Once the transition ends, trade deal or no trade deal, there is going to be lots of accidental business illegality. A lot will be riding on how forgiving/accommodating, or not, the enforcement environment is.
For context, following the Brexit vote quite a few banks reviewed existing process and found out that even within EU they were not exactly always complying with the rules ...
So a scenario: no data adequacy; company still hosts EU personal data on server in UK without contractual cover. What are the consequences? What steps do the regulators take? Heavy handed or give more time to adjust?
Another scenario: a CE marked UK-produced product is exported to France and put on the market, but instead of the (legally required) address of the EU-based importer on the label, it still has the UK producer’s address. What happens next?
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Is it time to have the long and boring discussion about the difference between standards and processes & production methods?
Trade policy tends to focus on outcomes (standards). So for imported food to be sold on the UK market it needs to be made to UK [or sometimes equivalent] standards.
Trade policy doesn't tend to deal with how (processes & production) the food is made e.g. how cows were treated.
But this is changing somewhat. The EU-Mercosur trade deal opens a tariff-rate quota exclusively for shell eggs birthed (?) from chickens subject to animal welfare conditions equivalent to the EU's.
Today's publication of the border operating model an explicit acknowledgement that exiting the EU's customs union and single market will create additional costs for British businesses trading with the EU.
Positively, this means we no longer have to discuss blockchain enabled zeppelins and "GATT 24", and can focus on preparing for the rupture at the end of the year.
For imports, customs controls are being phased in in two stages. From Jan 1st, importers from EU will have to decide whether to
- declare imports & pay duties as would from RoW; or
- take advantage of scheme allowing deferral of declarations and payment of duties for 6 months
Many people, including me, believe that similar measures (allowing for CE marked goods to continue to be accepted in the UK) will be reintroduced. This is because businesses are simply not prepared for the switch, and there is still no real clarity on the replacement.
Big positive to my mind that UK now accepts that there will be new administrative requirements placed on businesses sending goods from Great Britain to Norther Ireland.
Pretending otherwise helps no one.
A reminder of how it is determined whether a product going from NI to GB is subject to EU tariffs, according to the protocol:
Snap assessment: much more detail needed, some things EU will disagree with and quite a bit of domestic-focused spin BUT it demonstrates UK taking obligations seriously and hopefully paves way for UK and EU to move forward on implementing the Protocol.
Some areas of UK-EU disagreement that people might be less aware of (so not LPF, ECJ, fish etc):
1. EU wants FTA to cover procurement, UK doesn’t. 2. UK wants FTA to cover audiovisual services, EU doesn’t.
3. EU wants to use an off the shelf approach to rules of origin (so PEM), UK wants bespoke. 4. UK wants broad mutual recognition recognition of conformity assessment (allows UK-based notified bodies to certify products to EU standards), EU doesn’t .
5. EU wants climate change to be covered by broad level playing field commitments, UK wants it relegated solely to energy chapter.
‘A Canada-style free trade agreement’ should not be taken to literally mean the UK and EU will copy and paste the EU’s free trade agreement with Canada. It is just an example of an accepted balance of access and obligations.
A more recent example of the sort of relationship the UK is looking to negotiate would be the EU’s trade agreement with Japan.
Or if we’re going hipster, could look at negotiations that haven’t concluded yet, and mandate for EU-Australia FTA.
But another thing to understand, is that the trade agreement is just one pillar of future EU-UK cooperation, that will sit alongside cooperation in other areas such as security, defense, social security.