The EU is the UK’s single biggest export market, accounting for 46% of all UK exports and valued at £289 billion. In the event of a non-negotiated exit, the legal relationship of the UK to the EU will be that of a ’third country’, meaning the process for exporting goods to the EU will fundamentally change post-Brexit.
Key challenges for business
How will the rules for exporting to the EU change post-Brexit?
Exporting to the EU will change immediately after the UK's transition period for UK businesses. In the event of a non-negotiated exit, the UK will be regarded as a third country by the EU, and tariffs will be applying on most UK exports. In addition, all UK exports will have to undertake full customs procedures and many controlled goods will need to have additional licenses or go through additional procedures.
There are only a very few temporary measures in place that will ease the flow of goods to the EU – so the changes on Day 1 will be the changes businesses will have to work with unless a deal is struck.
In the case of a deal being reached, the new Free Trade Agreement (FTA) will determine what conditions UK exports go to the EU under. This is still being negotiated and while both sides want zero tariffs and quotas it will nonetheless be accompanied by customs declarations and additional paperwork, such as Rules of Origin documentation to prove qualification for zero tariffs.
What impact could the changes to exporting rules have on business?
In a non-negotiated exit, the combination of tariffs, customs procedures, and regulatory change creates both additional burdens and costs. The imposition of EU tariffs will mean that some businesses will face challenges in offering competitive pricing to their EU customers. The additional customs checks at the EU border have the potential to cause delays at ports if processes fail or are not followed correctly by transporters. These delays will have knock on impacts on supply chains – and are difficult for perishable products in particular - with all products of animal origins and plants having to enter the EU via a point of entry with a Border Inspection Post.