Brexit: preparing for 'day one' impact

The measures businesses should particularly assess are those in the four main areas where 'day one' challenges are expected – border controls, transport, people movement, and data transfers.

The review should form part of business' contingency planning for the end of the year, which in itself should include sector-specific preparations for a 'no deal' Brexit.

Border controls

To ease the transition to this new regime, the UK government announced in June that goods from the EU will not be subject to full UK border checks immediately from 1 January. Instead there will be a six-month transition with limited controls, during which businesses will have up to six months to complete their customs declarations and pay relevant tariffs.

In this context, it is not surprising that the UK has revived its contingency plans to transform the M20 motorway into a truck park for up to 2,000 queuing lorries, as new formalities are likely to slow down cross-border travel. Businesses will need to look closely at any time-critical elements of their cross-border supply chain, and consider alternative options to avoid the expected disruption at English Channel ports.

Transport

Reports from the trade deal negotiations suggest that the UK and EU have agreed in principle on reciprocal measures to preserve some cross-border access for transport operators. However, that is dependent on an overall trade deal, and the EU has so far been silent on whether it will contemplate permitting some form of temporary continued access if there is no trade deal.

However, it appears from recent reports that both sides have signalled their willingness – if those talks fail – to discuss mini-deals for particular sectors, and the transport sector may well be at the front of that particular Brexit queue. Even without a mini-deal, if we look back to its 'no deal' planning in 2018-19, the EU was sufficiently concerned by the short-term disruption to EU businesses of major transport sector changes that it eased the transition by granting UK operators temporary basic connectivity in the EU market: 12 months for UK airlines, nine months for UK rail operators, and nine months for UK road haulage and bus and coach operators. There are grounds for optimism that it will offer up similar limited measures again, if there is no trade deal, to avoid immediate disruption to EU businesses reliant on UK transport operators.

People movement

With the UK leaving the EU single market, it has been clear for some time that the days of UK businesses having full access for their staff to travel and offer their services in EU markets are at an end. The UK's attempts to win this access as part of a trade deal came to a swift end when the EU made clear that full adherence to single market legislation was a precondition. From 1 January, businesses will need to consider how they can recruit or move their staff within the frameworks set by the immigration rules of the UK and individual EU states.

However, there are already mitigation measures in place that maintain some free cross-border movement of UK and EU citizens. The Withdrawal Agreement of November 2019 preserves the established EU law rights of EU citizens already residing in the UK, and of UK citizens already residing in the EU by the end of 2020 – so they remain free to take advantage of the EU rights of free movement, although they will have to apply for a status under the applicable rules and within set timescales to be able to continue doing so beyond June 2021. For non-business travel, the EU has provided, as has the UK, that short-term stays may continue without any visa requirements.

Personal data transfers

The issue of whether personal data transfers from the EU to the UK may continue freely has been the subject of difficult discussions between the UK and EU this year, separate from the trade negotiations, about a potential EU decision on the adequacy of the UK's data protection regime. With the EU still pressing the UK for reassurances on current safeguards and future plans for departing from EU data protection legislation, it appears increasingly unlikely that an 'adequacy decision' will be in place by the end of the year.

The Withdrawal Agreement of November 2019 will provide some certainty, in that it authorises the processing of personal data that was transferred between the EU and UK before 31 December, as long as that data is processed under the terms of the GDPR. For transfers to the UK from 1 January, there is no avenue other than an adequacy decision for the EU to allow a temporary continuation for the free flow of personal data. Businesses will instead need to take their own mitigation steps to provide safeguards for data they need to transfer to the UK.

In particular, use of EU 'standard contractual clauses' or 'model clauses' will be central to data transfers from the EU to the UK from 1 January. Such clauses are currently under review to address necessary updates that account for the GDPR and the fall out from the so-called 'Schrems II' judgement. There is no certainty that the new clauses will be implemented before 31 December. This will mean businesses will be faced with the unenviable position of using the old clauses now and having to refresh documentation in the near future once new ones are published.

If the clauses are published after 31 December then there will be a potential further delay for UK businesses whilst the government exercises its powers to bring these clauses into force in the UK.

However, for data transfers into the EU from the UK, the UK government has already acted under the Data Protection Act 2018 to allow these to continue until at least 2024.

Please see our handbook on preparing for a 'no deal' Brexit for sector-specific advice for businesses on contingency planning for the end of the year.