UK decision to leave the EU – Brexit

What is it all about?

On 23 June 2016, the UK held a referendum to answer the question: "Should the UK remain a member of the EU, or leave the EU?" By a margin of 51.9 per cent to 48.1 per cent, the UK voted to leave the EU — commonly referred to as 'Brexit'.

Following the EU and UK's agreement on 28 October 2019 to delay the UK's exit, the UK is now scheduled to leave the EU no later than 31 January 2020.

Overview

What is the European Union?

The EU is an economic and political partnership of 28 member countries (including the UK). It is often described as a 'single market' facilitating the free movement of goods, services, capital and people — as if member states were a single country. The EU is also a customs union, or a group of countries with a common external tariff.

What does Brexit actually mean?

The formal process for the UK's exit from the EU began when the UK Government triggered Article 50 of the Treaty of Lisbon on 29 March 2017, commencing the process of negotiating the terms of its exit. Article 50 provides the legislative framework to negotiate Britain's EU withdrawal.

Following the EU and UK's agreement in October 2019 to extend the UK's Article 50 negotiating period, the UK is now scheduled to leave the EU on or before 11pm on 31 January 2020.

The UK Prime Minister Boris Johnson and President of the European Commission Jean-Claude Juncker announced agreement on a revised Brexit deal on Thursday 17 October 2019. The UK-EU Withdrawal Agreement has been unanimously endorsed by the 27 European Council members. The Council also approved the Political Declaration on the future EU-UK relationship.  A timeline of the process is available on the European Council website.

The revised Brexit deal requires approval from the UK and European Parliaments. If approved, the UK and EU would enter a transition period until at least 31 December 2020. During this transition period the status quo would prevail while the terms of the future EU-UK relationship are negotiated. The UK would remain in the EU single market and the current UK-EU trading arrangements continue subject to EU rules and regulations. The transition period could be extended for one or two years if the EU and UK agree.

Absent an agreed Withdrawal Agreement or further extension, a 'no deal' Brexit (where the UK leaves the EU) is the default outcome on 31 January 2020. A 'no deal' Brexit could have significant implications for the UK and the EU, businesses exporting and operating in the EU and UK, and third countries such as Australia.

The UK has laid the groundwork for its post-Brexit World Trade Organization (WTO) membership. The UK, like all EU member states, is currently a WTO member in its own right, but its obligations are those of the EU. The UK notified WTO members of its proposed goods and services schedules in 2018 and WTO processes remain ongoing with affected WTO Members. Parties to the Government Procurement Agreement (GPA) have approved the UK's accession to the pact, in its own right, once it leaves the EU.

What is the Australian Government doing to protect Australian interests?

The Australian Government is paying close attention to the UK's exit negotiations. The Department of Foreign Affairs and Trade has convened a whole-of-government coordination process to ensure that any risks posed by Brexit are addressed, while also identifying opportunities to enhance our relationships with the UK and EU. The Australian Government is continuing to work to ensure the arrangements Australian business rely on in the UK can continue or transition without disruption. These arrangements are ready to enter into force when the UK leaves the EU. Australia remains fully committed to the UK as an indispensable friend and ally. We also remain fully committed to our relationship with the EU, which is equally based on shared interests and common values.

Australian Government ministers regularly meet and liaise with their UK and EU counterparts, including in pursuit of Australian interests related to Brexit, and remain committed to preserving and advancing Australian interests.

UK announce 'no deal' Brexit temporary customs duties

In a 'no deal' Brexit the UK has proposed to temporarily liberalise trade for a large range of products, with 88 per cent of global imports (by value) entering the UK duty-free for a period of up to 12 months. This includes eliminating tariffs, reducing existing applied tariffs and opening up new tariff-rate quotas. This would include key Australian exports that previously faced import duties, such as wine and horticultural products.

The temporary tariff rates for the UK in a 'no deal' scenario can be found on the gov.uk website. However, the UK Government has stated that these documents are draft only, and final versions will be uploaded alongside relevant legislation once approved by the UK Parliament. In addition, an exceptional review process will come into force on exit day, to enable changes to the temporary tariff regime if necessary.

