Brexit to enter crucial phase in December as players warn against ‘no deal’

Source: ICIS News

2017/11/17

LONDON (ICIS)--The next few days and the EU Council meeting in December will be critical to the progress of the Brexit process, market participants said on Thursday.

Chemical companies should also consider the implications of a legal and regulatory transition period beyond the Brexit deadline of 31 March 2019, a panellist at a Brexit conference in London organised by the UK’s Chemical Industries Association (CIA) said.

“I think December is going to be show time,” said political editor of UK’s daily The Times, Francis Elliott.

There has to be significant movement at the meeting of the EU’s Council of Ministers, representatives of the bloc’s 28 governments, in December, he suggested, on the end state of the two-year negotiating period and on the question of the border between the UK’s Northern Ireland and Ireland.

The European Commission President Jean-Claude Juncker and Swedish Prime Minister Stefan Lofven are jointly hosting EU heads of state or government and other stakeholders in Gothenburg, Sweden, on 17 November, for the first EU jobs summit in 20 years.

UK Prime Minister Theresa May is attending the meeting and is expected to raise Brexit issues on the sidelines of the event.

Brexit uncertainties loom large for chemical industry executives, electronic polling of delegates views at the conference suggested.

The seemingly glacial progress of exit talks and the lack of serious discussion on the UK’s future trade and regulatory relationships with the EU are the key concerns alongside anxiety over the employment rights of EU and other nationals after March 2019.

Aline Doussin, a partner with law firm Squire Patton Boggs, suggested that progress was being made on phase one of the Brexit talks and Article 50 withdrawal.

The most sensitive side of the negotiations concerned the free movement of people, she said.

“It is very difficult back at the EU level,” she added, referring to the engagement of EU politicians in the Brexit debate.

EU member states have started to discuss amongst themselves what the new trading relationship between the EU and the UK might look like, she indicated.

There is widespread talk of a transition period following the end of March 2019 deadline although no indication of what conditions might hold during a period that has yet to be determined.

The CIA and European chemicals trade group Cefic said in a joint statement of 14 November that a worst possible outcome for companies and their employees Europe-wide would be a so-called ‘hard Brexit’ with the UK crashing out of the EU single market and the customs union.

They also called for a transition period to help companies across the EU and in the UK realign operation of their supply chains and other business relationships.

Doussin said she expected a transition period of two years but warned that companies need to anticipate issues that could lead to potential contractual disputes following that period.

A ‘no deal’ on Brexit would be catastrophic and lead to the long-term decline of the UK, Paul Nowak, Deputy General Secretary of the Trades Union Congress (TUC) said.

There needs to be a transitional period following Brexit and there should be a “team UK approach” to the talks, he said.

Staying in the EU single market looks like the best way of retaining investment and jobs, he added.

The TUC wants hard guarantees from the UK government on employment and the protection of social rights following Brexit.

“It is not just about employment rights on the day we leave the EU but about index-linking rights between the EU and the UK,” Nowak said.