Draft Brexit deal: how it could affect designers and creative businesses

Update 10 December 2018: Theresa May has postponed the UK Parliament vote on her Brexit deal, based on the presumption that it would be “rejected by a significant” number of MPs, according to the BBC. This means the draft deal could be tweaked, or significantly re-written. Design Week will report on any updates to the deal, and what this means for the creative industries.

Update 26 November 2018: The European Union (EU) has now agreed Theresa May’s draft Brexit deal, taking it one step closer to a done deal. The next stage is a vote by UK Parliament, with the majority of MPs needing to approve the deal for it to go ahead unamended. Look out for Design Week’s reporting following the Parliament vote.

Following the launch of Theresa May’s draft Brexit deal this week, UK Government has been in chaos with backlash and MP resignations currently in full swing.

While the draft deal has been approved by the Cabinet, it still needs to be approved by the European Union (EU), and then a final vote needs to be taken by UK Parliament to secure it.

There is still the chance that MPs could vote against the deal, giving the prime minister and her Cabinet 21 days to come up with a new plan and re-negotiate. This also opens up the possibility of the UK leaving the EU on 29 March 2019 with no deal whatsoever.

Even if the deal is accepted by Parliament, it then needs to be voted on and agreed by the European Parliament (EP) and the EU Council to go ahead as the prime minister plans.

If all goes to plan, the UK will leave the EU on 29 March 2019 with a deal and will then move into a 21-month “transition period” where the UK government, citizens and businesses can retain their existing rights while they adjust to the new rules. This is expected to last until 31 December 2020, but could be extended beyond this.

Assuming May’s plan does go through, the plan is likely to have an impact on the design and creative industries. The draft withdrawal deal includes details on EU nationals’ rights to remain in the UK, and vice versa, the movement of goods and services between the UK and EU countries, and what this means for copyright laws and intellectual property (IP) rights.

Rights to live and work

The draft agreement states that free movement of workers will continue until the end of the expected transition period, so December 2020.

It also states that EU nationals who have been living in the UK for five years by the end of 2020, and vice versa, will have the right to live permanently in the UK.

Additionally, those who have not yet lived in the UK for five years will be able to stay until they reach the five-year mark, then can apply for permanent residence, though the UK Government is able to reverse the right if someone “abuses the system”.

This applies to people who have been living in the UK prior to December 2020 – but the agreement does not make it clear how movement might be restricted for those who wish to move after this date, or who need to travel regularly for work after this date.

Deborah Annetts, CEO at the FreeMoveCreate campaign, which has been lobbying Government to ensure free movement of creative people after Brexit, says inhibiting the ability of creatives to travel for work could negatively impact the sector.

“Our prosperous creative industries and their artists – musicians, dancers, artists, designers – rely on freedom of movement for work,” she says. “If this is to end, the Government must ensure that the creative industries continue to maintain free movement rights or establish a two-year multi-entry visa for British creative professionals working in the EU27 [countries].”

There is also a worry that visas for EU citizens will be restricted by salary, in the same way that they are for international citizens currently, capped at the need to earn £30,000 per year. This could inhibit the ability for many EU creatives to work in the UK, particularly freelance illustrators and artists, given they earn less than this.

Annetts is calling for a Cooperative Accord on Culture and Education with the EU, which is an agreement that would allow visa leniencies for those working in the creative industries, on the basis that the UK would also benefit from their contribution.

This would include offering a multi-country, multi-entry short-term “touring visa”, with a similar thing implemented for UK creative citizens travelling to EU countries.

However, Annetts says the UK Government has “persistently failed to provide details” on this and FreeMoveCreate is urging Government to “clarify” its position.

In keeping with the salary restrictions, universities could also implement higher fees for EU citizens studying creative subjects in the UK, bringing them on par with international student fees, which are much higher.

Jack Tindale, manager of design and innovation at Policy Connect, adds that restrictions around travel, visas and tuition fees could mean that the UK’s currently “competitive and well-respected design sector” loses its edge in the international design market, as it will be simpler to take on EU students and graduates rather than those from the UK who require special conditions.

“If companies have to sponsor visas, or pay for customs charges on exporting goods and services, a lot of our existing advantage will be removed,” he says. “Why would [an EU business] take a UK studio or designer when they could take someone from the EU?”

Additionally, the Government’s draft agreement implies there could be higher fees and potential loss of access to study grants and loans for EU students who are not permanently based in the UK, which could put them off from studying here. This would limit the talent coming out of our universities, says Deborah Dawton, CEO at the Design Business Association (DBA).

“This could be an unwelcome deterrent to potential EU student talent that the design industry desperately needs,” she says. “This potential strangling of the industry’s access to the EU talent pool on an international front, coupled with current domestic policy on creative education, is a concern for us.”

The withdrawal agreement does state, however, that citizens from the EU will continue to have their professional qualifications recognised in the UK and will have “broadly the same” workers’ rights as UK workers, including conditions of employments, tax, access to housing and the right for their children to receive an education.

Dawton says that the organisation would like to see more clarity around how easy it will be for EU nationals to come to the UK to work, particularly freelancers, adding that an increasing number of design consultancies in the UK are using freelancers.

