The Brexit Impact - What Might it Mean for Exporters?


The Brexit Impact – What Might it Mean for Exporters?



Since the referendum result was announced more than six months ago, the Brexit story has rarely been out of the headlines in our newspapers, TV and radio. Early predictions of a sharp decline in the economy have proven to be wide of the mark – at least for now, leaving egg on the faces of many leading economists and business observers. Last month, we heard the Prime Minister set out her vision for the country after we eventually leave the European Union. It is now expected that Article 50 will be invoked by the end of March, effectively firing the starting gun for the process that will lead to the United Kingdom’s departure from the European Union, and it would seem, the Single Market and the Common Customs Union as well.

What does all of this mean for exporters?

At this stage, there are still a huge number of ifs, buts and maybes in any assessment on the impact of Brexit on British exporters. The government’s aspiration is to leave the Single Market but to secure the best possible deal for British business with regard to a free trade agreement with the European Union.

The development of the Single Market has created a unique system where goods, services, capital and people can move freely across 28 countries. For exporters, this has removed a considerable amount of control over the movement of goods between EU countries, at the cost of significant changes, often drastic, in legal standards for products, technology, employment, legal process and environmental control. The benefit for many exporting companies is that they can send and receive goods with much greater ease and speed than ever before. The harmonisation of standards has also made it less complicated to introduce products into new EU markets, because where a common or harmonised standard exists, the rules in the target country usually accord with those the exporter is already following.

It does seem that whatever the details of the agreement, there are going to be very significant changes for British exporters. Our exports will no longer be in free circulation in the European Union until they have actually been cleared through customs control and legally entered one of the other 27 countries. It is the government’s wish that we will have concluded a free trade agreement with the EU by the time of our departure, which ought to mean that exports of most British goods will not be subject to any tariff charges. However, even if this is achieved, the procedures that need to be followed will change significantly. Intrastat and EC Sales List returns can be expected to no longer be required, and the exporter will not need to show the customer’s VAT number on their invoice.

This of course is because the procedures of trade with EU countries will change to be similar to trading with the rest of the world. Exporters will need to familiarise themselves with the requirements of UK customs relating to export clearance as well as the import clearance rules of the receiving country. For exporters who already trade with countries outside of the EU, much of this will be familiar, but if an exporter has only traded with the EU until now, there will be significant new requirements to understand and implement.

The biggest issue for many exporting companies is likely to be compliance. At present, product and technical standards are largely harmonised between EU countries, meaning that a product that is legal in the UK is usually (although not always) legal in other countries too. It also helps that evidence required to prove compliance in the UK is also accepted in other EU countries. When the UK leaves the EU, it will be on a basis that the work on harmonising standards has largely been done, meaning that there should not usually be any need to an exporting company to adapt. However, over time both the UK and EU authorities are certain to alter their rules and to introduce new ones. A company that exports to other EU countries will need to keep up to date with changing rules in Westminster and Brussels, and in some cases may have to meet totally different standards to trade with both the UK and the EU.

The European Union also has free trade agreements with more than thirty non-EU countries. These agreements affect British exports and imports, but will not necessarily extend after we leave the European Union. These agreements cover a number of important trading partners, notably Egypt, Israel, Mexico,   South Korea, South Africa and Turkey. It is impossible to predict what the consequences for traders with these markets will be, or when any changes might take effect. This will depend on negotiations that the British government has with each country.

So although there is a considerable amount of uncertainty about the Brexit effect on exporters at present, it’s very important for exporters to keep abreast of developments and to start preparations for the inevitable changes. Strong and Herd are offering a series of training courses on the Brexit Impact, that promise to give a good starting point for exporters to start their planning.

Article written by Tim Hiscock Associate of Strong & Herd LLP



Brexit, EU, Intrastat, Procedures, Standards, VAT



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