Boris Johnson declared Brexit was “done” on January 31st 2019 when Britain formally left the EU and entered a transition period. British companies haven’t felt the full effects yet – how will they be affected by our actual exit on December 31 and what should they do to adapt?
By January 1 next year, we shall be out of the European Union’s single market and customs union; this will mean many companies will need to fill out new forms and to hire customs agents. Some will need to restructure their business.
Many people fondly thought that we would have all of 2020 to get ready, but Covid-19 has robbed us of the money and attention necessary to prepare. The good news is that the political strife over Brexit is over, not because Brexiteers have won the argument, but because they have silenced their opponents by winning a political victory.
Now we have another problem in relation to China – anyone who thought that uncoupling from the EU would somehow mean more trade and investment with China must currently be disappointed. Relations with China are as bad as they have been for 20 years, mainly due to China’s breaching of its treaty with the UK over Hong Kong.
Despite all this, there are some positive indicators.
- Trade and political relations with the USA and other Anglosphere nations are very strong.
- Similarly, our trade and political relationship with India has improved greatly over the last few years.
- The brutal learning experiences of the Covid-19 lockdown period have trained many UK companies to make better use of remote-working technology, which is the very technology that needs to be mastered to deal efficiently with overseas business partners.
- The free trade agreements (FTAs) that have been rolled over or are in process are generally flowing more smoothly than expected realistically. We now have FTAs with countries representing 8% of British trade before we have even left the European Customs Union.
FTAs usually aim to reduce tariffs and quotas on goods or services between countries. The big ones – India, Australia, Japan, and the biggest prize of all, the USA – are yet to come. As for the EU, we will need to reach a trade deal by the end of the year. In some ways, we are trying to achieve a trade deal there with an even bigger trading partner than the US.
However, we do have deals with
- ten Latin American countries, including Chile
- eleven African countries, including South Africa
- South Korea
- four Near/Middle Eastern countries, including Israel.
All of these are to take effect at the end of this year. In addition to these, FTAs with Canada and Mexico are close to conclusion. Trade talks with the US, Australia and New Zealand are also ongoing but should not be expected to conclude quickly.
Whether or not these FTAs are concluded quickly, there are certain actions that business owners should be taking now:
- be aware that, from New Year’s Day onwards, there will be new rules on how to travel to Europe. You cannot assume you won’t need a visa.
- plan for new procedures if you export to the EU or import goods from the EU. You don’t necessarily need to incur legal fees to get advice on this, as the government has issued helpful guidelines here. If you wish to receive more detailed guidance, please contact us.
- If you are interested in opportunities for sourcing suppliers or perhaps expanding sales in any of the countries named above, now is the time to research them. We have both contacts and expertise in many of the jurisdictions named and would be happy to assist.
We can all be forgiven for being distracted over the spring and summer of 2020. Now is the time to focus in on our conscious uncoupling from the EU, and work out how best to take advantage of the new economic ties we are creating.