What’s Next After Brexit?

What Is Brexit?

Brexit is short for British Exit and is a word used to refer to the UK’s decision to leave the European Union (EU). In June 2016, the UK held a referendum on whether to leave or remain in the EU. The “leave side” won by a slim majority. In March 2017, the UK invoked the exit clause of the Treaty of the EU, initiating a notification period for its departure in two years. The UK received a number of extensions on their exit.

The Transition Period

The UK formally left the EU on January 31, 2020, with a withdrawal deal. It is now in a transition period that is scheduled to end on December 31, 2020. The EU and the UK have both made it clear that there will not be any extensions to this transition period. During this transition period, the UK will still be part of the EU trading arrangement (no tariffs, quotas or checks) but not part of the political institutions of the EU and there will be no British members in the EU Parliament. The UK will have no say in the making of “new EU laws during this transition period but will have to follow all EU rules including freedom of movement.”

During this transition period, both sides must now negotiate a trade deal and determine what their future relationship will look like.

A New Trade Deal

The UK’s priority is to secure an agreement where the EU will not introduce new tariffs and other trade barriers coming into force after the transition period. The first step is for the EU and the UK to agree to a formal negotiating mandate and this could take some time. Once the negotiating rules are agreed to the talks toward a new trade deal can begin. This may or may not be a straightforward exercise. It’s not just trade that needs to be sorted out, the UK must also agree to a set of rules regarding cooperation with the EU on security and law enforcement and it is these types of issues that could make negotiations difficult. Both sides will need to determine how the UK will move away from existing EU regulations which have been called the “level playing field rules”.

During this transition period, the UK remains part of the international treaties that the EU has with third countries, such as the Comprehensive Economic and Trade Agreement (CETA) with Canada.

The UK-EU withdrawal agreement sets out how the UK is able to be covered by the EU-third country trade agreements during the transition period. The UK has provided guidance on the trade agreements during the transition period at UK trade agreements with non-EU countries.

The Trade Commissioner Service of Canada advises that “Canadian Firms will see no change in how they trade with the UK for the duration of the transition period.” More information on advice to Canadian Firms and the UK Brexit can be found at Brexit and United Kingdom-European Union trade negotiations: Summary information for Canadian companies.

Read More: What Is CETA?

No Trade Deal

If the EU-UK fails to reach a deal in time before the end of December 2020, the UK faces the prospect of trading with the EU under WTO rules. Countries that don’t have free-trade agreements usually trade under the rules of the World Trade Organization (WTO). Each country sets tariffs or taxes on goods entering. If the UK chooses to put no tariffs on goods from the EU then it must also have no tariffs on goods from every WTO country.

If you have any questions regarding your trade with the UK during the transition period please contact one of our Trade Advisors.

speak to trade advisor
Share this post
About Author
Jan Brock

Jan Brock joined Pacific Customs Brokers in 2015 as a Senior Trade Advisor. She retired from Canada Border Services Agency (CBSA) in 2015 after serving more than 37 years. Jan started her career with CBSA as a summer student in 1976 and worked part-time until she graduated from U.B.C. with a Bachelor of Education Degree in 1980 . Shortly after graduating from U.B.C. Jan worked full time as an inspector with CBSA and within three years was promoted to Superintendent. She served some time in the Regional Operations office as an Operations Review Officer before she was promoted to Chief of Operations first at the Customs Mail Centre, then in the Metro District as the Commercial Chief and ending her career as a Chief at Pacific Highway Commercial Operations where she served as Chief from 1992 to 2015. During her career she was a member of the Customs Drug Team and a trainer in the National Enforcement Program. Jan also served as the Regional Coordinator Officer Powers and Use of Force for the Pacific Region. Jan served on many Commercial Program Reviews and committees both national and regional during her career and possesses an expansive knowledge of importing and exporting into and from Canada.

While we strive for accuracy in all our communications, as the Importer of Record it is incumbent upon your company to ensure that you are aware of the requirements under the new regulations so that you maintain compliance as always.