UK POLICY PAPER ON THE DRAFT TEXT FOR DISCUSSION: IMPLEMENTATION PERIOD

This document sets out the United Kingdom’s approach to the legal text of the transitional period to be provided for in the Withdrawal Agreement. It responds with a number of amendments to the EU draft position paper on the transitional arrangements in the Withdrawal Agreement adopted on 7 February 2018.

Click here to view the Draft Text For Discussion: Implementation Period and here to follow the EU paper on the same topic.

 

 

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FAILING FINANCIAL INSTITUTIONS: HOW WILL BREXIT IMPACT CROSS-BORDER COOPERATION IN RECOVERY, RECONSTRUCTION AND INSOLVENCY PROCESSES?

This paper addresses the issues for international recognition of reconstruction and insolvency proceedings affecting international banks raised by the United Kingdom’s decision to leave the European Union, and considers what the United Kingdom and the European Union and its member states could do to address the potential loss of recognition and cooperation, as well as possible wider international initiatives. The relation of this issue to the World Trade Organization’s General Agreement on Trade in Services is also considered.

To read the full paper, please click here.

Dorothy Livingston
Dorothy Livingston
Consultant
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+44 20 7466 2061

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Filed under Financial services, Insolvency

The UK’s access to the EU’s preferential trade arrangements

There is much current discussion about the application of the EU’s current preferential trade agreements to the UK post-Brexit, both during and after a transition period. The attached briefing considers a number of issues this raises, including the potential to roll-over third country agreements and specific problems that arise in relation to a transition period.

Click here to read the full briefing.

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Filed under Trade, UK-EU negotiations, Uncategorized

What Should GCs Be Doing To Prepare Their Businesses For Brexit?

Here is a recent report aimed at general counsel and published by Legal Business which Herbert Smith Freehills contributed to.

 

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European Commission publishes draft legal text on transitional arrangements

The European Commission has today published a draft text of the transitional arrangements proposed to be included in the Article 50 Withdrawal Agreement, following the United Kingdom’s request to remain in the Single Market and the Customs Union for a short time-limited period after its withdrawal from the European Union on 30 March 2019. Today’s text reflects the mandate provided to the Commission by the Member States on such possible transitional arrangements. In particular, it translates into legal terms the principles set out in the European Council guidelines of 29 April 2017 and 15 December 2017, as well as the negotiating directives adopted on 29 January 2018. As the UK would remain, in effect, part of the Single Market and the Customs Union (with all four freedoms) until 31 December 2020, the UK will remain bound by EU law and the jurisdiction of the European Court of Justice. Union acquis will continue to apply in full to and in the UK during this period. Any changes made to the acquis during this time are proposed to be automatically applied. It is also proposed that the UK will no longer be represented in Union institutions, agencies, bodies and offices. The draft text will now be discussed amongst the EU27 Member States before being formally transmitted to the United Kingdom

To read the position paper, please click here.

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Filed under Article 50, UK-EU negotiations

House of Lords’ EU Committee report into the implications of Brexit for competition law and State aid control in the UK published

The House of Lords EU Committee has published its report into the implications of Brexit for competition law and State aid control in the UK.  In particular, the report recommends that the UK maintains consistency with the EU’s economic efficiency and consumer welfare-based approach to competition law policy, while considering those areas where the UK could take a more innovative and responsive approach to enforcement, including in relation to fast-moving digital markets and online platforms.  On State aid, the report concludes that it is highly likely that some form of State aid control will be required in any future UK-EU trade agreement, potentially along with a domestic UK State aid authority (and indeed, the importance of maintaining a level playing field in relation to State aid, has been highlighted in a recently published Commission discussion paper).

Herbert Smith Freehills provided evidence in relation to State aid and related international trade law issues, which the report draws on in many places.  Notably, we proposed that there is likely to be a link between the level of access to the EU internal market and the degree of parallel State aid control required under a future UK-EU trade agreement, a premise that was accepted in the report.  Our evidence was prepared by State aid and international trade lawyers Lode Van Den Hende, Eric White and Morris Schonberg.

Click here to read the full House of Lords report and here to read our submitted evidence.

