BREXIT; WHAT WILL HAPPEN WHEN?

Transcription

1 BREXIT; WHAT WILL HAPPEN WHEN? A brief outline of likely consequences and impact for Norwegian corporations 19 October 2016 AGORA INDUSTRI FORUM Partner Kjetil Haare Johansen, DLA Piper Norway October

2 Vote leave Take control! "We will be able to save 350 million a week" "We ll be in charge of our own borders" "We can control immigration" "We ll be free to trade with the whole world" "We can make our own laws" October

3 Vote Leave Take Control! Can Britain have their cake and eat it? October

4 "BREXIT means BREXIT" "We will invoke Article 50 no later than the end of March next year" "Let me be clear. We are not leaving the European Union only to give up control of immigration again. And we are not leaving only to return to the jurisdiction of the European Court of Justice" "Great Repeal Bill" "Norway model" "Swiss model" "Canadian model" "WTO default model" "Hard" vs. "Soft" Brexit October

5 New developments A hard Brexit would from Scotland s viewpoint - amount to the UK government breaking promises it made during the Scottish referendum New poll on Scottish independence now back on the agenda Court battle looms over rights of Government An investment manager and hairdresser challenge the right of the government to start the process of withdrawing the UK from the EU without a vote in Parliament Lord Chief Justice of England and Wales plus two senior Court of Appeal judges heard a case at start of Octoberwill hear the case Judgement awaited Likely to appeal to Supreme Court (UK's highest court) Tougher Brussels stance making a hard Brexit more likely EU cannot allow "cherry picking" EU cannot afford an exiting member state to be better off outside than inside the EU October

6 Brexit Timeline March 2017 March 2019 Article 50 Notice BREXIT negotiations New UK EU agreement Bilateral trade agreements Announced to be triggered by end of March 2017 Two years for withdrawal negotiations If no withdrawal agreement reached, EU treaties cease to apply in any event Possible extension if all Member States agree No deadline for negotiation of new agreement post-brexit on future UK-EU relations Cannot start formal negotiations while still in the EU Content will depend on new UK-EU agreement October

7 BREXIT a massive challange! Co-operation with EU on various policy matters (Education, Agency co-operation, Intelligence, antiterrorism, foreign & security policy) Resume full WTO membership (Currently a member under the EU requiring 163 consenting members vote in favour) Need for an interim solution? (while awaiting to replace EU s FTAs) Extrernal Trade Deals (to replace EU s FTAs) New Trade Deal EU UK (Unanimous approval by EU members + ratification) Article 50 negotiations (Qualified majority of EU members + majority in EU Parliament) October

8 Models: Norway and Switzerland Norway Closest to current arrangement almost full access to single market But: "Regulation without representation" Norway has to implement most EU regulation Norway a significant contributor to EU coffers Switzerland 100+ bilateral agreements Limited access to services Cumbersome constant renegotiation needed Neither Switzerland nor EU entirely happy with arrangement Norway is a large contributor to EU funding around EUR 350 million yearly during If "soft" Brexit UK would be left contributing to the EU at levels similar as of today! October

9 Models: Turkey, Canada, WTO Turkey Customs union goods, not services Intended as pre-cursor to EU membership Canada Tariff free trade in goods but not services Took years to negotiate World Trade organisation No special relationship with EU Trade governed by WTO rules October

10 Key issues Public procurement, State Aid, Competition Intellectual Property Rights ARTICLE 50 Other? Financial sector passporting rights October

11 Financial services: Passporting The issue Certain types of financial institutions can currently operate in other EU Member States from a UK base without needing to set up a subsidiary or obtain separate authorisation in each Member State The right to passport derives from a range of EU directives Post-Brexit, these directives fall away - unless agreement to the contrary can be negotiated UK-based financial firms might be able to: move their operations out of UK and into an EU member state stay in UK and establish a subsidiary or branch in the EU and apply for local license under domestic law take advantage of EU's third-country regimes where applicable Possible opportunities for the UK? October

12 Intellectual Property rights EU trade marks and EU design EU registration will not include protection in the UK when the UK leaves the EU Not yet clear how protection in the UK through an EU registration can be transferred to a national UK registration Future protection in the UK and the EU likely to require application to both UK Intellectual Property Office and EU Intellectual Property Office European Patents (EP patents) Business as usual Brexit has no impact - the UK is a member of the European Patent Organisation (EPO) (not an EU institution) Unitary patent (EU patent) Impact for the unitary patent - UK will no longer participate when the UK leaves the EU The Unified Patent Court negotiated seat in London will have to be located elsewhere October

13 Procurement Depending on post-brexit model, EU procurement directives may no longer apply UK is a WTO/Gatt member (GATT 1 January 1948) GPA of 1994 and revised GPA (EU on behalf of its member states) October

14 State Aid Depending on post-brexit model, EU state aid rules may no longer apply in the UK The UK will be bound by the WTO Agreement on Subsidies and Countervailing Measures: Regulation controls the use of subsidies and provides for remedies to to counter the adverse effects of subsidies Allows a contracting party, following an investigation, to charge extra duty on subsidized imports that are found to be damaging domestic producers EU State aid law would nevertheless be applicable for UK companies with subsidiaries in the remaining EU/EE Member States, either as beneficiaries or complainants October

15 Competition Substantive law Enforcement Mergers UK Competition Act Chapter I and II prohibitions modelled on TFEU Article 101 and 102 Will the obligation to deal with competition law issues in a manner consistent with the treatment of corresponding questions in EU law (section 60) remain? Infringement liability No clear guideline for assumption of jurisdiction - an undertaking may be subject to investigation by the EU Commission and a separate investigation by the UK Authorities Duplicate leniency applications? Greater freedom to block or impose conditions Scope for greater protectionism in the UK? October

16 TAX Dividends and capital gain from British companies will no longer be covered by tax exemption (no: ''fritaksmodellen'') Exemption, if UK is not a low tax country, Norwegian company owns more than 10% and have more than 10% votary rights throughout the year in the British company still tax exemption If Britain becomes a low tax country, ''NOKUS'' may apply. Companies in Britain controlled by Norwegian interests may be taxed in Norway Withholding tax (no: ''kildeskatt'') for all British tax owners (incl. companies) unless 10% ownership share. Rate withholding tax 15% October

17 VAT The VAT doctrine for EU will not longer apply for British companies. Both Britain and Norway outside EU. No changes. CUSTOMS EU: Customs union. Own legislation. EEA: The agreement have exempt from and/or reduced duty for several products. Britain will be outside the above agreements October

18 Things to think about! How exposed to UK and EU regulation are you? Assess your supply chain Contracts Termination rights, re-negotiations and material adverse change Think carefully about defined terms such as "EU", "Territory" and the likes Pricing and currency Provisions on securing full compliance with laws who will pick up compliance costs? Think of your IPR protection Use national measures where appropriate Financing Consider your financial covenants, financial ratios and Material adverse change clauses, cross-default obligations HR, Pensions & Benefits UK staff in the EEA, EEA-staff in the UK? How will restrictions on movement of persons affect you? October

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20 October