Position papers outlining the UK’s negotiating approach to goods on the market and more were published in the past week. It prompted discussion and comment ahead of the third round of Brexit negotiations in the days ahead.
On a practical level, what happens to UK business – to UK good and services – when the UK separates from the EU in the years ahead?
It’s a huge question for the UK’s businesses and one that the government and its civil servants have been trying to work through with positioning papers ahead of each round of Brexit discussion and negotiation.
In recent days, a position paper on continuity in the availability of goods in the UK and the EU has been published. It represents the latest attempt to articulate what’s at stake and how the UK (though not in bilateral agreement with the EU quite yet) would like to handle the practicalities of Brexit.
Of course, it’s well understood on all sides that when the UK begins to split from the EU the terms of that breakup need to be as smooth and orderly as possible for UK and European businesses and consumers.
But why? For one, because every year the EU exports consumer goods worth more than £100bn to the UK – more than it exports to Brazil, Russia, India and China combined – while the UK exports about £50bn of consumer goods to the EU. The actual value of goods flowing in either direction is also much higher, when you take into account other business activity – about double, by many calculations.
So the latest statements by the UK, which are becoming more detailed over time, have been well received, even if they are only one side of the argument.
What business thinks (part one)
Adam Marshall, director general of the British Chambers of Commerce (BCC), said in response that businesses in the UK, as well as on the continent, will welcome the British government's desire to maintain maximum continuity in the way goods are traded when the UK withdraws from the EU.
“UK goods will be fully compliant with EU regulations, product standards and safety checks at the time of the UK’s exit from the EU, and vice versa,” he noted. “Trading companies should not have to get new product approvals, or be subject to duplicate safety checks, for existing products. Related services should also be able to be sold as well.
“As the negotiations continue, both sides should commit to avoid unnecessary compliance checks for businesses, both at the time of the UK's exit from the EU, and in future wherever the UK and the EU agree to maintain close regulatory alignment.”
The BCC is also clear that a 'no deal' scenario, which would see extra red tape imposed on goods traders on both sides of the Channel, has to be avoided – “it's in no one's interests,” said Marshall.
What’s in the detail?
So what are the BCC and others responding to in the latest positioning paper?
The UK’s government’s basic position, as you would expect, is to seek an agreement with the EU which allows the freest and most frictionless trade possible in goods and services, to the benefit of all. This paper sets out four principles to underpin the availability of goods through the transition.
- The UK wants to ensure that goods which are placed on the market before exit day can continue to be sold in the UK and EU, without any additional requirements or restrictions.
- The UK wants to avoid unnecessary duplication of compliance activities that have been undertaken by businesses prior to exit. This means that where products have gone through an authorisation process prior to exit, for example, a type approval for a car, this approval should remain valid in both markets after exit.
- The UK wants patient safety and consumer protection in the EU27 and UK to be paramount. This means that an agreement will need to facilitate the continued oversight of products to ensure the necessary action can be taken for non-compliant or unsafe goods.
- The UK is thinking about services, too, not just goods, as they are interconnected. Services are essential for the production of goods, for their sale, distribution and delivery, and for their operation and repair. Where goods are supplied with services, the UK wants there to be no restriction to the provision of these services.
On the release of the paper business secretary Greg Clark stated that he absolutely recognises, through his meetings with businesses and business groups, the importance that business places on ensuring trade with the EU remains as frictionless and barrier-free as possible.
What business thinks (part two)
Mike Cherry, national chairman of the Federation of Small Businesses (FSB), said in response to the paper, and the principle of cross-border trade it explores, that simplicity holds the key.
“[Any] new arrangements for civil judicial cooperation must ensure legal certainty, easy and effective access to justice, clear designation of the applicable law where appropriate and recognition and enforcement processes that are both speedy and effective,” said Cherry.
“Commercial business-to-business disputes that take place across borders with EU27 countries, such as on late payments, must [also] have quick and easy remedies to shore up small business trading confidence,” he added.
“Small businesses will need time to adapt to any new changes and therefore clear and early communication will be essential once an agreement has been negotiated. This will be necessary to avoid a dip in confidence, which might then be followed by a dip in levels of trade.”
What business thinks (part three)
At the other end of the scale we have the corporates, represented by the CBI.
John Foster, CBI director of campaigns, was especially positive about the latest stance.
“The UK government’s position on goods is a significant improvement upon the EU’s current proposal, whose narrow definition would create a severe cliff-edge, hitting consumers on both sides of the Channel.”
However, he also noted that the only way to provide companies with the reassurance they need is through the urgent agreement of interim arrangements.
“This would ensure that goods and services can still flow freely, giving companies the certainty they need to invest. The simplest way to achieve that is for the UK to stay in the single market and a customs union until a comprehensive new deal is in force.
“Both sides should agree to move talks on to interim arrangements as soon as possible to stem the loss of investment.”
Are you happy with the progress of the negotiations? What would you like to see come out of them?