A full consultation process will be undertaken from January 2020, to review the impact of the proposed tariff regime for the development of the permanent tariff regime and the UK's future trade policy.

The UK has published guidance on its trading relationships by country, including with Australia, including information to assist UK exporters in the event that the UK leaves the EU in a ‘no deal’ scenario.

UK agriculture tariff-rate quotas in the event of a 'no deal' Brexit

The UK and EU intend to 'split' existing agriculture WTO tariff-rate quotas (TRQs) between the UK and EU-27 post-Brexit. This will include Australia's country specific quotas for beef, buffalo, sheep and goat meat, cheese, sugar and rice.

The Australian Government is engaging with the UK and the EU to ensure that the proposed 'splits' do not leave Australian exporters at a commercial disadvantage. The Australian Government continues to consult closely with affected industries.

The Department of Agriculture and Water Resources is progressing potential changes to the administration of the EU TRQs for which Australia manages (beef, sheep and goat meat and dairy), to prepare for a 'no deal' Brexit. More information on export quotas can be found on the Department of Agriculture and Water Resources website.

What does Brexit mean for business?

There will be no changes to the rules covering our trade and investment interests and people-to-people ties with the UK and EU while the UK remains within the EU, or during the expected transition period should a Withdrawal Agreement be concluded.

The Australian Government is continuing to liaise closely with the UK and the EU, to identify future implications for Australian businesses operating in, or trading with, the UK and/or Europe.

This includes contingency planning in the event that the UK leaves the EU in a 'no deal' scenario. The UK government has been implementing a significant programme of work to ensure the UK will be ready in all eventualities.

As announced by the UK Government on 18 July 2018, this includes the iterative release of a series of Technical Notices, to minimise disruption and ensure the smooth operations of business, infrastructure and public services in a 'no deal' scenario.

These technical notices and regular updates are available through the Department for Exiting the European Union. They include information on a range of key topics, including (but not limited to) importing and exporting; product labelling and product safety; travelling between the UK and the EU; taxation; regulation of medicines and medical equipment; workplace rights; and on nuclear research. The intention of this guidance is to set out information to allow businesses and individuals to understand what they would need to do in a 'no deal' scenario.

The European Commission and the EU Member States also continue work on preparedness for the consequences of the UK's withdrawal, taking into account all possible outcomes. These Preparedness Notices set out the consequences of the withdrawal of the UK from the European Union without a formal, ratified agreement. On 19 December 2018, the EU released "Implementing the Commission's Contingency Action Plan [PDF]" including measures in a number of areas where a 'no-deal' scenario would create major disruption for citizens and businesses in the EU27.

What do I need to do to prepare for Brexit?

Australian businesses and individuals should consider how Brexit could affect them, and may want to begin taking steps to mitigate against any risks.

As part of considering the potential impacts, businesses should take account of the volume of their trade with the UK and the EU and any potential supply chain impacts. Businesses should begin to look at the guidance for importing to and exporting from the UK and the EU contained in the abovementioned links and to familiarise themselves with key processes. Individuals should also consider how a 'no deal' scenario could affect them, in regard to residency, education and employment – depending on their circumstances.

Australian businesses and individuals should consider whether it is appropriate for them to acquire legal advice and/or engage a migration agent, customs broker, freight forwarder or logistics provider, to support them in preparing for all eventualities, including 'no deal'.

The HM Revenue and Customs' guidance is designed to help businesses prepare for the possibility of the UK leaving the EU without a deal. The information focuses on how VAT, Customs and Excise could be affected and includes information split by topic and audience.

Businesses and individuals can also contact the UK's Brexit Imports and Exports Helpline to obtain information about importing and exporting goods after Brexit, including about customs declarations and procedures; duties and tariffs; importing and exporting different goods; transporting goods to and from the EU; and product safety regulations.

If your business has a commercial presence in an EU member state, it may be useful to check the EU Commission's Brexit Customs Guide for businesses. You can also use the EU Commission's Brexit Trader Checklist if your business is based in an EU member state and trades with or moves goods through the UK.

