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Friday 11 October 2019

What Does Gov.uk Say You Need To Do Now To Prepare for Brexit?

Wow, I just plugged the data about my own professional service business into the UK Government's "Get Ready for Brexit Check" and set out below is what I got... 

As you read it, remember that free trade deals do not cover the export/import of services to anywhere near the extent that the UK trades in services under the principle of free movement of services as an EU member state. So, any form of Brexit effectively means "No Deal" for services.

All I can say is that I'm very relieved that I did my Brexit-proofing last year!

...

Based on your answers, we know:
  • You own or operate a business or organisation
  • You work in professional, legal and business services
  • Your business sells goods or services in the UK
  • Your business provides services in the EU
  • You do not employ EU citizens
  • You exchange personal data with EU organisations
  • You process personal data from the EU
  • You use websites or services hosted in the EU
  • You provide digital services to the EU
  • You use or rely on intellectual property protection
  • You use or rely on IP copyright protection
  • You do not receive EU or UK government funding
  • You do not sell products or services to the public sector
  • You are a British national
  • You live in the UK
  • You are employed in the UK
  • You plan to travel to Ireland

Your business or organisation

Check if you need to change your conformity assessment or conformity marking to sell your CE marked goods in the UK or EU
In most cases you can continue using the CE marking in the EU and UK (although in some cases you may need to transfer your certificate of conformity to an EU conformity asssesment body) - but if your good requires UKCA marking and you have not used it, then it will not be valid for sale in the UK.
Read the guidance: Prepare to use the UKCA mark after Brexit
Do it as soon as possible
Get legal advice if your business is merging with an EU company
If you do not follow the rules, you may be investigated by the Competition and Markets Authority (CMA) and the European Commission.
Read the guidance: Merger review and anti-competitive activity after Brexit
Do it as soon as possible
Check if you need to appoint a representative in the EU, and label your goods with your EU importer's details
If you do not meet the requirements, you may not be able to export goods to the EU.
Read the guidance: Placing manufactured goods on the EU market after Brexit
Do it as soon as possible
Check if your employees need a visa or work permit and meet any requirements for their profession to work in the country they’re going to
You or your employees may not be able to enter or work in some countries.
Read the guidance: Providing services to any country in the EU, Iceland, Liechtenstein, Norway or Switzerland after Brexit
Do it as soon as possible
Check if you need to change how you do accounting and reporting
You may breach reporting requirements in EEA countries if you do not make any changes you need to.
Read the guidance: Accounting if there's a no-deal Brexit
Do it as soon as possible
Read the guidance from the Information Commissioner's Office (ICO) to check if you need to change your contract to keep accessing personal data from the EU
You will not be able to access personal data from the EU without the right contract.
Read the guidance: Using personal data in your business or organisation if there’s no Brexit deal
Do it as soon as possible
Check how to label food if you're selling it in the UK or EU
You may not be able to sell goods in the EU if they're labelled incorrectly.
Read the guidance: Food labelling changes if there's a no-deal Brexit
Do it as soon as possible
Check if you need to pay a tariff on goods you import from the EU
Your goods will be held at customs if you do not pay the correct tariff.
Read the guidance: Check temporary rates of customs duty (tariffs) on imports after a no-deal Brexit.
It takes more than 4 weeks
Sign up to search for contracts to sell goods or services to the UK public sector
You won't receive notifications of new UK public sector contract opportunities.
Read the guidance: Public-sector procurement after a no-deal Brexit
Do it as soon as possible
Check if you need to change your contracts to broadcast licenced content outside the UK
You may not be able to broadcast outside the UK if you do not get extra copyright permissions.
Read the guidance: Copyright if there's no Brexit deal
Do it as soon as possible
Check if you need permission to sell someone's intellectual property in the EEA, if you've already sold it in the UK
You may not be able to export your intellectual property protected products from the UK to the EEA without the right permission.
