Brexit

BREXIT 28 March 2019

Emergency (Br)EXIT Since the invocation of the now-famous Article 50 by Britain two years ago, a section of Leave voters has been advocating to declare March 29th a national holiday.

Today, on the eve of the big day, there is scarcely any reason for celebration.

Jesmond Saliba writes

If I were to compare Great Britain to a sphinx, the sphinx would be an open book by comparison and let’s see how that book speaks over the next week or so – Juncker

rime Minister Theresa May, a reformed Remainer, argued for the delivery of Brexit to respect the will of the people and pushed for hard negotiations with the EU to finally hammer out a withdrawal agreement in November 2018. By that date, two successive Secretaries of State for Exiting the European Union, MP David Davies and MP Dominic Raab, had tendered their resignations.

In the 19 weeks since that draft agreement, the Brexit rollercoaster sped into its most dramatic twists and turns yet. Negotiations with Brussels would, arguably, prove to be easier than with the Cabinet of Secretaries; a visibly subdued Theresa May admitted to the nation that “choices were difficult” when she announced the government’s agreement with the withdrawal accord.

Fast-forward to today At the time of writing, rumours in the UK media are that Theresa May will set a resignation date in an effort to win over backbenchers to her deal, when she addresses the Conservative Party 1922 Committee on Wednesday evening. Also happening on Wednesday, will have been a series of ‘indicative votes’ by House Representatives as they try to break the Brexit gridlock.On Wednesday European Council President Donald Tusk said that the European Parliament should stand with the millions of people in the U.K. fighting against Brexit, and grant Britain a long delay if it requests time to rethink its departure.

“Before the European Council, I said that we should be open to a long extension if the U.K. wishes to rethink its Brexit strategy, which would of course mean the U.K.’s participation

in the European Parliament elections,” Tusk said.

Commission President Jean-Claude Juncker, speaking after Tusk, said a discussion among leaders about China at last week’s summit was easier than their deliberations on Brexit.

“If I were to compare Great Britain to a sphinx, the sphinx would be an open book by comparison and let’s see how that book speaks over the next week or so,” Juncker said.

His remarks reflect the expectation among EU leaders that the U.K. is unlikely to meet the deadline for approving the deal this week. But officials have been clear that if the U.K. parliament votes for the delay before the April 12 deadline, they would be willing to allow a technical delay until May 22 or even until June 30, to ease Britain’s path out of the bloc.

Continues on page 2

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Emergency (Br)EXIT Continued from page 1 On Monday, Conservative former minister Sir Oliver Letwin spearheaded amendments that gave the commons substantial control over the Brexit process, pulling the rug from underneath the government’s feet. MPs gave themselves the right to determine the next options, including accepting May’s deal; opting for a no-deal departure; or go for a second referendum.

The rebellion was sparked, to some degree,

by Brexiteers who were left unimpressed by the options offered by the EU the week before. A Leaders Summit proposed to shelve the May 29th date and laid two paths before Britain: either to back the current deal and extend the withdrawal date to 22 May, or to reject it and propose a final way forward by 12 April. Europe’s offer was widely interpreted as a sign of diminishing patience with the UK’s vacillation, but a core of Leave-backing legislators would have none of it and wrote to Theresa May warning her that delaying the exit day could be unlawful.

An eventful weekend Conservative MP George Freeman captured the mood succinctly when he said he had never known the UK to be “so divided, so angry and in such a dangerous state.”

Meanwhile, a march called by pressure group People’s Vote attracted hundreds of thousands of people in London on Saturday demanding a second referendum. According to reports in some media outlets, a million people attended the ‘Put It To The People’ protest converging on Parliament Square, among them Labour Deputy Leader Tom Watson and Scotland’s First Minister Nicola Sturgeon as well as other prominent politicians across the divide. Liberal Democrats Leader Vince Cable declared to the crowds

that Britain is “now a Remain country” as nine in ten young people who could not vote in the 2016 referendum are decidedly against leaving.

