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In the event of a No Deal Brexit, trade between the UK and the EU would move to World Trade Organisation (WTO) terms.

The UK has deposited a schedule with the WTO that sets out the services that can be provided to the UK under WTO terms and whether any restrictions apply to those services.

In the event of the UK leaving the EU with a Deal, trade in services between the UK and the EU will continue on the same basis as today until the end of any transition period (currently envisaged to 31 December 2020).

Brexit issue(s) Action required
Services supply chain
Understand what services your business imports and exports to / from the UK.
Review supply chain
It is essential for businesses to review their supply chains to understand the movement of services into and out of the UK and the potential for disruption as a result of the UK no longer being a member of the single market.
Understand whether services fall under the category of regulated or unregulated and whether they are included in the UK / EU WTO services schedules. It is essential to understand that even though certain services may be provided between the UK and the EU freely on WTO terms, other rules associated with EU membership may prohibit their import / export in a No Deal scenario. For example, consider:
  • Does the movement of a service require the transfer of data between the UK and the EU?
  • Does the movement of a service require the movement of people between the UK and the EU? What immigration and short term visa rules will apply between the UK and individual EU Member States in a No Deal scenario?
  • Are professional qualifications in the EU recognised by the UK and vice versa in a No Deal scenario?
  • Do other regulatory requirements apply?
Can steps can be taken to mitigate some of the impacts of other rules on the movement of services? Once it is understood what issues may gives rise to difficulties in the import / export of services to / from the UK, consider whether there are specific actions that may be taken to mitigate these. For example, where a service involves the flow of data subject to EU GDPR, consider whether there are options / exclusions available within GDPR that would facilitate the transfer of data from the EU to the UK in the event of a No Deal Brexit.
 

The World Trade Organisation (WTO) General Agreement on Trade in Services (GATS) divides the provision of services into 4 modes – set out below:

Mode 1: Cross-border supply - Service delivered within the territory of the Member, from the territory of another Member, e.g. an Irish consultant provides a report to a UK consumer via post or email.

Mode 2: Consumption abroad - Service delivered outside the territory of the Member, in the territory of another Member, to a service consumer of the Member, e.g. an Irish individual travels to the UK for legal advice.

Mode 3: Commercial presence - Service delivered within the territory of the Member, through the commercial presence of the supplier, e.g. an Irish architect establishes an office in the UK.

Mode 4: Presence of a natural person - Service delivered within the territory of the Member, with supplier present as a natural person, e.g. an Irish consultant or health worker travels to the UK to provide their service to a UK recipient.

Over the last few years the concept of a new mode of supply of services (mode 5) has emerged, though this mode has not (yet) been formally adopted by the WTO. Mode 5 refers to services which are incorporated into goods which are then traded across international borders, e.g. a UK car manufacturer sells a car with inbuilt software, etc. into Ireland that will require the provision of future services as part of the contract.