“The reliance on freelancers among DBA member [studios] and the wider design industry is rising, up from 77% in 2017 to 83% of [studios] in 2018,” she says.

Movement of goods and services

The term “goods” is often intangible in the design industry, given that this could mean a graphic design system or assets, product design files or even just designers’ services being transported across countries, rather than physical objects.

However, the withdrawal agreement implies there could still be restrictions on these things after the transition period is up.

It states that goods will “continue to circulate freely” between the UK and EU until 31 December 2020, and things which are “in transit” at the end of 2020 can also move freely.

However, businesses will need to prove that the good was placed on the market before the end of December 2020, to not be liable to customs charges – implying that everything after this will be subject to charges.

The only likely exception to this will be the movement of goods between the Republic of Ireland and Northern Ireland, which is likely to have more freedom given the prime minister’s intent to avoid a “hard” border between the two countries, with regards to their former conflict.

Alan Bishop, CEO at the Creative Industries Federation, says that it is “regrettable” that the UK Government “did not go further” in its withdrawal statement on clarifying trade and free movement, given “the vital importance of ease of movement and frictionless trade of services for the creative industries”.

He adds that, if this movement is severely impacted, this could have a “major negative impact” on the UK economy on a whole, as over 9% of the UK’s total services exports are provided by the creative industries.

Intellectual property, copyright and trademarks

Currently, all designs created within the UK are protected by both EU and UK design laws, including unregistered design rights, which are automatic, and registered design rights, which designers need to apply for.

Interestingly, British unregistered design rights mean that a design is automatically protected for 15 years after it is created, while EU unregistered design rights only gives a design three years’ worth of protection.

UK designs also currently benefit from EU trademark protection, which allow a business, individual or company to claim something as their own.

Currently, as the UK is in the EU, a design that fits the criteria of being unique is automatically given unregistered British design rights, protecting it in the UK, and unregistered EU design rights, protecting it across the 27 EU countries. 

After December 2020, EU design rights will no longer apply to designs created or used in the UK, meaning a design’s protection across European countries will disappear – but the Government has confirmed that it will grant national rights in place of these so designers “do not have any loss of rights or gap in protection in the UK”.

If designers or businesses have already registered their designs under EU law, they will not need to pay a fee and do not need to do anything – the transition to the new UK rights will be automatic. If they are in the process of registering a right when the transition period ends, they may need to re-register under UK law.

Dawton says the organisation is happy with what the Government has proposed on IP and copyright, particularly on not charging UK designers to transfer their rights over.

“From what we’ve seen proposed on IP, we’re pleased to see a suggestion that trademark and design owners’ existing rights will not be re-examined and they won’t have to pay for the conversion of EU IP rights into UK rights,” she says.

“This should enable them to become a holder of comparable IP right in the UK, which is good news for EU clients commissioning design from the UK, and supports future investment in British design.”

But Dids Macdonald, founder at organisation Anti-Copying in Design, which lobbies Government for policy changes to protect designers’ work, has expressed concerns that no longer being protected under EU law will mean British designers’ work will be open to infringement in European countries.

“This lack of protection could devastate many UK design businesses, who will not be able to block copies of their designs from being made and sold across the EU, as they will not be protected,” she says.

While there are no charges for design rights, there will likely be a charge after the transition period to protect intellectual property when moving goods across borders between UK and EU countries, and vice versa.

So what happens after December 2020?

Essentially, the prime minister’s vision of what happens after the transition period is still hazy, which has left industry leaders sceptical and concerned about what this means for the creative industries.

Many have interpreted this as an implied reduced ability for EU designers to remain in and travel to the UK, higher costs for trade of goods and services, and more bureaucracy and red tape around protecting designs through IP and trademark.

Alan Bishop, CEO at the Creative Industries Federation, says the industry “urgently needs more clarity on the final relationship” to ensure the “crucial [creative] sector remains central to ongoing negotiations”, while Dawton at the DBA adds that “it is difficult to comment in detail on this draft deal with the current instability in Westminster, and possibility for future amendments”.

What about a “no-deal”?

Jack Tindale at Policy Connect adds that even a deal that does not make exceptions for the creative industries would be better than no deal at all, which is of course, still on the horizon.

“If there’s no deal, and the EU starts to treat us a country without any firm bilateral ties with it, much of our competitive advantage will be removed,” he says. “Companies will have to sponsor visas or account for paying for intellectual property (IP) rights and customs charges – the creative industries would be hugely affected.

“But even if the deal as it currently is goes through, there are still questions that haven’t been answered and need to be – we can’t just keep kicking the can down the road.”

Bishop at the Federation adds that a “no-deal” would be a worst case scenario and hopes that this draft agreement is “one step further away” from that conclusion.

The Federation’s global trade report, conducted in January this year, found that 40% of the UK’s creative businesses thought a “no-deal” scenario would harm their business’ ability to export, while a fifth, 21%, would consider moving their business abroad.

“Securing a transition period is critical to reduce the significant uncertainty that businesses have been facing across the country,” Bishop adds.

Read the Government’s current draft Brexit statement here.