The morning after, the country woke up to frontpages announcing that ministers Michael Gove and David Lidington were mounting a coup to overthrow Theresa May and save Brexit. Both dismissed the reports and Lidington, the de-facto Deputy Prime Minister, bluntly told door-stepping journalists: “one thing that working closely with the prime minister does is cure you completely of any lingering shred of ambition to want to do that task.”

And yet, Theresa May has shown a formidable reluctance to give in to the pressures that came with her election and resign, a frequent invitation by Opposition Leader Jeremy Corbyn. History books will likely be kinder than daily papers to the Prime Minister, who has put herself into an impossible situation of reconciling a divided country while moving it forward. Theresa May inherited not just the complex task of delivering Brexit without weakening the country’s bargaining weight, but also to hold together a fractious Conservative Party.

The agreement inciting disagreement The Withdrawal Agreement that May’s government negotiated covers consequential issues such as citizen’s rights, the fishing sector, and laws and the jurisdiction of the European Court of Justice. Another controversial chapter in the 599-page document relates to the so-called ‘divorce bill’, which some estimate could reach over €45 billion to be paid by the UK. Most people, though, will be forgiven to believe that central theme of the agreement is the Irish Border.

The ‘backstop’ has, indeed, become the major bone of contention pitting party

members against one another. The draft agreement proposes to seek a long-term solution that avoids creating a hard border between Northern Ireland and the Republic of Ireland, a fundamental element of the Good Friday Agreement that ended years of violence in the region. Failing to find a reasonable solution by 2020, the backstop option would automatically come into effect establishing a single customs territory between the European Union and the United Kingdom.

Critics argue that such a scenario would keep Britain within the Customs Union and prevent the UK from forging independent trade deals with other countries.

A backstop would require the government to observe “level playing field conditions” in sectors related to agriculture, fisheries, food standards and the environment. The Democratic Unionist Party, which forms part of May’s coalition government, is set against the backstop option and it has repeatedly asserted its unchanging position.

Third-time unlucky Wary of the discontent among the vociferous Brexiteers on the government benches, Theresa May took a last-minute decision to postpone a vote in Parliament on her deal, originally scheduled for December. Many predicted that the vote would be a humiliation to the Prime Minister and would throw the government into a new crisis. Instead, May rescheduled the vote to the new year and went on a crosscountry tour to try to build grassroot support for her deal.

We will never know how the Withdrawal Agreement would have fared in the original date, but the vote on 15 January saw the largest defeat for a sitting government in Britain’s history. The Brexit deal was

defeated by a 230 margin, spurring the Opposition to table an urgent motion of no confidence in the government. Theresa May survived that vote.

The government’s next move was to hold a second vote in the commons in March, while Theresa May sought assurances from the EU. Brussels were not as accommodating as the UK Prime Minister must have hoped with the bloc’s chief Brexit negotiator Michel Barnier declaring that there would be no further negotiations on the accord.

The second vote was less catastrophic, but equally disastrous for May, as the agreement was rejected by 149 votes. This time, House Speaker John Bercow prohibited the Prime Minister from presenting the same agreement for voting again, demanding substantial changes to be made to a future proposal. MPs did get another vote within a few days, though, this time absolutely rejecting a no-deal Brexit, which led to the turbulent week we have had.

According to plan, the past five months should have been the final leg of the Brexit journey, with the UK formally ending its membership of the EU as from 23:00 on Friday. But wrangling between opposite camps and indecisive leadership has derailed the process and we are today exactly in the same place we were at the start of it: the unknown.

This article provides a roundup of the salient developments since Theresa May secured a deal with the European Leaders till what was meant to be Brexit day, up till Wednesday 27th March at 1400h. It’s compiled through an analysis of the news provided for the Business Weekly by Corporate Dispatch and Diplomatique.Expert.

