Sally Jones of Ernst Young of the Big Four insolvency outfits asks what does the Brexit deal actually mean for business?
Writing from the perspective of an insolvency practitioner and accountancy firm Sally Jones of Ernst Young (EY) has given some views on the pros and cons of the recent Brexit EU trade deal.
She wrote: “On 24 December, negotiations to conclude the UK-EU Trade and Cooperation Agreement (UK-EU TCA) ended. As the dust starts to settle on the ‘deal is done’ headlines of recent days, we’re keen to remind the business community that the UK-EU TCA (or the avoidance of a no deal outcome) does not remove the need for businesses to make changes to their operations – far from it. What it does do is bring some certainty on many of the new trading rules that will apply after the end of the transition period, most notably tariffs.
“Businesses now have four working days (not excluding public holidays) to understand the new trading relationship and implement any changes in order to continue to trade effectively between the UK and EU from 2021 onwards.
So what are the headlines?
More detailed analysis will be provided in due course but the headlines of the EU-UK TCA can be summarised as follows:
Positive outcomes for business
Zero tariffs: “There will be tariff-free, quota-free access for products traded between the UK and EU. However, this is accompanied by a number of new customs procedures and formalities, including new ‘rules of origin’ requirements, which are needed in order to qualify for the tariff-free, quota-free treatment.”
Technical barriers to trade: “Specific annexes were agreed to reduce the non-tariff barriers for medical products, automotive, chemical products, organic products and wine.”
Government procurement: “Despite expectations that it would not be included, the UK and EU agreed to continue to allow access for their respective businesses to bid for each other’s government procurement contracts, going beyond the obligations set out in the WTO Government Procurement Agreement.”
Road haulage: “Hauliers can continue to operate between the UK and EU, and to transit through UK or EU territory. UK hauliers will also not need European Conference of Ministers of Transport (ECMT) permits.”
Air transport: “Air transport of passengers and cargo can continue without quantitative restrictions on capacity or frequency (although UK airlines will no longer be able to fly between two points in the EU, so called ‘onward legs’). With regards to aviation safety, both sides will recognise the validity of each other’s safety certificates and licenses.”
EU programmes: “The UK will continue to have access to various EU programmes, including: Horizon Europe, the Euratom Research and Training Programme, the fusion test facility ITER, Copernicus, and access to the EU’s Satellite Surveillance & Tracking (SST) services. However, this will not include the Erasmus student programme.”
UK-Turkey: “Agreeing the UK-EU TCA has enabled the UK to reach a continuity trade agreement with Turkey which will be extremely beneficial for many supply chains which rely on the EU-Turkey Customs Union to source products. The UK and Turkey have committed to expanding this agreement in the future to include services trade and investment.”
Disappointments for business
Services trade: “While services provisions have been included, they do not go much beyond existing EU practice, and notable barriers will limit the scope of many services providers to trade between the EU and the UK. Barriers include the end of the mutual recognition of professional qualifications, and significant carve outs from the EU regarding the extent to which it commits to allowing UK service providers to access their EU customers.”
Conformity assessments: “There is no agreement on the mutual recognition of conformity assessments, which means UK manufacturers will need to have their products assessed for compliance with an EU-notified body, and vice versa.”
Agrifood: “The two sides have not agreed on how to reduce the burdens of sanitary and phytosanitary (SPS) checks and cooperation, which require enhanced regulation and physical checks for products of human, animal and plant origin. Agrifood businesses will be highly impacted, although the degree to which this is the case will depend on the implementation of the provisions of UK-EU TCA. There was also no agreement on geographical indications (GIs) beyond what was already set out in the Withdrawal Agreement.”
Trade remedies: “Trade remedies are policy tools that allow governments to take remedial action against imports which cause injury to domestic industry. The UK-EU TCA includes virtually no restraints to prevent the UK and EU using trade remedies against each other. This means that the much-fought over level playing provisions may have less power than expected, because either side can revert to trade remedy action as an alternative resort.”
About ICSM Credit
ICSM Credit has more than four decades of experience as a credit intelligence group whose members gain inside information about firms in trouble allowing them to avoid bad debts and rogue traders. To join costs less than a tank of fuel - while at the moment there's a special free temporary membership offer during the Covid-19 crisis which gives access to free legal letters. ICSM also has an effective debt collecting service which has a global reach - ask for details from Paul.
For details about ICSM Credit call 0844 854 1850 or visit the website www.icsmcredit.com or email Ian at Ian.carrotte@icsmcredit.com on how to subscribe and to join the UK’s credit intelligence network to avoid bad debts and late payers. Follow ICSM Credit on FaceBook, Twitter and YouTube and Ian Carrotte on LinkedIn.
To keep up to date subscribe to the FREE ICSM Credit Newsletter to hear all the latest insolvency news and to see who has gone out of business click on the orange panel on the top left of the home page of the website www.icsmcredit.com or send an email to Ian.carrotte@icsmcredit.com
For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk