On January 31, at 23:00 CET, Britain officially left the European Union (EU), the Ministry of Foreign Affairs informed.
The Brexit process consists of two main steps:
• The transitional period from February 1 to December 31, 2020;
• The future relations of the UK and the EU will be discussed during the transition period to agree by 2021.
Throughout the transition period till December 31, 2020, the UK will continue to be subject to EU law and will be bound by EU international agreements, including trade contracts. The UK will be part of the single market of the EU and the customs union during the transition period. Therefore, trade with the United Kingdom of Great Britain will not change until the end of 2020.
In turn, after the transition period, the situation will change. Here are some essential details you should pay attention to in business with concern to the UK.
Which companies run the risk of facing negative impacts as a result of Brexit?
According to the EU legal acts on products, after the end of the Brexit transition period, goods from the UK will be considered as imported goods. Accordingly, they will be subject to import rules as goods of third countries.
Companies that have mainly established trade relations with the EU countries are now very concerned about the possible risks of Brexit, since this type of business, in particular, is most at risk and, as expected, most of the companies involved in it will suffer.
Companies that conduct business with companies other than the European Union will carry far fewer risks, although they are in no hurry to write them off. For example, counterparties outside the EU may be subject to the so-called domino effect, especially in the automotive, chemical, and financial sectors. A good example is the chain of car dealers: cars made in the UK consist of parts made in the EU and vice versa. In turn, this will mean an increase in prices of final products and services, which, of course, will affect the entire supply chain.
According to the EU legal acts on products, after the Brexit transition period, goods from the UK will be considered as imported goods. Accordingly, they will be subject to import rules as goods of third countries.
Effect of Brexit on Customs:
The number of customs ports will increase from the current 55 million a year to about 255 million.
Customs clearance will result in long lines and traffic jams both in the ports of the United Kingdom itself and in the ports from which shipments are departed for the United Kingdom.
Supply chains built on precise and fast transport, including in the mechanical engineering, automotive industry, and technology sectors whose factories are located in the UK, can collapse.
Significant problems will fall mainly on the agricultural industry of Ireland, whose manufacturing enterprises are located partly in both Ireland and Northern Ireland.
Great Britain will need to expand access roads leading to ports, and all states, especially the United Kingdom, will have to bring them into line with modern requirements and expedite the process of customs clearance.
How should Businesses Prepare for Brexit impact?
If you have a company that exports or imports merchandise beyond the boundaries of the UK, then it is prudent enough to start getting ready for the effect of the post-transitional period. If you start implementing positive steps for change beforehand, the potential loss and downtime for your business will be less.
Find a freight movement provider that is AEO approved (Authorized economic operator). AEO approved freight movement providers will have the ability to offer a faster clearance if border checks and customs demands are reintroduced by creating an impact evaluation about the sourcing and sale of merchandise in case of absence of a free trade arrangement.
Summary
At the current moment, there is substantial economic, political, and trade uncertainty. It is unclear as to the exact nature of consequences post the Brexit transition period. If you have a company that exports or imports merchandise beyond the boundaries of the UK, then it is prudent enough to start getting ready for the effect of the post-transitional period. Companies that conduct business with companies other than the European Union will carry far fewer risks. If you’d like to know more about this topic, take a look around our website www.cxportal.com or give us a call on +442034416513 and we’ll do everything we can to help.
Susan Bloomberg
CXPORTAL is your award-winning AI, ML, SAP Commerce Cloud and eCommerce digital transformation solutions provider, CXPORTAL is specialised in Innovating business strategy, design and development of digital products, digital platforms engineering and data science solutions. CXPORTAL Leverage Artificial Intelligence, Machine Learning Algorithms, Deep Learning Models, and big data Analytics to unlock and scale your business data, and optimising the operating model for exponential business impact.
