UK and EU to start negotiations on their new relationship
The UK will withdraw from the EU when the EU–UK withdrawal agreement enters into force on 1 February 2020. The withdrawal agreement dismantles all cooperation based on the UK’s EU membership in an orderly manner and provides for a transition period until the end of 2020, during which the relationship between the EU and the UK will continue under the current EU rules.
During the transition period, the UK will still have all the rights and obligations of an EU Member State. The only significant exception is that the UK will no longer participate in EU decision-making or in the activities of EU bodies. The UK will therefore continue to comply with the EU treaties and legislation during this period. It will remain within the EU single market and customs union. For example, the free movement of persons, goods and services between the EU and the UK will continue until the end of the transition period.
The withdrawal agreement only lays down the terms and conditions for the departure of the UK. It does not lay down provisions on the future relationship between the EU and the UK. For example, the withdrawal agreement safeguards only the status and rights of those EU citizens who already reside in the UK at the end of the transitional period and, correspondingly, the situation of those UK citizens residing in EU countries at the end of 2020. The withdrawal agreement does not state the conditions under which trade will take place after the transition period nor the conditions under which EU citizens can move to the UK after the transition period.
Future relationship between the EU and the UK
The new relationship between the EU and the UK must be negotiated and brought into force in each sector separately during the transition period in 2020.
Due to the general conditions set by the UK, the future relationship will be clearly more distant than EU membership. The schedule for the negotiations is tight, as the Act on the Approval of the UK Withdrawal Agreement states that the transition period cannot be extended. It is therefore possible that by 1 January 2021, an agreement will not have been reached for certain sectors. Businesses in particular should be prepared for this possibility.
As far as trade is concerned, the future relationship will be based on a free trade agreement. Even if an ambitious free trade agreement is negotiated, its benefits will not correspond to those of the EU single market. Despite the forthcoming agreement, barriers to trade between the EU and the UK will arise from 1 January 2021. Trade can only be completely free in the single market.