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Customs preparations

The United Kingdom is expected to leave the European Union on the 29th March 2019, thus becoming a third country to the EU. In the absence of a deal, the Customs administrations in the EU will have to enforce EU rules for both exports to, and imports from, the UK. Therefore, the formalities that currently apply to trade with non-EU countries will apply, including the submission of customs declarations for goods and the related controls to ensure compliance. Duties and taxes will have to be accounted for.

JOSEPH CHETCUTI, Director General, Customs Department, writes

The main concern for Customs will be that of dealing with the volumes associated with formalities and their implications. This will result in additional documentation and data requirements for businesses, processing and controls for Customs, and infrastructure requirements for both, including IT and physical infrastructure to allow appropriate risk-based controls.

Customs declarations for all consignments imported from, or exported to, the UK, as groupage cargo, containers, fast parcel, postal service and airfreight will have to be lodged in the Customs IT systems and risk analysed. A percentage of these consignments will then be selected for physical control by Customs officials.

Malta Customs has been, slowly but surely, preparing for Brexit and it is as ready as it can be in the circumstances. From an initial assessment, the following will have to be catered for the following...

Cargo traffic • Groupage Cargo - on average, 25 trailers per week convey cargo from the UK to Malta by road, resulting in around 250 additional Customs declarations lodged every week.

• Container loads – on average, 30 full load containers are imported from the UK every week resulting in as much additional declarations per week.

• Airfreight: Airfreight consignments from the UK amount to 100 per week resulting in as much additional weekly declarations.

• Courier & Parcel Post traffic: Currently around 5,500 parcels are received every week from the UK by courier operators, while a comparable number of parcels arrive by parcel post. It is pertinent to highlight that this is a very fluid area due to the continuous, exponential increase in e-commerce.

Overall and to meet these volumes, the Department will be increasing its staff complement in the cargo area by 25%.

On the other hand, the reselience of the Department’s I.T. infrastructure is deemed adequate and the National Import System and the National Export System are geared up to handle the increase in workload associated with Brexit. As a rough estimate, it is envisaged that more than 7,000 additional declarations will be lodged every week. This figure is considered to be conservative and does not take into

consideration the additional declarations that will have to be lodged from 2021 onwards for those consignments having a value of €22 or less. However, this comes at a cost because these systems will have to be reconfigured to accommodate restrictions, risks and other obligations associated with controls.

Passenger traffic • 12 additional inbound and 12 additional outbound flights with 160 passengers each, every day, are expected from the UK. Therefore, an increase in the monitoring of accompanied luggage and cargo brought through these flights is required. The increase in flights to and from the UK may also require some infrastructural changes at the arrivals and departures lounges, something which must be dealt with by the private operator.

To meet these challenges, Malta’s Customs Department has already increased its staff complement at the Airport by 25% and same complement is expected to be strengthened by an additional 15%.

Planned initiatives • Road show - The Department intends to initiate a road show during the first two weeks of March with the Malta Chamber of Commerce, the General Retailers & Traders’ Union, the Fast Parcel operators, the Hal Far Groupage operators, the Shipping Agents’ Association, the Malta Employers Association, the Gozo Business Chamber and the Burdnara Association to explain what are the lines to be taken for goods imported from and exported to the UK; • Malta International Airport - The Department is discussing with MIA the issue of infrastructural changes at the arrivals and departures lounges and on the actions that are to be taken on passenger traffic to and from the UK; • Registration of Economic Operators - As highlighted earlier on, from 30th March, 2019, 00:00 hours (CET), all imports from, and exports to, the United Kingdom will need to be covered by a Customs declaration in the electronic systems. Therefore, the Customs Department is calling on those economic operators who either solely trade with the United Kingdom, or who trade exclusively with the United Kingdom and the European Union, to register with the Customs Department to obtain an Economic Operator Registration Identification (EORI) number, by sending an e-mail to

