In the event of a no deal Brexit, it could take seven years to re-establish frictionless, tariff-free trade between the UK and EU.
That’s the opinion of two leading EU law specialists who have warned that it might not be as simple as it sounds to simply default to World Trade Organisation tariffs should the UK crash out on 29th March.
Anneli Howard, EU and competition law specialist at Monckton Chambers and a member of the bar’s Brexit working group said to The Guardian that: “No deal means leaving with nothing.
“The UK will need to set up new enforcement bodies and transfer new powers to regulators to create our own domestic regimes.
“Basic maths shows that we will run out of time but any gap in our system will create uncertainty or conflict. Negotiating and ratifying international free trade deals with the rest of the world alone could take over seven years.
“The UK will have to start negotiating over 50 free trade agreements from scratch once we leave the EU. In the meantime we will have to pay tariffs.”
It’s a pretty dire assessment of what could be to come if Theresa May cannot convince the EU to backstop concessions and latterly Parliament to agree to whatever concessions she’s able to secure.
But, naturally, there are some with a more optimistic outlook. Professor of international economic law at City University of London, David Collins remarked that: “The UK can trade quite easily on an uncertified schedule.”
And it’s also worth noting that no deal is still, even at this late stage, possibly still an unlikely outcome. EU negotiations go down to the wire all the time, made apparent by the BBC’s Inside Europe documentary, so we could see a deal agreed at 11:55 pm on March 28th. We could also see an extension to the negotiation period should there be a serious impasse but some light at the end of the tunnel in sight.
You’d like to presume that the government wouldn’t take the UK out of the EU on the morning of the 29th March if both they and the Donald Tusk et al felt another two/three days of talks would see an agreement.
However, it wouldn’t be the first time, second time or even the 100th time that the Brexit process from the referendum to now would have both UK businesses and the population as a whole still clueless as to what’s going to happen next.
Where next for UK businesses
So put simply, we still don’t know where we stand as businesses who rely on the import of goods and export sales. The potential outcomes and routes through Brexit are the same as they were two years ago – deal, no deal or delay. It still seems evident that the prospect of remaining or a People’s Vote with the view to remaining are notions by the wayside as technical possibilities, despite vocal support.
So for businesses looking to prepare for exit, the playing field is pretty much as we were – just with an ever-nearing deadline.
But with nearly half of UK firms not prepared for a chaotic Brexit according to the Bank of England’s most recent inflation report, there is still much planning and preparations to be done for UK firms as Brexit day looms large.
How to plan for the no deal scenario
First port of call is to make sure your business has the right documentation and goods passports in place to continue trading with the EU.
One of these includes an Economic Operator Registration and Identification number, which some businesses will require in order to apply for customs simplifications and to submit import and export declarations.
Read more: UK firms trading with EU urged to apply for EORI number in preparation for No Deal
Secondly, make sure you have enough critical supply of key components should trade and customs disruption follow from the 29th March.
This approach has been labelled fearmongering by some, but for businesses, especially within the manufacturing, food production and pharma industries, it’s critical for operations to ensure that components and parts that are imported from Europe are readily available to ensure no hold-ups in output.
In fact, the same BoE inflation report found that two-thirds of firms it quizzed said they’d begun building up stock and taking out extra warehousing space – and that rate of stockpiling is increasing.
And it’s not just worried businesses that are ensuring key supplies are ready and waiting should disruption occur following the 29th March. After all, it was just this week that it was reported that the NHS was stockpiling body bags.
But perhaps the most important step, and the one you should carry out immediately if not already done so, is talking to your customers on the continent.
Whether you sell the final product or service, or you deliver key components across The Channel, they will be having the same concerns as you are… but they have close neighbours and a local marketplace to turn to for alternatives should they feel the need.
Come Brexit day, the last thing you want to see when opening your inbox, in the event of a no deal exit, is a tirade of emails from key EU customers saying they’ve found alternative arrangements.
So talk to your customers, let them know your own contingency plans and reassure them that your potentially decades of doing business together will not stop because of Brexit, and your company stands ready to make adjustments to ensure as seamless
As Go Exporting CEO, Mike Wilson wrote in an article for Cheshire Media; “It is imperative that you talk with them now to find out their concerns, analyse together where the pinch points may arise and work through a solution. Re-assure them that you are prepared and that they can rely on your company to deliver.”
Well, you’re not alone. Even those businesses that have invested millions into pre-Brexit planning and contingencies are concerned. But what’s critical is to ensure you have a plan in place to cover all the potential outcomes.
Creating action-plans that can be implemented from the 29th March as the picture becomes clearer is the best way to help safeguard your import-export business in the days running up to Brexit.
If your firm needs support and expert guidance on preparing for Brexit, you can read more about our Brexit consultancy services.