Trade Post-Brexit: What would a hard Brexit mean for international trade?

The post below was first published on our PIL blog

The UK’s vote to leave the EU brings with it the possibility of so-called ‘hard Brexit’. Business needs to understand what Britain leaving the EU without a smooth transition to a new framework might mean for cross-border trade both within Europe and between Europe and the rest of the world.

At the point when the British government announces its formal intention to exit the EU by triggering Article 50, a two-year countdown will begin to the UK leaving the EU. Understanding the various changes, analysing the risks they pose and working through potential solutions will all be essential to help firms position themselves to navigate the challenges and opportunities that lie ahead.

The peculiarity of the Article 50 process – with its two-year ticking clock – makes this preparatory work all the more urgent. If no alternative relationship or even temporary transitional arrangement were to be agreed between Britain and the EU before the two years run out, the EU treaties would cease to apply to the UK, with nothing to replace them. This has profound implications for both sides.

Herbert Smith Freehills has worked in collaboration with The Boston Consulting Group and Global Counsel to produce a report that considers the potential impact on trade in goods and services if the UK left the EU single market and the EU Customs Union without any new trade agreement in place.The report is designed to help business leaders understand and prepare for a sharp shift in the UK’s relationship with the EU: hard Brexit. Regardless of the eventual outcome, planning for a hard Brexit scenario provides businesses with a baseline to see most clearly the potential impact of the possible changes and to make corresponding plans of action.

Our conversations with business leaders suggest the mood is not necessarily one of negativity, but the scale of the potential change coupled with the lack of clarity as to how it might be effected leaves a lot of uncertainty in the short-to-medium term. Businesses are struggling to understand what Brexit would mean for them. Understanding hard Brexit is a good place to start.

‘We do not necessarily think that a hard Brexit is the most likely outcome of negotiations,’ says Lode Van Den Hende, a partner and international trade law specialist at Herbert Smith Freehills. ‘But planning for this scenario is the most effective way for businesses to compare their current position from within the EU single market with a counterfactual position in which the UK trades with the EU and the rest of the world on the basis of WTO rules. From this baseline, organisations can see most clearly the potential impact of the possible changes and make a corresponding plan of action.’

This report not only aims to help businesses understand the implications of a hard Brexit, but the role they may play in shaping that or an alternative outcome.

The report, produced by Herbert Smith Freehills, The Boston Consulting Group and Global Counsel contains expert contributions from Stephen Adams, Partner, Global Counsel, Pierre Mercier, Senior partner and managing director, The Boston Consulting Group, and Lode Van Den Hende, Partner, Herbert Smith Freehills.

Please follow this link to Herbert Smith Freehills’ Brexit hub to download a copy of the report.

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

Air Quality update

The post below was first published on our UK Real Estate Development blog

Authors: Julie Vaughan, Senior Associate, Environment and Helena Thompson, Associate, Planning and Environment, London

This blog gives an overview of the current position on air quality following the recent ClientEarth (No.2) court decision regarding DEFRA’s air quality plan. In this blog we will consider:

  1. the ClientEarth (No.2) decision
  2. Sadiq Khan’s approach
  3. new domestic legislation?
  4. impact on Heathrow expansion
  5. impact on development
  6. Brexit

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GOVERNMENT LOSES ROUND ONE OF BREXIT LEGAL CHALLENGE AS HIGH COURT RULES THAT THE APPROVAL OF PARLIAMENT IS REQUIRED TO TRIGGER ARTICLE 50

The post below was first published on our Litigation blog

In a landmark constitutional law ruling, the High Court yesterday ruled that the UK Government cannot trigger Article 50 without the approval of Parliament: R (Miller) v Secretary of State for Exiting the EU [2016] EWHC 2768 (Admin).

The ruling is a victory for the claimants who brought the case against the Government’s position that it would trigger Article 50 through the use of the Royal Prerogative. A leapfrog appeal is expected to be heard by the Supreme Court on 7 and 8 December 2016, before a full court in view of the constitutional importance of the issue. For more information on the decision, see our Brexit e-bulletin published yesterday.

For a short practical guide on how Brexit may affect your commercial contracts, see English law contracts post-Brexit: What changes should commercial parties expect? Or for more of the firm’s latest thinking in relation to Brexit, see our Brexit hub page.

Government loses round one of legal Brexit challenge

High Court rules that the approval of parliament is required to trigger Article 50.

In a landmark constitutional law ruling (R(Miller) v Secretary of State for Exiting the EU) the High Court today held that the UK Government cannot trigger Article 50 of the Treaty on the European Union (Article 50) without the approval of Parliament. It was common ground between the parties that notice under Article 50(2), which starts the formal process for the UK leaving the EU, is not reversible. Accordingly, serving notice would inevitably lead to the loss of legal rights arising from the UK’s membership of the EU which have been enshrined in domestic law. However, as Parliament had legislated to confer these rights in domestic law, only Parliament could take them away: the executive branch of Government could not rely on its prerogative powers to make and break treaties to do so.

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