eori.customs@gov.mt or by calling on telephone number 25685121. Further details may be obtained through the following linkhttps://customs.gov.mt/bus/economicoperators-registration-identification; • Business 1st presence - In line with the Customs Department’s strategy on the need to improve customer experience, and in accordance with the planned initiatives in preparation to Brexit, the Department’s customer care services will be included in the one-stop-shop Business 1st initiative of Malta Enterprise. For this reason, as from Thursday, 14th March, 2019, one Customs official from the Customs Economic Procedures Unit, and/or an official from the Department’s Customer Services, will be reporting for work at the Business 1st premises, in Mrieħel, once a week, to assist the business community in its queries; • Real-time on-line payment system - As from April, 2019, all economic operators will be able to settle payments of taxes due to the Customs Department via the banks’ IBAN infrastructure, or by credit or debit cards, through a real-time on-line payment application; and • Equipment - A new luggage scanner is being purchased to screen luggages on arrival before they are placed on the conveyor belts.

The Customs Department is committed to adopt an approach that puts customer understanding at the heart of its initiatives and to proactively strive to improve stakeholders’ satisfaction. This means that the Department will maintain its dedication to enhance quality service.

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Brexit: businesses need to prepare contingencies for all possible outcomes – MEA The Director General of the Malta Employers’ Association JOSEPH FARRUGIA believes that, at this stage, businesses need to keep their ears to the ground and prepare contingencies for all possible outcomes, as the scenario is changing every day.

Rebekah Cilia reports

hen asked by The Malta Independent on Sunday, how businesses should prepare for Brexit, Farrugia said British politicians are paying the price for having committed themselves to something which was not defined, and the consequences – both positive and negative – have yet to be fully determined.

“Currently all countries are scrambling to pick up the best pieces in the aftermath of Brexit, with France seeking to boost its financial services, for example. Malta has to do the same and capitalise on its historic relationship with the UK. The Prime Minister has proclaimed that Malta could act as the UK’s gateway to the EU, and there could be business opportunities in this strategy.”

The UK’s exit from the EU will result in a shrinking EU budget to the tune of €12 billion. However, it is not all bad, Farrugia noted, as funding previously directed towards the UK in specific sectors, such as research, could be channelled to other countries like Malta.

Farrugia said that “currently there is considerable confusion in what even The Economist recently described as ‘The Mother of all Messes’. There is still talk about the options of a hard

versus a soft Brexit, and even a slim but growing chance that UK citizens will be asked to vote again to choose their country’s future.”

The options, at the moment, are a soft Brexit, a hard Brexit and possibly another referendum, the outcome of which would be uncertain. Farrugia explains that the basic difference between a soft and hard Brexit is that the former attempts to retain access to the European Single Market and observing the ‘Four Freedoms’.

On the other hand, a hard Brexit option will sever any ties between the UK and the EU through the current Customs Union, meaning that the UK can impose its own tariffs and barriers to trade. This could affect the prices of imports, exports as well as in terms of trade.

When questioned if there is any indication of what will change, from a business perspective, with the current withdrawal agreement, Farrugia replied: “The main change is that one of our major trading partners will no longer be a member of the EU trading block. The extent of the impact of this change will depend on the conditions under which the UK leaves the EU, assuming Brexit takes place.”

Farrugia continued that this uncertainty is also being felt in the UK itself, as the confusion that reigns at a

political level is also filtering down to the reality that many enterprises are facing, with some sectors considering relocation outside the UK to EU countries.

Any changes that will affect small businesses are not likely to happen overnight, on Brexit day, on 29th March, but Farrugia explains that from the way things are heading, it appears that there will be a transition period.

When asked if employees from Britain would have any problem working in Malta, Farrugia answered that it depends on the terms of Brexit. A soft Brexit that retains the four freedoms, including the mobil-

ity of labour, might still allow UK citizens to work in the EU, and conversely, for EU citizens, he said.

As happened when there were crises in the past, such as the international recession, there are social dialogue structures that are of benefit to the stakeholders affected, Farrugia noted, when asked if the government was doing enough when it comes to Brexit.

Through MEUSAC, MCESD and other committees set up to monitor Brexit, all social partners are doing their best to keep their public informed. However, the fluidity of the situation makes it challenging to predict a definite outcome, he said.