Lode Van Den Hende
Lode Van Den Hende
Partner
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+32 2 518 1831

Eric White
Eric White
Consultant
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+32 2 518 1826

Morris Schonberg
Morris Schonberg
Senior Associate
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+32 2 518 1832

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Filed under Competition

Purpose and powers of the Taxation (Cross-border Trade) Bill 2017–19

Tax analysis: The Taxation (Cross-border Trade) Bill will give the government the ability to establish a standalone customs regime, and ensure VAT and excise legislation operates effectively, following the UK’s withdrawal from the EU. Heather Gething, partner, Dorothy Livingston, consultant, and Dawen Gao, associate, all at Herbert Smith Freehills LLP, discuss the Bill in more detail, focusing on the options outlined, protection against unfair trading practices, and information sharing obligations, among other things.

To read the full article, please click here.

Dorothy Livingston
Dorothy Livingston
Consultant
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+44 20 7466 2061
Heather Gething
Heather Gething
Partner
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+44 20 7466 2346
Dawen Gao
Dawen Gao
Associate
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+44 20 7466 2595

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Filed under Tax

THE BREXIT NEGOTIATIONS – THE VIEW FROM BRUSSELS ON DEVELOPMENTS IN JANUARY 2018

The Brexit debate often looks different viewed from Brussels rather than from London. It is however important for businesses to also keep in mind the Brussels perspective and therefore we publish a monthly view from our Brussels office on recent developments and the state of the negotiations.

In this issue we focus on the supplement to the negotiation guidelines adopted by the European Council on 29 January 2018, more particularly on the requirements for a standstill transition and on the issues raised by third country agreements. We also take a closer look at the “preparedness notices” issued by the EU by way of preparation for a possible hard Brexit. These are of interest not just for what they say about the EU view of the consequences of a no-deal scenario but also because they effectively constitute the starting point for the forthcoming negotiations.

Click here to read the full ‘The view from Brussels on developments in January 2018’

Click here to visit our Brexit hub page.

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Brexit – PRA consults on approach to UK branches of incoming insurers

The post below was first published on our Insurance blog

On 20 December 2017, the Treasury, PRA and FCA clarified their approach to EEA-headquartered financial services firms wishing to carry on business in the UK post-Brexit. More recent evidence to the House of Commons Treasury Committee (“TC”) sheds further light on the PRA’s thinking. It also highlights the difficulty for the PRA of giving guidance to firms while so much uncertainty surrounds the UK’s future relationship with the EU.

The PRA’s consultation (CP30/17) on its approach to third country insurers, a separate “Dear CEO letter” and comments made to the TC on 16 January merit further comment.

To read the full article, click here. Key points for firms discussed in this article include the following:

  • Together, the PRA’s papers and comments provide firms with a greater understanding of how the PRA expects incoming EEA firms to plan for Brexit.
  • Comments made to the TC also recognise the additional costs associated with establishing and maintaining a UK subsidiary as compared to operating through a branch here.
  • The PRA’s proposed requirements for firms to subsidiarise are, nonetheless, worrying. In particular, applying a test based on the amount of a firm’s FSCS-protected business appears to us to be flawed.
  • It is not clear whether the PRA’s comments relate to both new and in-force business. For a non-life insurer, in particular, a requirement to transfer all of its in-force business (much of which will have a duration of less than a year) to a newly-established subsidiary would result in considerable unnecessary expense.
  • The PRA’s approach makes a number of assumptions that may turn out to be incorrect. In particular, Sam Woods (CEO, PRA) warns that, if there is no cooperation between the remaining EU states and the UK post-Brexit, “we are not in the business of allowing branches, and firms would have to subsidiarise”. This leaves firms unclear whether the approach being taken by the PRA today will change again in the lead-up to Brexit.
  • EEA insurers that do business in the UK on a services-only basis are not covered by the PRA’s comments. The difference between the EU law approach to the requirement for a services passport and the UK approach to “non-admitted” business means that some EEA insurers should not need PRA authorisation for their coverage of UK risks post-Brexit.

The deadline for responses to CP30/17 is 27 February 2018.  In the meantime, firms affected by the PRA’s proposals should, if they have not already done so, begin to plan for obtaining authorisation for their activities in the UK.

The PRA is consulting separately on its approach to banks (see CP29/17).

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EU Council Adopts Negotiating Directives on the EU Position Regarding Negotiations on a Transition Period

This afternoon the EU Council adopted supplementing negotiating directives for the Brexit negotiations detailing the EU27 position regarding a transition period. These negotiating directives provide the Commission, as the EU negotiator, with a mandate to start discussions with the UK on this matter. The relevant documentation is available here.

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