Trade is critical to the UK economy with approximately half of UK exports and imports being sent to and from the European Union (EU). The UK’s decision to leave the EU will impact on its trading relationships with the EU, and the rest of the world. The UK’s future success will be significantly influenced by what the new model of UK-EU trade arrangements looks like.
While EEF is calling for a trade arrangement between the EU and UK that does not involve higher tariff and non-tariff costs or complex administration for manufacturers at the border, we may end up with all manner of barriers at the border. This paper highlights ways in which friction at the border may occur, and raises some of the key issues that manufacturers need to consider and address across their supply chains.
Currently the Single Market and EU Customs Union work ‘hand in glove’ to allow the free movement of goods inside a common external tariff wall. After the UK leaves the EU the key issues for manufacturers at the UK/EU border will be the introduction of tariff and non-tariff barriers including:
- UK goods will not circulate freely between the UK and EU
- A hard border between the EU and UK will exist, requiring new customs administration documentation and the need for goods to be checked to ensure compliance with EU standards, market and legal requirements
- Manufacturers will have to prove goods entering the EU from the UK are of UK origin, in accordance with a pre-agreed set of rules of origin agreed between the EU and UK
- The UK will have to set its own external tariffs to be faced by EU and other country goods entering the UK. Tariffs will apply to goods both being exported to and imported from the EU. The UK will need to agree a Tariff Schedule
- With the WTO. It is expected that initially this will mirror that of the EU’s. Any preferential zero tariff rates will need to be agreed between the EU and UK as part of a comprehensive FTA agreement
- The UK will have to negotiate its own external trade policy in the WTO and in negotiating FTAs with other countries
As manufacturers, you can prepare for these issues by carrying out an audit of your requirements in some areas. Our exclusive Brexit Trade Tool can help you carry put this audit.