If, at the end of the transition period, the EU and the UK fail to reach an agreement on their future relations guaranteeing the absence of a border between Ireland and Northern Ireland, the “backstop of Northern Ireland” will come into force. In this case, Northern Ireland will be part of the UK customs territory, but it will be aligned with a limited set of EU rules, particularly with regard to goods. Trade in goods is affected. There will be regulatory controls on goods taking place at the UK`s entry into Northern Ireland and not through the land border between Northern Ireland and the Republic of Ireland. In addition, the United Kingdom will apply tariffs to the United Kingdom on products from third countries as long as goods imported with Deminland are threatened with entering the EU internal market. This applies equally to goods arriving from Great Britain to Northern Ireland or directly to Northern Ireland. However, the UK will apply EU tariffs to products that are at risk of entering the internal market. This is, of course, an extremely complex issue, because at the moment we do not fully understand how the question of the risk of entry into the internal market is defined or what measures the UK will take to enforce EU tariffs in this case and what could happen if the goods actually remained in Northern Ireland. Under the agreement, a joint EU-UK committee will further uncover these issues at a later stage. However, trade in services with the EU must be governed by WTO rules. Under WTO rules, the specific impact for businesses will vary depending on the sector in which they operate.
There will be no change in some sectors, while in other (generally highly regulated) sectors there will be additional requirements and standards and even a ban on the provision of certain services between the EU and the UK. The EU and the UK have reached an agreement on the withdrawal agreement with a revised protocol on Ireland and Northern Ireland (abolition of the “backstop”) and a revised political declaration. On the same day, the European Council (Article 50) approved these texts. The political statement refers to the autonomy of regulation and decision-making of each bloc and its ability to make equivalency decisions in its own interest. From a British point of view, the latter reference to autonomy is less welcome when it comes to achieving considerable market access in equivalence. If one does not read about the objective of going beyond WTO obligations, there is no explicit reference to an extension of equivalence beyond the existing patch work. In this context, Steven Maijoor, President of the European Financial Markets Authority (ESMA), has already called for a comprehensive and harmonised European regime for trading platforms in third countries. The policy statement also refers to the fact that both parties begin to assess equivalence to each other as soon as possible after the withdrawal, so that they can be completed before the end of the second quarter of 2020. In order to allay the UNITED Kingdom`s concerns about the sudden withdrawal of equivalence, the documents promise “transparency and appropriate consultation in the process of accepting, suspending and withdrawing equivalency decisions.” We can also expect “close and structured cooperation” in regulation and oversight, as well as information exchange and consultation on regulatory initiatives of common interest, both at the political and technical level.
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