agreed. To give a few practical examples:
5. Both the UK and the EU will have to organise how they will deal with the consequences of Brexit.
6. In many areas, such as competition law, companies will face duplication.
7. Material concerns about State aid may be expected.
8. The new EU General Data Protection Regulation, which was set to enter into force in May 2018, will not apply in the UK.
9. The UK may lose the automatic benefit of free trade agreements (“FTAs”) put in place by the EU.
10. Intellectual property rights and their enforcement will be affected.
We will stop here, because books can and will be written on the full picture.