Malta’s proposition for the UK Financial Services industry presented at London’s Guildhall by FinanceMalta alta’s proposition for the UK’s financial services industry was presented to industry professionals last month at London’s Guildhall

by FinanceMalta and practitioners from the financial services industry.

The London-based event was aimed at highlighting the advantages and high level of services that the Maltese jurisdiction has to offer to UK companies seeking to relocate to other jurisdictions. The event kicked off with a keynote address, followed by four focused panel discussions on Asset Management, Insurance, Private Wealth, and Blockchain. Each discussion was held concurrently in separate rooms featuring a different panel for each topic.

Speaking about FinanceMalta’s participation in this high level event, Wayne Pisani, Finance Malta Governor said that, “the aim of our participation in this event was twofold. On one hand to network with leading UK and international stakeholders and on the other hand to promote Malta as a financial services centre of international repute.”

Mr Pisani added “Malta has evolved into a platform for financial activity drawing on its rich history boasting millennia of mercantile activity as a business hub in the heart of the Mediterranean. As an EU jurisdiction with a robust and innovative regulatory framework, excellent infrastructure and a balmy Mediterranean climate, Malta is the ideal financial services platform for businesses looking to tap a strong double tax treaty network with EMEA markets and beyond.”

The Asset Management discussion saw the participation of Mark Caruana Scicluna from GANADO Advocates, Chris Portelli from EY Malta and Rebecca Xuereb from BOV Fund Services.

The Insurance panel discussion was introduced by Romina Bonnici, from Mamo TCV Advocates with the participation of Ian-Edward Stafrace from MARM, Karl DeGiovanni, from AON and Malcolm Falzon from Camilleri Preziosi Advocates.

The private wealth panel discussion was moderated by Tom Burroughs and introduced by Przemyslaw Koger from Alter Domus (Services) Malta Ltd together with Michael Gauci from Corrieri Cilia Legal and Simon Denton from Sovereign Group.

Wayne Pisani addressing the audience

The fourth and final panel discussion on Blockchain was moderated by Wayne Pisani, Finance Malta Governor and introduced by Gayk Ayvazyan from Chetcuti Cauchi. The panel discussion saw the participation of Stephen McCarthy, from MDIA, Joseph Portelli, from Malta Stock Exchange, Ian Gauci

from GTG Advocates and Gerd Sapiano from the Malta Financial Services Authority.

This morning event came to an end with a networking reception, where delegates had the opportunity to network with local industry professionals.

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Malta: A base for your future The Malta Individual Investors Programme was established to attract talent and High Net Wealth Individuals (HNWI) to the Maltese Islands to positively contribute to our society by stimulating business, increase job creation, increase revenue and augmenting our human capital. Our safety and friendliness, our health care system, our highly educated workforce, and our culture and history are what make the Maltese Islands attractive to the investors.

Furthermore, in the past few years, Malta has maintained a strong growth in real GDP, making the country one of the most productive economies in the European Union.

itizenship is only granted to individuals who are indeed of good repute. The Agency’s responsibility does not start and end with the citizenship by investment (CBI) programme it conducts. We are committed to keep strengthening the integrity of the whole CBI industry. The programme’s success and robustness rests on three mechanisms intertwined in such a way that none can thrive without the other – due diligence, good governance and transparency.

MIIPA goes to a serious level of detail on each application, knowing that like all service industries, the programme’s reputation is guarded with very stringent due diligence and high regulatory standards, earning it the main advocate’s role within the whole industry. This potentially results in fewer applications being approved, since Malta’s ambition strives for quality rather than quantity. It is an allgood-enough reason why the Individual Investor Programme distinguishes itself from the rest. In turn, this proves to be beneficial to the parties on both ends, adding value to the country as much as to the individuals acquiring its citizenship.

