During the transition period, the UK will retain the benefits of EU membership and will remain a part of the EU’s internal market and customs union. Simultaneously it will start trade negotiations with the EU. On the other hand, the UK will lose its representation in the European institutions and will not participate in EU decision-making. The post-Brexit transition period ends at the end of 2020. The UK has stated that it will not request an extension of the transition period.

Given the time available, we expect a vary basic trade agreement by the end of 2020. It is likely that this trade agreement will have to be supplemented and extended with further agreements post-2020, in particular in the field of services.

February 3, 2020

Mr. Barnier will set out the European Commission’s draft negotiating mandate for the trade talks in Brussels. The EU is making clear its bottom lines. It insists that the UK must accept alignment with its rules on workers’ rights, the environment and state aid, as the price for a deal (fearing that otherwise the UK will steal a competitive advantage).  The EU is also insisting that its members should be allowed access to UK fishing waters before any trade deal can be reached, and that it wants a future role for the European court of justice in any disputes with the UK.

On the same day Mr. Johnson is expected to make a major speech setting out his red lines for the UK-EU relationship. The prime minister will be seeking to make a hardline trade deal in less than a year that is “at least as ambitious” as that struck by Canada with the EU in 2017, after seven years of very difficult negotiations. And he will make no concessions to ease an agreement into being. There will be no alignment whatsoever.

March 1, 2020: Negotiating mandate agreed.

The EU wants its negotiating mandate to be approved by March 1, potentially at the meeting of EU-27 European Ministers on 25 February. Once this mandate is in place the European Commission has the authorization to open trade talks with the UK.

Both sides agree that a priority in the talks will be to hammer out a free trade agreement that will be the core of their new future economic relationship. The EU and the UK have said that the objective should be quota-free and tariff-free trade in goods but the EU requests significant alignment with EU standards, in order to ensure a level playing field and avoid unfair competition. Lobbying for the interests of specific sectors will likely be most effective before this date. Recent years have shown that the final outcome of the negotiations often closely mirrors the initial negotiating mandate.

June 2020: Stocktaking

According to the EU and UK political declaration, a summit should be held in June 2020 so that the EU 27 and the UK can assess the progress of trade negotiations. June is also the mast month in which the UK can request an extension of the transition period beyond the end of 2020. The current Conservative government has made it clear that it will not ask for such an extension.

November 26, 2020: Trade deal presented to the European Parliament?

A trade agreement must be negotiated, checked, translated and presented to the European Parliament (EP) at the penultimate plenary session of 2020 that takes place during the week of 26 November, if the agreement is to be ratified before the end of the year.  The last plenary session in mid-December would be to late to sign an agreement with the UK. Furthermore, each member state must also ratify a trade agreement by the EU. In practice, this means that there will be a very short period for the EU and the UK to negotiate their future trade relations.

December 31, 2020: No trade deal post Brexit?

If there is no trade agreement in place by this date and no extension of the transition period, the UK will fall back on the basic conditions of the World Trade Organization. That means that there will be tariffs for goods customs border controls and procedures to comply with them. The result would in fact be the same as a no-deal Brexit and companies would have to be prepared for how to deal with such a potential scenario in 2021.

December 31, 2022: End of an extended extension?

This is the latest date until which the transition period can be extended. However, during this period, the UK would need to make further financial contributions to the EU budget and revert to its earlier declaration not to extend the transitional period under any circumstances. This scenario therefore seems unlikely.



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