Brexit – The Final Deal

“It’s a defensive deal, with the UK focussed on regaining sovereignty and the EU in turn focussed on not breaking its single market”, and “On the one hand it’s very complex, and on the other hand is strikingly thin in some places (to echo the verdict of the IPPR) ” was the consensus of DLA Piper’s advisory practice during a Brexit – the final deal webinar, summarising the 24 December 2020 European Union (EU)-United Kingdom (UK) Trade and Cooperation Agreement (TCA).

During the live broadcast on 5 January, a multi-disciplinary panel of DLA Piper lawyers and policy specialists, including Lord Andrew Tyrie, shared their views on the post-Brexit deal agreed at the eleventh hour on 24 December 2020, and discussed its impact on the UK economy, UK-EU relations, and businesses on both sides of the Channel.

An on-demand recording of the webinar is available online, alongside our recent Boardroom Brexit publication, succinctly summarising the impact of the trade deal on all aspects of business operations.

Summary

Political and economic perspectives 2021 – UK, Ireland and EU

From a British perspective, the deal provides a measure of certainty and avoids the more extreme trade shock that would have resulted had the UK and EU failed to reach an agreement.

In the medium to long-term, we predict that the UK economy will bounce back well from the post-pandemic and post-Brexit consequences. And, in terms of the post-Brexit Britain political landscape, we anticipate a greater focus by UK Prime Minister Boris Johnson on more traditional and moderate Conservative voters, Scottish independence, and the reconstruction of a fully coherent foreign policy.

From an Irish perspective, the deal is welcomed but there will be changes in trade patterns and logistics. Even some of the best prepared companies are likely to discover that there are unforeseen consequences of Brexit that were not previously envisioned or planned for. These changes and continuing uncertainty on Services are likely to drive investment decisions and M&A both in Ireland and the UK.

There remains a long journey ahead and much work to do affecting Services, and businesses currently await sector specific and other deals relating to trade in services.

Within the EU, there are two distinct points of view - a more combative element that does not want Brexit to be seen as a success; and others who hope that this process will have helped the EU to move forward, with the UK’s Euroscepticism finally removed.

The deal has yet to be ratified by the European Parliament, although this is considered to be a formality.

Cross-border trade in goods and services

An overwhelming positive of the deal is tariff-free trade in goods, albeit this only applies to goods with EU/UK origin. However, no-deal supply-chain planning is still applicable, especially relating to customs procedures, tax and VAT and product standards.

The deal is at its thinnest on services. UK service providers will now need to comply with a patchwork of host-country rules in each Member State. Uniform market access under the EU’s Single Market is a thing of the past.

Immigration and employment

The deal does not have a specific chapter on mobility. However, the addition of the defined list of business visitor activities is much welcomed, as it provides some clarity on permitted activities that can be universally carried out throughout the EU by British citizens. Nevertheless, these should be approached with caution as some Member States have retained specific restriction over certain activities.

Data protection and digital trade

The deal provides for a six-month bridging period (from 1 January 2021), where personal data transfers will be allowed to continue between the EU and the UK. This gives the EU time to adopt a formal adequacy decision allowing the flow of personal data to the UK. Beyond this, businesses need to comply with a dual-regulatory GDPR regime. The digital trade section of the deal provides wider commitments which align well with ambitions on both sides to enable growth in digital services.

State Aid, competition and level playing field

The level playing field was one of the most fraught areas of negotiations. The EU and UK opted for the phrase ‘subsidy control’ rather than the more traditional ‘state aid’, which may be an attempt to move away from EU case law in this area. Many expect the Competition and Markets Authority (CMA) to take the role of the ‘independent subsidy control authority’ - not a function the CMA has carried out in the past. The CMA will also assess the UK competition impact of all cases, increasing its oversight function.

Competition law is a developed area of law in both the UK and the EU, and the deal is likely to continue that tradition of cooperation going forward.

Panellist Biographies

Richard Bonnar, Brexit Committee Chairperson, DLA Piper
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Richard chairs DLA Piper's Brexit advisory practice, coordinating the firm's approach to the withdrawal of the UK from the European Union (EU).

