Guest Column | November 18, 2019

What Is the Current State Of BREXIT, And What Happens Next?

By Zaid Al-Nassir, Decision Resources Group (DRG)

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[Editor’s Note: This draft is updated through Nov. 8, 2019, and will be updated as Brexit progresses]

What Has Happened So Far?

On March 29, 2017, the United Kingdom (UK) invoked Article 50 of the Lisbon Treaty, beginning the two-year process of leaving the European Union (EU), more commonly known as Brexit. Although the UK government and the EU reached a deal on the withdrawal agreement in November 2018, British Members of Parliament (MPs) have not been able to rally a majority to support a specific withdrawal arrangement on several occasions.

Because the government has not been able to secure parliamentary approval for the deal — and considering the UK was originally set to exit the EU on March 29, 2019, regardless of whether an agreement had been reached — MPs have voted (and the EU has agreed) to delay Brexit on two separate occasions between early March and mid-April, 2019.

On April 11, 2019, the EU and UK agreed on a “flexible” extension that allowed the UK to leave the EU at any point during the period leading up to Oct. 31, 2019, if MPs had managed to ratify a withdrawal agreement. Under this arrangement, a “no-deal” Brexit on Oct. 31, 2019 remained the default outcome if no agreement was ratified in parliament.

New Prime Minister

In late May 2019, having repeatedly failed to unite parliament (and her own cabinet) behind a Brexit deal, Theresa May announced that she was stepping aside as Conservative Party leader and Prime Minister, thereby triggering a race for leadership within the Conservative Party that would determine the next Prime Minister. Nearly two month later, Boris Johnson — a leading figure in the Brexit campaign and former Foreign Secretary in Theresa May’s cabinet who had resigned in protest at May’s Brexit approach — won the Conservative Party leadership ballot and was subsequently appointed Prime Minister by the Queen; shortly after, Johnson indicated that he intends to renegotiate both the binding and non-binding elements of the deal that Theresa May negotiated with the EU, and insisted that his government would leave the EU on Oct. 31, 2019, regardless of whether a deal had been approved.

Despite a lack of willingness among EU leaders to reopen the negotiation process on the binding withdrawal agreement and non-binding political declaration, Johnson defied expectations and managed to renegotiate both elements; on Oct. 17, 2019, he and Jean-Claude Juncker, President of the European Commission, announced a new Brexit deal that is distinct from its predecessor in its treatment of the so-called Irish backstop and the political declaration, but not much else.

However, Johnson’s plan to secure parliamentary approval for the deal by Oct. 19, 2019 — the parliament-stipulated date (via the Benn Act) by which Johnson would be forced to request another extension from the EU if parliament hadn’t approve a deal — was scuttled when parliament voted to withhold its support for the new Brexit deal until the necessary laws to apply Brexit came into place in order to mitigate the risk of an inadvertent “no-deal” Brexit and provide MPs with more time to look into the new deal. This essentially forced Johnson’s hand to request an extension from the EU.

On Oct. 22, 2019, while the EU was still considering the UK’s extension request, Johnson continued to attempt to pass a Brexit deal by the Oct. 31, 2019 deadline. UK MPs voted in favor of Johnson’s Brexit bill in an initial debate on the overall principles of the bill (known as a second reading) — marking the first time parliament had backed any Brexit deal — but rejected a fast-tracked timetable to finalize the deal by Oct. 25, 2019 on the grounds that they did not have enough time to consider specifics of the legislation.

Early Elections

In response, Johnson announced that he would place the legislation on hold until the EU responds to his extension request; yet, the EU indicated that it requires more clarity surrounding the purpose and justification of an extension before granting one. On Oct. 24, 2019, attempting to break the impasse, strengthen his party’s position in parliament, and provide justification for an extension, Johnson called for an early election on Dec. 12, 2019, though it was uncertain whether he would be able to garner the requisite parliamentary support for an election, due largely to the opposition’s concerns surrounding the possibility of a “no-deal” Brexit.

However, on Oct. 28, 2019, the EU agreed to another “flexible” extension until Jan. 31, 2020, essentially satisfying Labour’s request that the potential for a “no-deal” Brexit be eliminated. The following day, MPs supported Johnson’s call for an early election on Dec. 12, 2019.

Therefore, parliament was dissolved on Nov. 6, 2019, and the Brexit deal will not progress until elections are complete. The future of Brexit relies entirely on the result of the upcoming elections. As it stands, all possibilities — including a ratified Brexit by Jan. 31, 2020, a renegotiation, a second referendum, the revocation of Article 50, and a “no-deal” Brexit on Jan. 31, 2020 — remain on the table.

Implementation Period

In the scenario that some form of withdrawal agreement is approved, the UK and EU already have agreed on conditions of a transition (or implementation) period — effective through Dec. 31, 2020 — aimed at avoiding potential disruptions by providing citizens, businesses, and the government more time to prepare for post-Brexit arrangements.

During this implementation period, Marketing Authorization Holders (MAHs) based in the UK will continue being able to access EU markets; manufacturing and distribution licenses and inspections will continue to be mutually recognized in both regions. Moreover, UK-based firms will still be able to apply for marketing authorizations. Furthermore, both UK and EU markets will continue to rely on CE marking, and UK-based firms will not be required to have EU-based authorized representatives. Notified Bodies in the UK may continue third-party conformity assessments, which will be recognized throughout EU markets.

Significantly, because both the European MDR and the CTR are set to be implemented prior to the end of the planned Brexit transition period on Dec. 31, 2020,  the UK government will implement both regulations in full. However, given the recent renegotiation and various delays surrounding Brexit, there is a lack of clarity on whether the agreed-upon transition period is still effective, and some sources have reported that there is potential for the period to be extended until December 2022 if both the UK and EU agree.

Possible Outcomes

While the full impact of Brexit will rely on the specifics of the final withdrawal agreement, a number of consequences for the medtech market can be anticipated. For example, historically, the UK has been at the receiving end of a large portion of grants from the European Research Council; although some non-EU countries receive funding from this council, it is possible that the amount given to the UK will be reduced; other partnerships and research investments may be in jeopardy, as well. Furthermore, the UK may be able to maintain some trade cohesion with the EU if it negotiates to remain in the European Economic Area or join the European Free Trade Agreement; it is currently uncertain whether this will occur.

In the event of a “no-deal” Brexit, the UK will no longer be party to EU regulatory networks and will need to have its own approach to managing internal regulatory actions. This would include developing new processes and systems for UK-based companies and informing these companies of any changes they would need to implement to abide by UK regulations; in addition, companies applying for device approval in both the EU and the UK would have to engage in these processes separately.

That said, a “no-deal” Brexit appears rather unlikely, given the substantial opposition to this potential outcome in both the UK and the EU, as well as the significant progress that has been made on Brexit in recent months. However, due to the uncertainty surrounding the result of the upcoming election, no assumptions regarding the outcomes or impact of Brexit have been factored into this evaluation.

About The Author

Zaid Al-Nassir is a senior product support analyst at Decision Resources Group. He holds a B.A. focused in Political Science, History, Writing & Rhetoric from the University of Toronto. Zaid can be contacted at zalnassir@teamdrg.com