Following the Conservative Party winning December’s general election by a significant majority, the European Union (Withdrawal Agreement) Bill sailed through Parliament and the UK will officially leave the EU on 31 January 2020.
The UK will then have until 31 December 2020 to negotiate the UK’s future relationship with the EU (the transition period). During the transition period, the UK will effectively remain in the EU’s customs union and single market and will continue to abide by EU laws. However, the UK will be outside the EU’s political instructions and there will be no British members of the European Parliament.
The first priority during the transition period will be to negotiate a new trade deal with the EU. As it stands, UK-based businesses can sell goods to EU customers without additional taxes and can import goods tariff-free. However, the UK government has made clear that, after 31 December 2020, the UK must leave the customs union and single market and therefore a new arrangement must be reached.
There are currently two options for the UK's future trade relationship with the EU:
- A new free trade deal. A deal of this nature is not uncommon and, if achieved, it would serve to eliminate tariffs and other trade barriers. However, negotiating the deal is likely to be difficult, especially in the short amount of time available.
- World Trade Organisation (WTO) terms. The UK and the EU are both members of the WTO so, in the absence of a new, renegotiated free trade deal, both will have to apply the same tariffs and trade barriers as they apply to imports from other WTO member states (e.g. the United States, China, Brazil and Australia).
The UK government has also made clear that the overall jurisdiction of the European Court of Justice (the ECJ) should end after 31 December 2020. Indeed, the European Union (Withdrawal Agreement) Act includes a power to allow ministers, following consultation with the judiciary, to create new regulations which may enable courts or tribunals to depart from historic ECJ case law in certain circumstances.
How these new regulations will look is not yet known (and is unlikely to be known for some months whilst the judicial consultation takes place); however this is potentially a very significant development. It means that all UK civil courts could have the ability to depart from ECJ rulings in areas such as workers’ rights (which could affect, for example, the right to paid holidays and sick leave).