A former Board Member of DLA Piper, Richard is a commercial lawyer of over 30 years' experience and leads complex IT and transformation projects for many of the firm's key clients, including UK and overseas governments. A recognised authority on EU law, Richard also heads up the firm's UK public sector practice.

Paul Hardy, Barrister, Brexit Director and UK Head of Government Affairs, DLA Piper
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Paul has over 25 years' experience working as a lawyer and policy adviser, including working in the European Commission in Brussels and as the senior EU Legal Adviser to the UK Houses of Parliament.

Paul joined DLA Piper from the House of Lords in April 2017 as the firm’s Brexit Director, advising businesses, public sector organisations and States on the implications of Brexit and how best to manage them. He works with our sector specialists worldwide, and his professional background makes him uniquely placed to navigate clients through the complexities of the post-Brexit domestic and cross-border regulatory environment, and to understand the new opportunities and risks that will arise for clients under trade agreements.

In April 2020, Paul took over as UK Head of Government Affairs from Lord Clement-Jones CBE. He provides clients with strategic policy advice and strategies for influencing outcomes in Whitehall and Westminster, combining his and the wider government affairs team’s political insights and networks with the regulatory expertise of the firm’s sector specialists. The UK government affairs team is part of an inter-connected global government affairs offering within DLA Piper, with centres in Brussels and Washington DC. Paul holds the qualification of practicing barrister, and also remains a “door tenant” at specialist EU and administrative law barristers' chambers in London, Francis Taylor Building, where he last practiced as a self-employed member of the Bar.

Lord Tyrie, Political Consultant, DLA Piper
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The Rt Hon Lord Andrew Tyrie joined DLA Piper as political consultant, advising clients across a wide range of financial, public policy and corporate governance issues.

Prior to joining DLA Piper, Lord Tyrie was chair of the Competition and Markets Authority (CMA) between June 2018 and September 2020. He is also a Crossbench Member of the House of Lords.

Richard Sterneberg, Head of Global Government Relations, DLA Piper
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Richard leads DLA Piper’s government affairs EU team. He has considerable experience in the technology and telecommunications sector, international sustainability and environmental issues, as well as working alongside many Asian governments and NGOs. Richard focuses on international projects across the Tech, FMCG, Healthcare, Agriculture and Fisheries sectors.

Richard is also an experienced advisor in crisis communications and litigation, where he has worked with high-profile companies and non-EU governments to guide their strategy and support senior executives.

David Carthy, Ireland Managing Partner, DLA Piper
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David is the Country Managing Partner for DLA Piper’s Ireland business. He focuses on corporate legal work (both public and private) and on multinational/foreign direct investment in particular, and has extensive international experience in the Technology, Life Sciences, Healthcare and Financial Services sectors particularly.

David is the immediate past President of the Irish Exporters Association and is experienced in trade and Brexit related planning.

Lisa Roberts, Senior Associate, DLA Piper
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Lisa is a senior associate specialising in immigration law and sits within DLA Piper’s employment practice. She has extensive experience advising corporate clients on all aspect of the UK immigration system including compliance and internal immigration policies. She also assists clients with their Brexit and post-Brexit strategy, ensuring they are best equipped with the knowledge on how Brexit may impact their business.

Andrew Dyson, Partner, DLA Piper
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Andrew is Global Co-Chair of DLA Piper’s Data Protection, Privacy and Security Group. With 20 years' experience, he advises leading UK and global businesses on legal issues relating to data, cyber security and information technology matters, including compliance with the General Data Protection Regulation and related privacy and cyber laws, including data breach preparedness and response.

Sam Szlezinger, Partner, DLA Piper
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Sam advises on all aspects on European Union (EU) and United Kingdom (UK) competition law and has 20 years' experience in advising leading corporates in relation to EU, UK and international merger control and behavioural competition law cases, including cartels, as well as State aid investigations. Sam represents clients before both the European Commission and the Competition and Markets Authority (CMA) and advises on both contentious and non-contentious competition law.