Read the guidance: Brexit and exhaustion of intellectual property rights
Do it as soon as possible
Appoint a representative in the EU if you run a large UK-based online business providing digital services in the EU
You may be fined if you do not have a representative to help you meet online security standards.
Read the guidance: NIS Regulations - what digital service providers in the UK should do if there’s no Brexit deal
Do it as soon as possible
Exchange your UK Driver Certificate of Professional Competence (CPC) for an EU Driver CPC
You will not be able to drive a lorry, bus or coach for an EU operator if you do not have an EU Driver CPC.
Read the guidance: Driving in the EU after Brexit
Do it as soon as possible
Check how to get approval to sell vehicles and vehicle parts in the UK and the EU
You will not be able to sell vehicles or vehicle parts in the UK and the EU if they are not approved correctly.
Read the guidance: Vehicle type-approval if there’s no Brexit deal
It takes more than 4 weeks
Check what steps you need to take in order to import goods from the EU
If you do not get your business ready, you may not be able to import goods into the UK from EU countries.
Read the guidance: Get your business ready to import from the EU to the UK after Brexit
Do it as soon as possible
Disclose your designs before 31 October if you want unregistered protection in the UK and EU
If you do not do this before 31 October, you’ll only have protection where you first showed your design, either the UK or the EU.
Read the guidance: Changes to registered design, design rights and international design and trade mark law if the UK leaves the EU without a deal
Do it as soon as possible
Check what you need to do if you're a lawyer with an EU or EEA qualification to still work or provide legal services in the UK
You may not be able to continue working or providing legal services in the UK if you do not prepare.
Read the guidance: EU lawyers in the UK after a no-deal Brexit
Do it as soon as possible
Check what you need to do if you own a UK legal services business
You may not be able to continue providing legal services in the same way if you do not get your business ready.
Read the guidance: Legal services business owners after a no-deal Brexit
Do it as soon as possible
Check what you need to do if you're a lawyer with a UK qualification to still work or provide legal services in the EU
You may not be able to continue working or providing legal services in the EU if you do not prepare.
Read the guidance: UK lawyers practising in the EU, Norway, Iceland or Liechtenstein in a no-deal Brexit
Do it as soon as possible
Check which carbon pricing policies you need to comply with before and after exit day
You may not comply correctly with emissions reporting and carbon pricing regulations, which could lead to a fine.
Read the guidance: Meeting climate change requirements if there’s no Brexit deal
Up to one week
Check if your employees need to make social security contributions in the UK as well as in the EU, EEA or Switzerland
Your employees may not be entitled to healthcare or benefits in the country they work in.
Read the guidance: Social security contributions for EU, EEA or Swiss workers
Do it as soon as possible
You may not need to do all these actions ahead of the 31 October deadline. The action you may need to take may change subject to negotiations and your own circumstances.
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Wednesday 9 October 2019

Any Form Of Brexit Means #NoDeal For Export Of British Services

An excellent event at the Institute of Directors today on the impact of Brexit on Britain's trade in services - congratulations to all the speakers. This is vital to understand and address in some detail, because services amount to 80% of the UK economy, 80% of UK jobs, a third of UK exports of which 40% go to other EU countries based on the principle of free movement of services. Yet most services are not covered by free trade deals with third countries. So even if Britain were to leave the EU and eventually negotiate trade deals, that wouldn't help UK exporters of services. There will always be "No Deal" for most services, so the UK's "No Deal" warnings are permanent for services. This is why Liz Truss is suddenly making "liberalising trade in digital and services" one of three priorities at the WTO. She's too late, and it will never happen for the reasons given below, so it's time to get cracking on mitigation...

While the problem for services post-Brexit isn't news to me, I'm still absolutely stunned to see so little information about it in the media. Partly it's the age-old assumption that 'business' means 'big business' while nearly all UK businesses are small - 99% of UK businesses (5.7m) employ fewer than 250 people. Only 8,000 UK businesses employ more than 250 people.  