MIIPA adopted a structured four-tier due diligence process taking a minimum of 4 months to complete. A multitude of checks justify this lengthy stage of the process, such as standard Know your Client (KYC) checks with law enforcement agencies, including Interpol and Europol’s databases, in-depth verification of completeness and correctness of documentation submitted and outsourced due diligence. This allows the Agency to go beyond the simple investigation on the source of funds and wealth, but obtains as much information as

possible from numerous sources. The information is then scrutinized and reviewed to expose any anomalies highlighting potential risks.

MIIPA continues to have the most stringent due diligence process in place, yet it constantly seeks to improve its practices by advocating for higher industry standards across the board. It is also at the forefront in advocating for international sharing of critical information on rejected applications, through already wellestablished channels in institutions, such as the FIAU and Security Services. Malta has been advocating for more cooperation between jurisdictions in the aspect of due diligence and background checks and on creating awareness on due diligence to the RCBI industry. The rigorous due diligence process we employ is the cornerstone of our success. However, we still need to keep advocating transparency and good governance in the way we administer the programmes.

Moreover, in our commitment towards transparency, Malta is one of the few European countries which actually publish the names of individuals who are granted citizenship. The nature of the due diligence checks is also made public. Additionally, professional firms and practitioners are accredited and trained by MIIPA to guide them on the process of applications; this gives an additional layer of good governance. Malta is also the only country which has a dedicated regulator, who oversees all the processes of the Agency. The regulator also presents a detailed report to Parliament on a yearly basis.

Our aim has always been to carefully select, through the right checks and balances and a rigorous due diligence process, the right global citizens who can see Malta as their natural

The programme’s success and robustness rests on three mechanisms intertwined in such a way that none can thrive without the other – due diligence, good governance and transparency

home and the place from where they choose to shape the world of tomorrow. It takes more than an investment to become a true global citizen, and we believe this has been part of our success.

Over the past six years, the Government has sought foreign direct investment from all corners of the earth. We have engaged in new economic niches and are now in full force working to expand our potential to become leaders, amongst others of digital innovation technology. By being the first to push forward a regulatory framework for Blockchain technology and exploring Artificial Intelligence as a new economic niche. Through our most rigorous process of checks and balances, we are thriving at attracting the right talent and investors to our shores.

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EU completes prepa ‘no-deal’ scenario o As it is increasingly likely that the United Kingdom will leave the European Union without a deal on 12 April, the European Commission this week completed its “no-deal” preparations. t the same time, it continues supporting administrations in their own preparations and urges all EU citizens and businesses to continue informing themselves about the consequences of a possible “no-deal” scenario and to complete their no-deal preparedness. This follows the European Council (Article 50) conclusions last week calling for work to be continued on preparedness and contingency. While a “no-deal” scenario is not desirable, the EU is prepared for it.

Following a request by Prime Minister Theresa May, the European Council (Article 50) agreed on Thursday 21 March to extend the UK’s departure date to 22 May 2019, provided the Withdrawal Agreement is approved by the House of Commons by 29 March 2019 at the latest. If the Withdrawal Agreement is not approved by the House of Commons by then, the European Council has agreed to an extension until 12 April 2019. In that scenario, the United Kingdom would be expected to indicate a way forward before this date.

While the European Union continues to hope that it will not be the case, this means that if the Withdrawal Agreement is not ratified by Friday 29 March, a “no-deal” scenario may occur on 12 April. The EU has prepared for this scenario and has remained united throughout its preparations. It is now important that everyone is ready for and aware of the practical consequences a “no-deal” scenario brings.

A ‘no-deal’ scenario In a “no-deal” scenario, the UK will become a third country without any transitionary arrangements. All EU primary and secondary law will cease to apply to the UK from that moment onwards. There will be no transition period, as provided for in the Withdrawal Agreement. This will obviously cause significant disruption for citizens and businesses.

In such a scenario, the UK’s relations with the EU would be governed by general international public law, including rules of the World Trade Organisation. The EU will be required to immediately apply its rules and tariffs at its borders with the UK. This includes checks and controls for customs, sanitary and phytosanitary standards and verification of compliance with EU norms. Despite the considerable preparations of the Member States’ customs authorities, these controls could cause significant delays at the border.

