Transition…to what?

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One week from now, the UK will have left the EU and entered the transition period which is set to last until 31 December 2020. But a transition to what exactly?

Both the UK and the EU have yet to map out their objectives in the trade talks that will follow. There are echoes of the first phase of the negotiations in that the EU appears more prepared at this stage. However, this may simply be driven by the logistics of having to consult and cater for 27 member states – a process already begun.

The UK government remains determined to complete a trade deal by the end of the transition period. This has led UK businesses to repeat their appeal for clarity on the related objectives so that they can make the necessary preparations. The Chancellor’s recent comments that the UK will not seek alignment with EU trade rules after transition has heightened tensions.

Friction-less trade has been a long-stated goal on both sides of the Channel, but there appears less consensus on how to achieve it. In its absence, uncertainty remains.

Firstly, a question mark hangs over the extent to which UK Courts will continue to apply case law derived from the European Court of Justice (ECJ). This could have particular implications for employment rights. There’s also uncertainty surrounding how the status of Northern Ireland, as enshrined in the Withdrawal Agreement, will impact in practice on the movement of goods through the province. UK and EU officials voice contradictory interpretations on this matter and there is much debate over how long it will take to implement new customs arrangements.

And all of that is even before the transition stage begins and issues surrounding trade and regulatory systems are addressed in detail. As 31 January approaches, the trade negotiations are widely expected to be tougher than those surrounding the UK’s withdrawal.

Under these circumstances, the 11-month timeframe set by the UK government to complete a deal is likely to be tested to its limits. The next Brexit battle is about to begin…