5.4m UK businesses are 'micro-enterprises' who are either sole traders or employ up to 9 people.

'Businesses' are people - many of them sole traders selling their time and expertise across the EU. Eve online, business is personal.

I've posted on the impact of Brexit on services many times, here and on Pragmatist and for several law firms. I've tended to focus on the Brexit impact on financial services because that's my main area of expertise - and they are the largest of the UK's services exports, relying on valuable EU passporting rights which they will lose. As a result, 7000 jobs have moved so far, with more to follow if Brexit proceeds, and the costs of splitting capital/liquidity to support separate EU subsidiaries will cost customers €60bn a year by 2030.

But I've also mentioned the need for a new basis for transferring personal data from the EU27 to the UK, and I've even shared my own personal Brexit-proofing journey in adding Irish qualifications and consulting to an Irish law firm, for the same reason that it makes sense to switch EU contracts from English law to Irish law.

So I was thrilled to learn of today's event and I was not disappointed. I'm sharing my notes (anonymised) and I understand the video will be available via the IoD site. Worth watching! 

What laws govern the export of services?

Every country regulates what services can be offered to its residents to some degree. Regulations get tougher the more money residents might lose, or the greater the gap in knowledge between the service provider and the customer - that's why financial services are so heavily regulated.

Permitting foreign service providers to sell their goods or services in your country is a matter of trust and control, or political will and legislation ("trust is good but control is better").

Trade law on goods developed first, and rules on services followed - in particular:
  1. EU membership entitles firms to free movement of services based on mutual recognition of professional/trade qualifications and legislation that ensures individual member states don't drop their standards or supervision. That freedom falls away on Brexit day (subject to any agreed transition).
  2. Some services remain unregulated today (e.g. management consultants) and some are given mutual recognition status only at trade body level rather than by governments (e.g. architects). That shouldn't change on Brexit.
  3. Some regulation is based on outcomes, rather than dictating how qualifications are actually obtained or what subjects have to be studied to gain 'equivalence' or 'mutual recognition' (e.g. lawyers). This could diverge on Brexit, and 'equivalence' findings and mutual recognition will not automatically apply, can take a long time to be granted and are subject to withdrawal on little notice without appeal.
  4. Financial services passporting represents the most advanced form of free movement in services, since authorisation in one EU member state allows certain services to be provided in all member states. That will not be possible after Brexit (subject to any transition).
  5. In stark contrast to financial services passporting, the 'equivalence' regime that is available to third countries (and post-Brexit UK) is only available for certain types of financial infrastructure (e.g. exchanges) and some investment services, and can be withdrawn without appeal on 30 days notice (e.g. Swiss stock exchange) - so equivalence is not reliable.
  6. Other services that can be supplied to EU countries after Brexit will be based on a patchwork of national access rights, which vary in terms of scope and conditions.
  7. Outside the scope of EU trade rules (and where only minimum standards are set), the member states (like any other country in the world) can set tougher standards where they see greater potential adverse impact. The UK will be treated like any other non-EU country for that purpose. The UK government has tried to helpfully list where different EU countries have different rules for different services (will that stay up to date?). 
  8. There is a WTO rule (article 7 of GATS) aimed at preventing one member country from discriminating against another member ('most favoured nations' or 'MFN').  Free trade agreements also contain MFN clauses that require one party to offer the other any similar benefit that has been offered to another country. The EU seems to ignore the WTO requirement (which the Swiss have complained about to no effect so far), but does allow MFN clauses in its free trade deals with very limited scope (won't cover mutual recognition or equivalence decisions, for example, just legislation and 'national treatment'). Critically, the EU insists on its own regulatory autonomy. Only the  European Commission (and ultimately the European Court of Justice) can decide whether a service etc meets EU rules. 
Immigration and visa restrictions go hand-in-hand with constraints on services, since people often have to be physically present to provide services.  So free movement of labour is also critical to the free movement of services. That freedom entitles Brits to live, work and retire freely in 30 countries, but is lost on Brexit. Related entitlements to healthcare and so on will also fall away...