UK entities would also cease to be eligible to receive EU grants and to participate in EU procurement procedures under current terms.

Similarly, UK citizens will no longer be citizens of the European Union. They will be subject to additional checks when crossing borders into the European Union. Again, Member States have made considerable preparations at ports and airports to ensure that these checks are done as efficiently as possible, but they may nevertheless cause delays.

The EU’s “no-deal” preparedness and contingency work Since December 2017, the European Commission has been preparing for a “no-deal” scenario. It has published 90 preparedness notices, 3 Commission Communications, and has made 19 legislative proposals.

The Commission has held extensive technical discussions with the EU27 Member States both on general issues of preparedness and contingency work and on specific sectorial, legal and administrative preparedness issues. The Commission has now also completed its tour of the capitals of the 27 EU Member States. The aim of these visits was to provide any necessary clarifications on the Commission’s preparedness and contingency action and to discuss national preparations and contingency plans. The visits showed a high degree of preparation by Member States for all scenarios.

Member States have also been engaged in intensive national preparations. An overview of residency rights in the EU27 Member States is available here, as well as direct links to national preparedness websites.

BREXIT PRE Contingency and preparedness legislative measures To date, the Commission has tabled 19 legislative proposals. 17 proposals have been adopted or agreed by the European Parliament and the Council. Formal adoption of all those files by the European Parliament and Council is currently taking place. Two proposals are to be finalised by the two co-legislators in due course.

As outlined in the Commission’s Brexit Preparedness Communications, the EU’s contingency measures will not – and cannot – mitigate the overall impact of a “no-deal” scenario, nor do they in any way compensate for the lack of

preparedness or replicate the full benefits of EU membership or the favourable terms of any transition period, as provided for in the Withdrawal Agreement. These proposals are temporary in nature, limited in scope and will be adopted unilaterally by the EU. They are not “mini-deals” and have not been negotiated with the UK. The EU has maintained - and will continue to maintain - a fully united position throughout its preparations, and during any possible “no-deal” period.

State aid As regards the need for financial resources and/or techni-

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arations for possible n 12 April The “no-deal” contingency measures

UK citizens will no longer be citizens of the European Union. They will be subject to additional checks when crossing borders into the European Union. Again, Member States have made considerable preparations at ports and airports to ensure that these checks are done as efficiently as possible, but they may nevertheless cause delays

PAREDNESS cal assistance, the EU’s existing State aid rules make it possible to address problems encountered by businesses in the case of a “no-deal” Brexit. By way of example, State aid rules permit consultancy aid for small and mediumsized enterprises (SMEs) or training aid which could be used to assist with SMEs preparedness (including possible future custom formalities). The Rescue and Restructuring Guidelines contain provisions on temporary restructuring support schemes for SMEs, which could be useful to address their liquidity problems caused by Brexit. Access to finance is possible in various formats, e.g. through Statefinanced lending schemes respecting the reference rate or

State guarantees under the guarantee notice.

Funding and support under the EU budget Technical and financial assistance from the European Union can also be made available in certain areas, such as the training of customs officials under the Customs 2020 programme. Other programmes can help similar training projects in the area of sanitary and phytosanitary controls. For agriculture, EU law provides a variety of instruments to cope with the most immediate effects of the withdrawal of the United Kingdom, in particular in a nodeal scenario.

• PEACE programme: the continuation of the PEACE programme on the island of Ireland until the end of 2020. As for the period after 2020, the Commission has already proposed as part of its proposals for the next Multi-annual Financial Framework to continue and strengthen cross-border support for peace and reconciliation in the border counties of Ireland and Northern Ireland.

• The EU Budget (in the process of final adoption): in a “no-deal” scenario, the EU will be in a position to honour its commitments and to continue making payments in 2019 to UK beneficiaries for contracts signed and decisions made before 30 March 2019, on condition that the UK honours its obligations under the 2019 budget and that it accepts the necessary audit checks and controls.

