Current goings on in Brexit
The UK has now left the EU and has entered an 11-month transition period that runs until 31st December 2020. During this period, the we will remain in both the EU customs union and single market. That means, until the transition ends, most things will stay the same, including:
Travelling to and from the EU (including the rules around driving licences and pet passports)
Freedom of movement (the right to live and work in the EU and vice versa)
UK-EU trade, which will continue without any extra charges or checks being introduced
Now transition has begun the UK will automatically lose its membership of the EU’s political institutions, including the European Parliament and European Commission. So, while the UK will no longer have any voting rights, it will need to follow EU rules. The European Court of Justice will also continue to have the final say over any legal disputes.
As the UK is no longer a member of the EU, it is now free to negotiate and sign trade deals around the world. Securing a UK-EU trade deal will be top a priority over the months ahead. Trade deals aim to increase trade between countries – usually in goods, but occasionally in services too.
Making it cheaper to trade between countries is one way of doing this. A free trade deal will often reduce or eliminate tariffs. Trade agreements also aim to remove quotas – these are artificial limits on the amount of goods that can be traded.
Trade can also be made simpler and faster if countries have the same trade rules (mostly to do with the specification of the product). The closer the rules are, the less likely goods need to be checked to make sure they meet the required standard.
While free trade agreements aim to boost trade, too many cheap imports can threaten a country’s farmers and/or manufacturers/processors. So, in order to protect local producers, countries can impose tariffs on products from other parts of the world.
The UK will and the EU need to secure their agreement to prevent new tariffs and other trade barriers coming into force after the transition period ends on 31 December 2020.
Prime Minister Boris Johnson has spoken in favour of an EU trade agreement that builds upon the deal that Canada currently has with the EU. Tariffs on most Canadian goods have been eliminated, though there are some additional checks (such as customs and VAT).
Neither side wants tariffs and quotas – so that part of the trade deal could be straightforward. But getting agreement around rules and regulations could be much more difficult. The UK and the EU begin the negotiations with exactly the same rules. But if the UK moves away from some of these rules, it could make it easier for it to secure trade deals with other countries, like the US.
The EU, on the other hand, wants to keep close alignment with the UK, in order to prevent UK businesses gaining a competitive advantage. But even if a detailed trade deal is agreed, it won’t eliminate all checks. That’s because the EU requires certain goods (such as food) from non-EU countries to be checked, no matter how closely they follow EU rules.
Time is also a problem. The transition is due to end on 31 December, and formal trade talks are not likely to start until early March. That’s because the EU needs to agree its negotiating objectives among its 27 members first.
If negotiators fail to reach a deal in time, then the UK faces the prospect of trading with the EU under the basic rules set by the World Trade Organization (WTO), which is where countries negotiate the rules of international trade. If the UK had to trade under WTO rules, tariffs would be applied to most goods which UK businesses send to the EU. This would make life particularly difficult for many UK farmers as it would make their goods more expensive, and therefore harder to sell in Europe.
Trading on WTO terms would also mean full border checks for goods, which could cause traffic bottlenecks at ports, such as Dover. And the UK service sector would lose its guaranteed access to the EU single market.
While it was an EU member, the UK was automatically part of around 40 trade deals the EU had struck with more than 70 countries. In the run-up to Brexit, the UK was given permission to replicate these agreements. So far, the UK has managed to roll over 20 “continuity” deals, covering 50 countries or territories.
Contingency planning for foodservice operators should be simple and straightforward. The key is good planning alongside suppliers, as follows:
Acting now could make a huge difference to your business later this year. Good luck.
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