Businesses face “biggest imposition of red tape in 50 years” as Brexit begins

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Most companies had closed when the new EU-UK Trade and Cooperation Agreement (TCA) was finally announced on Christmas Eve. And they are only now starting to get their heads around what it all means.

Essentially, it creates the biggest shake-up to the UK’s trading relationships since 1973.  As the BBC’s Economics Editor reported:

It is the biggest imposition of red tape in 50 years“….Johnson’s “manifest error in declaring there are “no non-tariff barriers” for trade with the EU had business leaders falling off their chairs. This is patently not the case.”

Everyone will have their own ‘hit list’ – my own Top 10 covers the whole range of normal business activity:

  • Customs Declarations will be needed for GB-EU movements, including GB to N Ireland as Great Britain leaves the EU Customs Union
  • N Ireland rules create a new UK border down the Irish Sea, as it stays in the EU Single Market whilst Great Britain leaves
  • Rules of Origin will require companies to provide full details of their supply chain, in order to claim tariff exemption for their exports
  • Sanitary & Phytosanitary rules start to protect consumers and plant life – requiring 100% checks on live animals, for example
  • The UK’s vital services sector (~80% of GDP) is hardly mentioned in the Agreement, with the EU still to decide on “equivalence”
  • Freedom of movement ends for workers between the EU – UK, and companies will need to register/re-register for the UKCA/CE/UKNI markings
  • Work visas will required for many EU business trips by UK citizens, and ATA Carnets will be needed to take items to EU trade fairs and music gigs
  • UK qualifications will no longer be recognised in the EU, affecting a wide range of jobs from hairdressers to accountants and lawyers
  • UK-based airlines and trucking companies will lose cabotage rights – the ability to take passengers/freight between EU destinations
  • UK border controls are clearly not ready for Brexit as the pre-Christmas crisis highlighted, although EU borders are more prepared

These changes will be a major, and expensive, shock for anyone who doesn’t remember what doing business across Europe used to be like before the UK joined the original Common Market in 1973. Moving product from Birmingham to Berlin will no longer be as easy as moving it to Bristol.

Then there is REACH, the chemicals safety rules. Companies have spent €bns on registering for this over the past decade. Now, in pursuit of “sovereignty”, the UK government will demand they re-register for a new UK version of Reach from 2022. This is a complete and utter waste of time and money – caused by the UK’s refusal to accept European law as the governing law.

The end result of Brexit will be that many products are withdrawn, because the costs of registration don’t make financial sense. As a result, prices will rise, and availability will reduce.

Nobody would have ever voted for this outcome, if they had been told this was the endgame. Indeed, Boris Johnson assured the voters just after the referendum:

“British people will still be able to go and work in the EU; to live; to travel; to study; to buy homes and settle down …There will continue to be free trade and access to the single market”.

READY FOR BREXIT CAN HELP

Equally worrying is the quality of UK government guidance. So far, it amounts to nearly 600k words – equal to Tolstoy’s ‘War & Peace’. But it is spread across a wide range of different websites, with no coherent linkage between them.

This is where Ready for Brexit can help.  As legal experts Irwin Mitchell have noted:

“It’s great that Ready for Brexit has curated all the relevant guidance for the key areas”. 

I helped set it up 3 years ago, with colleagues equally experienced in exporting/importing.  It aims to provide the planning tools that businesses will desperately need from 1 January.

I hope we will be able to help your business mitigate the impact of this explosion of “red tape” and cost increases.

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