The deadline is fast approaching to agree the rules for the new UK-EU relationship. The transition period ends on the 31.12.20 and the deadline for extending it has now passed.
In the next couple of months, a trade deal should be reached between the UK and the EU in order to figure out how business will continue between the two territories. In addition, topics like co-operation on security and law enforcement must also be settled. The coronavirus has not made things easier, but the latest discussions between the two parties did seem to pick up some steam. Boris Johnson seems to think that they are “not that far apart” either. Both parties agreed that they want to complete a deal that is in the best interest of citizens.
When transition ends on 31st December, the UK will automatically drop out of the EU’s main trading arrangements:
- The single market
- The customs union
The single market means that countries share the same rules on product standards and access to services. Whereas, the customs union is an agreement between EU countries not to charge taxes (tariffs) on each other’s goods.
However, if a new UK-EU trade deal is not agreed in time then tariffs and border checks would be applied to UK goods travelling to the EU – under the rules of the World Trade Organization. The UK also decides what tariffs and checks to impose on EU goods.
Tariffs would make UK goods more expensive and harder to sell in the EU, while full border checks could cause long delays at ports.
Even if a trade deal is reached, it would not eliminate all checks – so UK businesses will need to prepare and at Goudsmit UK we are working hard to ensure we are ready to react, whatever the outcome.
Although it is obvious that the UK relies on the EU as a partner for about half if their trade (about 51%), this is magnified when looking at Northern Ireland. Northern Ireland trades mostly with the EU. This is particularly true with the Republic of Ireland, about two-thirds of exports from the EU and roughly half of imports to the EU are traded with the Republic of Ireland.
Currently, the Northern Ireland protocol is one of the biggest barriers to finding an agreement, especially considering the political history between the two countries (Northern Ireland and the Republic of Ireland), and the fact that Northern Ireland does not want to be treated differently than any other country in the UK. It is no secret that the complicated history between the Republic of Ireland and Northern Ireland, the border issue is very sensitive. Besides that, the question of logistics will prove to make this topic one of the most difficult issues of Brexit.
All in all, Northern Ireland has the most to lose from a bad Brexit deal.
What is the plan to avoid checks?
The Northern Ireland protocol, negotiated by UK Prime Minister Boris Johnson last October, is part of the withdrawal agreement (which some called the “divorce deal”) that saw the UK leave the EU on 31 January 2020.
Under the protocol, Northern Ireland will continue to enforce the EU’s customs rules and follow its rules on product standards (known as the single market on goods).
And this will make checks on goods travelling from Northern Ireland (a non-EU country) into the Republic of Ireland (an EU country) unnecessary.
The protocol is due to come into force on 1 January 2021 – the first day of the new EU-UK relationship.
What happens if the Northern Ireland protocol is not ready by 1 January?
The UK is legally obliged to ensure the goods entering Northern Ireland from Great Britain are checked, according to Jess Sargeant, at the Institute for Government think tank.
“If it looks like the UK is not applying EU law to the EU’s satisfaction, it could impose a fine on the UK or take it to the European Court of Justice”, she stated.
Furthermore, if companies are not ready to meet the new paperwork requirements, it could lead to delays at ferry ports and trade disruption.
I would like to thank you for your support over the last few years and to remind you that we are here to partner you in business to the best of our efforts. Should you have any concerns, please do not hesitate to contact us on +44 (0) 2890 271 001.
Read more on Goudsmit UK’s Brexit planning strategy here.