• Fishing rights and compensation: these measures provide for compensation for fishermen and operators from EU Members States under the European Maritime and Fisheries Fund for the temporary cessation of fishing activities. It also ensures that the EU is in a position to grant UK vessels access to EU waters until the end of 2019, on the condition that EU vessels are also granted reciprocal access to UK waters • Financial services: temporary, limited measures to ensure that there is no immediate disruption in the central clearing of derivatives, central depositaries services for EU operators currently using UK operators, and for facilitating novation, for a fixed period of 12 months, of certain over-the-counter derivatives contracts, where a contract is transferred from a UK to an EU27 counterparty.

• Air connectivity and safety: these two measures will ensure basic air connectivity in order to avoid full interruption of air traffic between the EU and the UK in the event of a “no-deal” scenario.

• Road connectivity: allows for the continuation of safe basic road connectivity between the EU and the UK for a limited period of time, provided that the UK gives reciprocal treatment to EU companies and operators.

• Rail connectivity: ensures the validity of safety authorisations for certain parts of rail infrastructure for a strictly limited period of three months to allow longterm solutions in line with EU law to be put in place.

This is, in particular, related to the Channel Tunnel and will be conditional on the United Kingdom maintaining safety standards identical to EU requirements.

• Ship inspections: this aims to ensure legal certainty and secure business continuity in shipping.

• Re-alignment of the North Sea – Mediterranean Core Network Corridor: This adds new maritime links between Ireland, France, Belgium and the Netherlands to the core network, and introduces a new funding priority to the Connecting Europe Facility (CEF): adapting transport infrastructure for security and external border check purposes.

• Climate policy: this measure ensures that a “no-deal” scenario does not affect the smooth functioning and the environmental integrity of the Emissions Trading System.

• Erasmus + programme: students and trainees abroad participating in Erasmus+ at the time of the UK’s withdrawal can complete their studies and continue to receive the relevant funding or grants.

• Social security entitlements: the entitlements (such as periods of insurance, (self) employment or residence in the United Kingdom before withdrawal) of those people who exercised their right to free movement before the UK’s withdrawal are safeguarded.

• Visa reciprocity (in the process of final adoption): visafree travel to the EU for UK nationals if the UK also grants reciprocal and non-discriminatory visa-free travel to all EU citizens.

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Forging ahead with optimism about the future STUART GILL is British High Commissioner for Malta

The UK’s exit from the EU will bring many changes for our citizens, as well as businesses of all sizes that benefit from trade between the UK and the EU. It is with this in mind that the UK Government believes the best approach is to leave the EU in a smooth and orderly way with the deal agreed with the EU last November. This deal delivers what the British people voted for, is good for both the UK and the EU economy, and provides the platform for a close future partnership in key areas like business and trade.

We are not there yet, so it is only prudent to plan for all scenarios, including for no deal. This includes explaining how all outcomes may affect our citizens,

businesses, and ties with the rest of Europe.

The UK Government has published more than one hundred pages of guidance for businesses on processes and procedures at the border in a no deal scenario. So too have the European Commission and Malta put in place a number of their own contingency plans, and provided advice.

We continue to work together to make any changes as seamless as possible. Equally important are the assurances provided by the Maltese government to UK nationals, and by the UK government to EU nationals, who have made each other’s country their home.

We have stayed closely in touch with the Maltese business community, including leaders in key industries, to reaffirm our strong conviction that the Malta-UK

relationship – both in business and between our people – will continue to grow, thrive and prosper long after our exit from the European Union.

Businesses across Europe also need to prepare and engage to ensure they are aware of the measures in place to respond to each scenario.

Although the Parliamentary process continues, what is certain is that our exit from the EU will present new opportunities for our two countries to strengthen our ties across the board, not least our business and trading relationship.

It is crucial that we, as well as our counterparts across Europe, look to create a business environment that can recognise such opportunities, adapt, and forge ahead with optimism about the future.