BREXIT - A COUPLE YEARS LATER
- Viktoryia Nestserava
- Apr 27, 2022
- 4 min read
Contingency planning or fire fighting
In preparation for Brexit, businesses complained of the environment of uncertainty, as it was unclear whether the UK would end-up signing a trade deal with the EU or not. Back then not all businesses prepared and, instead, waited for the final outcome. It turns out, however, that advice given back then remains critical today.
2 years after the event, it is now clearer to the different businesses trading with the UK that the so long-awaited EU-UK Trade and Cooperation Agreement, on its own, does not necessarily allow for a continuation of a seamless trade between the, now, 2 blocks.
Where preparation was advised, businesses, especially those operating within the international environment, were warned to prepare to leave the EU Customs Union, which means they should have considered all or some of the following actions:
restructure their corporate set-up in terms of functions and human capital,
reorganise their supply chains,
re-negotiate contracts with stakeholders and
ensure new compliance requirements are integrated into their procedures.
Where preparation should have been based on mitigation, businesses would generally be advised to consider a variety of possible scenarios that would promote contingency planning on a temporary and long-term basis, as well as guidance documents published by government bodies and already available expertise.
From personal experience, however the environment of uncertainty put certain amounts of pressure on government officials, persons dealing with contingency planning and advisers. UK.GOV notices would oftentimes be contradictory; preparation for different scenarios would require internal investigation and therefore generate costs; and experts would be asked questions to which they couldn't give a simple 'yes' or 'no' answer.
Advice given to businesses back then
The main advice for businesses and private individuals was, above all, in mapping the potential risks of any outcome. It would be necessary to be aware of repercussions of the worst possible outcome . Depending on sector of activity different aspects must have been considered. Legal compliance and adaptability capacity was key. Below are some of the examples of areas of concern.
Legislature
UK law tied to EU standards needs to be rewritten, adopting the hundreds of EU regulations into the UK law, or proposing new policies. This may be an opportunity for businesses and the wider civil society to engage in lobbying activities and redefine certain rules of state of play.
International trade in goods and services
Access to other markets for raw materials, processing operations, administrative and financial services, as well as distribution and sales require companies to review the relationship with their business partners in order to absorb extra costs. While certain Free Trade Agreements are maintained after Brexit, many technical rules see changes and must be monitored.
Logistics
Some ports, roads, logistics centres may become impaired due to exceptional circumstances failing to respect the previously planned routes and lead times. Companies may need to guarantee stock availability beforehand.
Agriculture
Agricultural sector needs to draw measures to guarantee that farmers are continuously supported by levies and other incentives. This may require a replacement in funding mechanisms previously guaranteed by the EU Commission. In the same manner, imports into the EU by UK producers and vice-versa will see Safety and Security checks. These imply the following:
Knowledge of exact documentary requirements, this includes quality, sanitary and/or phytosanitary certificates, import and export licences, packaging, and labelling.
Need for origin information or other information regarding product tracing.
Scheduling of physical controls and pre-notification of export/import to the relevant authorities.
Prior agreement in reference to Incoterms (delivery terms) and definition of parties responsible for supply of documentary evidence and Customs clearance.
Supply of electronic certificates as opposed to paper-based certificates.
Knowledge in reference to country-specific procedures.
Etc.
Foreign Policy
The UK will be required to define its Foreign Policy that may not align with the EU Foreign Policy. This may require additional spending by the government and/or redefinition of allies on the international arena. The UK has always been close to the USA, for example, which may in the future influence both countries to align their interests in international affairs to an even larger degree. Also not to forget about the Commonwealth of Nations.
Culture, R&D, Education
UK is currently home to many different nationalities that influence the day-to-day interaction within society. Potential changes and unrest in economic behaviour of the population may result in unexpected reactions and propel social movements of nationalistic nature. An emphasis may be put on British cultural particularities, which in the long run may generate additional policy discussions so as to define the values Britain must stand for. I believe it will be important to maintain relations with other countries by ensuring access to education to foreigners, as well as support research and development initiatives.
Conclusion
Brexit, to this day is surrounded by the environment of uncertainty and, therefore, requires both private individuals and businesses at large to be prepared for the varied outcomes, but also attempt to define what future the country is to strive towards. As such, for all those dealing within the UK, it is important to engage in preemptive evaluation of possible risks and opportunities.
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