As you are probably aware there is much speculation about why Britain chose to leave the EU, this will be argued by scholars regardless of the outcome for many years so we won’t dwell on that today.
Whilst the governments of Great Britain and those of the EU have disclosed little about what to expect in the future days, months, years following Brexit, the following is what we have pieced together from various industry and government sources.
Europe is a continent divided into around 50 countries. 28 of those countries are members of an economic/political organisation called the European Union. (EU)
The EU is primarily a free-trade area, working as one single market, where goods, services, people and capital can flow freely between the member countries.
Brexit was the result of a growing discord within the UK at our sovereign state being administered and often over ruled by a non-elected foreign government.
So to clarify, the UK will be leaving the EU not Europe!
ANYWAY, enough of politics, It is now I would like to turn our attention to matters of International Trade.
Great Britain established a trading post here in Hong Kong in 1841, that was a long time ago and things have moved on in many ways, but here we are 178 years later and still doing the same thing we were doing all that time go, trading foreign goods.
Today the UK’s largest global trading partner is the United States of America, and that is a trade relationship that has lasted for over 400 years.
This trade lane with the USA operates seamlessly and quite happily without any special deals in place, as does trade with Great Britain’s various Commonwealth partners including Australia and Canada.
For that matter, Great Britain trades happily without any special trade deals with just about everyone, Scandinavia, China, South East Asia, India, Africa, South America (sorry if I missed someone out)
So it gives me a great deal of confidence that even without a special deal in place with the EU or a No deal Brexit as it has now been termed, it will still be business as usual for the UK.
To summarise our position in the event of a no deal Brexit.
- If the UK remains in the EU, nothing changes.
- If the UK leaves but with a one of the multitude of sub agreements being discussed by our governments, nothing changes.
- If the UK leaves without agreement, ( Hard or No deal Brexit )it is expected to revert to WTO trade rules until alternative more permanent structures can be introduced to facilitate the flow of goods. (namely EFTA, Canadian model, Norway Model).
It is worth reminding those present that Brexit is only expected to affect the flow of cargo between current EU member states, all other International traffic will have existing customs border processes already in place which will remain unchanged.
I will now draw your attention to the UK‘s current trading practices and how they affect the flow of cargos to and from our country in the case of a No Deal Brexit.
Exports from the UK
Goods being exported from the UK to Europe may very well attract Import duties at the country of destination, however, this will be for EC to decide what it will and what it will not allow to be imported into Europe for Free.
Imports into the UK
All goods arriving from Europe will almost certainly require a customs clearance to take place to calculate Customs duties.
At this stage we still do not know whether Duty will be payable on the day of arrival at the border or whether payment can be deferred and paid retrospectively.
There are already in place several scenarios which could seamlessly facilitate a No deal Brexit, especially when considering the many countries which already trade happily and for free with the EU
EFTA is a preference status; its current members are Switzerland, Norway, Iceland, and Lichtenstein; all of which enjoy free trade with current EC members.
EFTA movements are Duty free however are subject to T1 transit document requirements. A T1 transit document is required to be in place during transit across foreign borders and be discharged upon arrival in the final country of destination.
ATR1 (Turkey) is another trade model similar to the above but quite often subject to greater scrutiny given the location and proximity of its Eastern border.
TSP -Transitional Simplified Procedure is another solution designed to make it easier for goods to be imported from the EU. TSP allows a registered UK Importer to lodge a simplified frontier declaration to clear goods from the EU arriving at a designated UK Port. Goods can theoretically flow freely, as the Importer is required to make a full retrospective Import declaration at a later date.
The problem we have identified with the TSP model is that if your goods are consolidated on a groupage service with non TSP cargo, they may be delayed anyway until all consolidated cargo has been clear through customs before its onward journey.
UK Customs announced only days ago that Duty may be waived on the vast majority of products (87%) for an interim period of at least 12 months in the event of a ‘no deal Brexit.”
So, in summary Great Britain looks likely to leave the EU with a No deal Brexit and without any special deal in place with the EU. However as we have outlined above, Great Britain is ready for such an event and will look forward to making the most of new trade agreements with its global trade partners when free from historic restrictive EU directives.