Brexit, the prospective withdrawal of the UK from the European Union, will have widespread impact, not just in the UK and European Union, but in countries around the world, including the US.
Since no country has ever left the EU before, no one is quite sure how Brexit will play out, but it is destined to affect government and companies and individuals. We are on watch, and will be sending periodic updates as events unfold.
Here is the first of our planned semi-annual updates, as the UK and EU move forward towards an official Brexit.
BREXIT IN BRIEF:
Negotiations are currently focusing on finalizing the EU Withdrawal Agreement, as well the development of a framework for future partnership between the UK, the EU and the US.
THREE KEY EVENTS FROM Q1
1. “Implementation period” agreement
- The UK and EU reached an agreement on the terms of a time-limited implementation period (informally being called the "transition” period). This is a decisive and long-awaited step.
- The transition period will start on March 30, 2019 and continue until December 31, 2020.
- During this period, the UK will no longer be a Member State of the EU, but "common rules” governing how goods enter the EU will remain in place. Businesses will be able to trade on the same terms until the end of 2020.
- Economic and regulatory cooperation will be undisturbed, and the UK will be able to negotiate, ratify and sign trade deals with new partners during the implementation period.
2. “Joint Committee” established
- A “Joint Committee” will be composed of representatives of the UK and EU, and provide a means to ensure the smooth functioning of the implementation period, allowing either side to raise and resolve any concerns.
3. “Financial Services” proposal
- British Chancellor Philip Hammond's speech at HSBC in London on March 7 gave comfort to the financial services community, with its focus on partnership between the EU and the UK. He proposal struck all the right chords: “reciprocal regulatory equivalence...proper governance structures, dispute resolution mechanisms, and sensible notice periods”
THREE KEY UPCOMING EVENTS:
1. Withdrawal agreement & the Ireland Issue
- Progress has been made on the actual text of the Withdrawal Agreement, which covers financial settlement, citizens’ rights, and lots more. A critical topic still under discussion is the issue of a "hard" or "soft" border between Ireland and Northern Ireland. The final Agreement is expected in October.
2. EU Industry agencies
- The status of several key industry agencies inside the EU are currently in focus, among them The European Medicines Agency (EMA), the European Chemicals Agency (ECHA), and the European Aviation Safety Agency (EASA). We will keep you updated.
3. Bringing it home: the UK-US Free Trade Agreement
- The UK-US Trade and Investment Working Group is hard at work. Formed to strengthen the UK’s existing bilateral trade and investment relationship with the US, its purview covers industrial and agricultural goods and services; the financial services industry, including digital trading; intellectual property rights and enforcement; labor and environment along with sustainable development; and small and medium-sized enterprises (SMEs).
How to plan for the long haul Brexit events:
The BREXIT implementation (transitional) period will last from 29 March 2019 to 31 December 2020. That gives us all ample time to plan ahead for potential outcomes.
Your SVB FX Advisor can work with you in developing long term plans for your firm, as you expand your activities in the UK and EU.
*Source: Brexit facts, information provided by British Consulate-General, Boston.