Post Brexit, all throughput to/from the UK from the Port of Rotterdam (the largest port in Europe) must be registered through Portbase. Transporters without a digitally pre-notified customs document via Portbase will not be granted access to Dutch terminals. It is the responsibility of exporters and importers to decide who will register their cargo. Affected Australian companies should ensure that affected cargo has been registered in advance by either themselves or by intermediaries such as a forwarder, customs agent or carrier.  Companies should familiarise themselves with the Port of Rotterdam's Brexit information and the Portbase Brexit process.

Further guidance for business is available on the Austrade website and on the UK's EU Exit website, which provides guidance for businesses, individuals, and people living in both the UK and EU.

Are there any implications for Australians seeking to live and work in the UK?

The UK Government has made clear its intention to retake control over its immigration policy when it departs the EU. On 19 December 2018, the UK released details of its future skills-based immigration system, setting out the government's plans to introduce a new single immigration system, ending free movement between the UK and EU.

Australian ministers have impressed upon their UK counterparts the importance of ensuring any prospective visa changes do not negatively impact the strong economic and people-to-people links between Australia and the UK.

DFAT has also issued advice on Smartraveller for Australians wanting to travel to the UK.

Will dual nationals with Australian and British passports still be able to live and work in the EU?

Nothing will change in the short term for British passport-holders living, working, and travelling in the EU. This includes Anglo-Australian dual nationals. Whether this state of affairs will continue in the future will depend upon the outcome of negotiations between the UK and the EU.

As a result, Australian individuals should consider how a 'no deal' scenario could affect them personally, and may want to begin taking steps to mitigate against risks, however unlikely.

Australians who plan to continue living in the UK after it leaves the EU can use the UK's visa and immigration tool to seek guidance on visa status and rights to stay. The UK Government's EU Exit website also includes specific up-to-date guidance including on travel, residency and employment. Citizens of the EU, EEA or Switzerland can apply under the EU Settlement Scheme to continue living in the UK after 30 June 2021. Such citizens can also view and prove their settled or pre-settled status online.

Australian citizens should begin to look at the guidance issued by the UK (available through the Department for Exiting the European Union) and the EU in relation to a range of issues which could affect them in regard to residency, travel, education and employment, depending on their circumstances. These include (but not limited to) modes of travel between the UK and the EU, including by air, sea, rail, coach and/or car; travel between the UK and Ireland; changes to airport security; passports and visas; drivers licenses and international driving permits; vehicle insurance; pets and horses; mobile phone contracts and mobile roaming; importing and exporting; VAT; banking and other financial services; and family law and other civil law issues.

The EU and UK will continue to periodically issue further guidance in relation to Brexit. Australians should consider signing up to email notification services provided by the UK government and by the European Commission to keep updated on issues directly relevant to them.

Australian individuals should contact their service provider directly to ascertain if and when there will be changes to contracts and/or consumer services provided as a result of Brexit. Australians should also consider whether it is appropriate for them to acquire legal advice and/or engage a migration agent, insurance broker, or other type of consultant to support them in preparing for all eventualities, including 'no deal'.

Has the UK's decision to leave the EU impacted Australia-EU trade negotiations?

No. Australia and the EU launched FTA negotiations on 18 June 2018. As a bloc, the EU is Australia's second largest trading partner, third largest export destination, and second largest services market. The EU was Australia's largest source of foreign investment in 2017. Australia is seeking an ambitious and comprehensive FTA with the EU to drive Australian exports, economic growth and job creation.

Further information on the Australia-EU FTA negotiations

Can Australia begin FTA negotiations with UK?

Australia and the UK are committed to negotiating an Australia-UK FTA as soon as the UK is in a position to do so.

Updates

DFAT will continue to update this webpage as further information is provided by the UK government and the European Commission. The material on this website is a summary only of the subject matter covered and does not necessarily reflect the views of the Australian Government or DFAT. It is not intended to be, nor should it be relied on, as a substitute for legal or other professional advice. Users should obtain any appropriate professional advice relevant to their particular circumstances.

Last Updated: 29 October 2019

 

 

CONTACT US

Email: brexittaskforce@dfat.gov.au