What are the practical impacts of Brexit?

Well, if you're among the 5.4m 'micro-enterprises' and export goods or services to the EU, the VAT rules will be a big problem. You currently benefit from hard-fought exceptions under the VAT Mini One Stop Shop (MOSS), but those will disappear on Brexit day (what if part way through contracts?). The HMRC warning states:
Businesses that want to continue to use the MOSS system will need to register for the VAT MOSS non-Union scheme in an EU member state. This can only be done after the date the UK leaves the EU. The non-Union MOSS scheme requires businesses to register by the 10th day of the month following a sale. Alternatively, a business can register in each EU member state where sales are made.
EU consumers are already ceasing to buy from UK suppliers, and EU suppliers are geo-blocking UK customers and suppliers from applying to their sites. So forget bidding for service contracts from the UK, and many EU business people have stopped traveling to do business in the UK.

Work permits will be needed after Brexit, but can’t be applied for before then. These may be needed for speaking at conferences (unless asked a question first), giving training sessions, working on projects and so on.

Booze cruise etc to the EU for cheaper, duty free consumer goods may impact small retailers and their service providers.

If you're a director of a company, you have a duty to promote the success of the company, as well as a duty to exercise reasonable care, skill and diligence. You need to be able to demonstrate that in the context of Brexit - which is a known unknown. That would likely include: board discussions, a sub-committee, minutes, briefing papers, presentations, risk registers, scenario planning, supply chain analysis to identify suppliers at risk who may need to be replaced/helped (using the wrong type of pallet, say, or their trucks may be allowed into the UK by UK authorities, but will struggle to back into EU); and resolutions taking action to address threats and opportunities.

What can you do if your services are impacted? It depends on threats and opportunities identified, but some examples:
  • Set up a new subsidiary in an EU27 member state;
  • Rewrite contracts with new governing law and other pertinent changes;
  • Establish a new basis for transferring personal data from EU customers/suppliers to the UK;
  • Consider the tax impact of moving business activity to an EU27 country (or, for instance, whether withholding tax exemptions still work for entities owned by UK companies)

Time to get cracking!

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Tuesday 8 October 2019

Hype Will Harm Artificial Intelligence

After exploring AI deployment in some depth and chairing the SCL's overview of AI in Dublin in September, I've been particularly conscious of the hype vs reality. Nobody should deny that narrow artificial intelligence is here to stay - for good and bad. We just have to be realistic about its capabilities and shortcomings - and how to detect their consequences - so that AI is developed and deployed responsibly.

In a recent report on 'smart cities', for example, the Oliver Wyman Forum found that no city on Earth is ready for the disruptive effects of artificial intelligence. 

Talk of 'killer robots' and beating humans at board games is also all the rage, but Barry O'Sullivan assured us in Dublin that robots take ages to 'train' for any one sequence, can't cope with door handles and their batteries soon run down. It took $50m in electricity to train a computer to beat a human at Go. 

AI can be used for good, but it can also be 'weaponised' against a population, and 'hacked' by altering the appearance of things or people's appearance in quite subtle ways - without actually interfering with the AI itself. 

In the 'real world' of AI, the genuine concerns are inaccuracy, lack of explainability and the inability to remove bias. And there remain vast challenges associated with the reliability of evidence and how to resolve disputes arising from their use. 

That means we have to challenge the use of AI where the consequences of false positives or negatives are fatal or otherwise unacceptable, such as denying fundamental rights or compensation for loss, for example. 


Being realistic about AI and its shortcomings also has implications for how it is regulated. Rather than risk an effective ban on AI by regulating it according to the hype, regulation should instead focus on certifying AI's development and transparency in ways that enable us to understand its shortcomings to aid in our decision about where it can be developed and deployed appropriately.

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