Don’t rock the boat with Brexit, say business groups

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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.

  1. 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.
  2. 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.
  3. 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.
  4. 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?

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By DJKL
23rd Aug 2017 16:38

Well, in an ideal world the parties suddenly realising that we are dealing with the Emperor's new clothes would be great- I will be staggered if half the purported benefits of Brexit come to fruition and I expect the economic impact of business uncertainty in the meantime will take a very long time to be overcome.

Having said the above in the words of Macbeth,

"If it were done when 'tis done, then 'twere well
It were done quickly"

What is currently crippling is uncertainty, we are a barometer of business activity as we lease commercial property to other entities, activity is still sluggish and I suspect there will continue to be fewer new transactions until we really get to see what we have bought.

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24th Aug 2017 09:43

I really don't know why there is all this fuss. We will continue to do business with the EU and they with us. All this hype is artificial as was seen just after the result of the referendum. The EU are suffering severe problems because of their immigration and human rights policies. They need to change PDQ. A cap on immigration doesn't have to stop the free movement of workers. The immigration problem is only going to get worse. When a woman braves the Sahara desert and the Med in order to not go into prostitution to survive says something about the human race. We do not live in a perfect world therefore we can't have perfect solutions to problems. Time the EU got off its fat backside and did something meaningful.

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24th Aug 2017 10:48

The thrust of the recent position papers begs the question as to why we are actually going to all this trouble to leave the EU at all.

The more the details of what is actually involved are revealed, the more it appears that not much in honesty needs to change. Why do it?

It seems to me in all this, as so often happens, politics has got in the way of pragmatism and common sense.

As we accountants know from long experience, politicians very often make life a lot more complicated than it needs to be.

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to Agutter Accounts
24th Aug 2017 13:25

The issue is quite simple. Most of us decided to leave the EU because of their incompetence to deal with important issues. Your comment is somewhat contrary as common sense would have got rid of a national security threat yet the EU court of human rights (run by the EU politicians) said no.
All this political stuff is just huff and puff.
My view is to come away with no deal and just negotiate as and when, because, let's face it, the EU and many others do not want us to leave and will put obstacles at every opportunity.

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to johnjenkins
24th Aug 2017 15:53

I am afraid John, that may be why YOU have voted for Brexit.

But the reality is about half the votes were to leave and half of the votes are to stay. And lots of people didn't have an opinion either way.

Whilst he is a bit of a [***], this is quite good analysis from Ashcroft on "why" and most of it is about feeling old and left behind in the modern world, or basically having a hard time of if financially and voting for "something different" or simply not understand how Europe works or what is does. Curiously virtually none of the problems that keep Brexiteers up and night will be solved by Brexit.

http://lordashcroftpolls.com/2016/06/how-the-united-kingdom-voted-and-why/

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to ireallyshouldknowthisbut
25th Aug 2017 09:26

Unfortunately the EU doesn't work and the reason is quite simple. It is far too big and controlling by a few to many. EFTA was the original reason for us entering the then "common market". I cannot see any valid reason that free trade should be glued to movement of people. There has to be flexibility and individual country controls. Europe is not and never will be a country so it's no good trying to treat it like one.
Many of our problems are cause by the vast increase in immigration when our infrastructure can't handle it. Many people on ground level were seeing and experiencing this first hand. Everyone of my clients voted for Brexit, even those that do business with the EU countries.
Nigel Farage sums it up really well. Would we join if we weren't in. The resounding answer was no. By the way 52% - 48% is not half or about half.

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to johnjenkins
29th Aug 2017 12:11

I suggest you read Article 45 of the Lisbon treaty. We could have had a lot more control of EU freedom of movement than successive governments chose to implement.

And recent surveys continue to show that the country remains split down the middle by this most divisive of issues.

This will simply not have a good outcome and to pretend otherwise is completely deluded.

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to Agutter Accounts
29th Aug 2017 13:18

Being a business man and have clients that do a lot of business with the EU I fully understand where your coming from. I don't think anyone expected such an influx of people (300,000+ net), most from the EU. So surely the EU could have realised that this needs a flexible solution but they don't seem to be able to move in that direction. Now they will have to. I totally disagree with you on the outcome. It will be a good outcome for all concerned, because at the end of the day the EU will realise that tying the movement of people to the single market will not work for a prosperous economy (unless every EU country has a prosperous economy).

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to ireallyshouldknowthisbut
25th Aug 2017 13:37

Like many people who voted to leave, I am in favour of a "common" market and free trade across Europe.

What I am not in favour of is the increasing centralisation and federalisation, eroding national identities and absorbing them into the great EU empire project.

History is littered with examples of what happens when individual sovereign states are absorbed into empires and artificial federations.

Sooner or later, such groupings collapse into nationalistic tensions and outright civil war, the most recent example being what happened to the former Yugoslavia. So long as Tito was alive, he kept the country together, ruling with an iron fist. Once he was gone, and with the accompanying break up of the Soviet empire, the former Yugoslav states descended into civil war.

The Balkan conflict of the 1990s is a foreshadowing of what might happen in the future in Europe, if the EU is allowed to go on with its federalist agenda. Better for us to leave now, before it collapses and descends into anarchy and war.

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to Peter Cane
29th Aug 2017 09:37

Although I agree with much of your post, and I think that us leaving the EU is just the start of a complete EU breakdown, I do not think that they will descend into anarchy and war. The business giants of Europe will come up with a plan that will save EU face and allow us to be linked in some form. They are already talking about "imaginative proposals". BMW are working behind the scenes. Years ago someone came up with a trading currency called the Ecu. Surely that is better than countries having to answer to a central bank. To me the whole EU thing has not been thought out properly. I compare the EU to HMRC. Some great concepts then the need for ultimate control sends it all down the pan.

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24th Aug 2017 17:36

Wonder if the accountants have ever considered that financial benefits of remaining in the EU might be far outweighed by non-financial costs? My CPD constantly harps on about non-financial "benefits" but it does seem that reality trumps theory every time.

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