The United Kingdom left the European Union on January 31, 2020, but discussions about what this will mean for businesses have been ongoing throughout this year. Politicians set a deadline of December 31, 2020, to negotiate a trade deal but what happens if they can reach no agreement, and what does it mean for businesses selling to France?
The impact of no-deal Brexit on UK trade
If the UK fails to agree a trade deal with the EU, it will become a so-called “third country”. This means the UK’s relationship with the European Union will be subject to international laws, including WTO ( World Trade Organisation) rules. The WTO regulates global commerce between countries, making sure that international trade flows as freely, smoothly and predictably as possible.
As the UK will then be a third country, the EU will impose its tariffs and rules and tariffs at the borders. Regulations include customs controls and checks and verifying compliance with EU standards. They will also make phytosanitary and sanitary checks to prevent diseases, contaminants or pests that could harm animals, plants or humans, from entering an EU member country.
There will be an impact on transport between the EU and the UK, and the previously mentioned phytosanitary and sanitary inspections may cause severe delays at borders and ports. Road transport times are expected to be longer.
It is possible that depending on the specific circumstances that led to a no-deal, the European Union might wish to negotiate further with the United Kingdom as a third country.
Will border checks be imposed?
If the end of the year arrives without a trade deal being agreed, the European Union will start implementing border customs checks on products exported from the UK on January 1, 2021. The EU will do this even if the United Kingdom hasn’t amended any of its own regulations.
The British government expects lengthy delays and long queues at the border for at least six months if the UK leaves the EU without agreeing a trade deal. Post-Brexit, France will impose border controls at its ports immediately if no agreement is signed. According to figures from the Washington Post, around half to three quarters of all truck drivers will not have the required paperwork to enter the European Union via a French port.
UK companies also face additional paperwork costs: HMRC estimates that they will have to spend about £15 billion a year on documentation if there is no deal.
Are customs arrangments due to change under a no-deal scenario?
At present, UK companies enjoy frictionless trade with the EU. But a no-deal Brexit will mean that the EU will apply the same rules regarding goods being moved between the UK and the EU as it does between the EU and non-EU countries. Export and import paperwork will also be necessary.
- Carrier declarations
Companies will need nominated carrier declarations to ensure the safety and security of transported goods.
- Excise goods
At the moment, the EMCS ( Excise Movement Control system) controls duty-suspended movements between the Uk and the EU. In the event of a no-deal Brexit, EMCS will no longer apply, and excise goods will be subject to duty.
- Importing from the EU
Companies importing goods from the European Union will be required to make an import declaration. Customs checks will be needed, and importers may be required to pay excise duties.
- Businesses must apply for a UK EORI (Economic Operator Registration and Identification) number for use on customs declarations by onward freight transporters and logistics companies They will also be required to classify imported goods accurately.
- Finally, they will have to arrange with freight delivery companies to transport their goods to their final distribution point.
Exporting from the UK
Companies will be required to register for a UK EORI number before they can export. They must amend their contracts and INCOTERMS (International Terms and Conditions of Service) to demonstrate that they are now exporters. They will also need to make safety and security and export declarations.
How might a no-deal Brexit affect UK e-commerce companies selling to France? Final thoughts
It’s clear that because of uncertainty, UK e-commerce businesses have experienced a difficult time during the transition period. A no-deal exit from the EU is sure to bring about many changes to the operations of UK e-commerce companies selling to France, but preparation and being ready to adapt will help your business to avoid being left behind.