Brexit transitional period: challenges and solutions ahead
In December 2017, the European Council determined that sufficient progress has been made on the 1st phase of the Brexit negotiations and that talks could move to the 2nd phase, which includes a transitional period and the framework of the future trade and customs relationship.
In this new stage, the EU would negotiate a transitional period during which the UK would be a third country while continuing to participate in the single market and in the EU customs union. In this context, one of the main questions for businesses trading with the UK is whether or not they will continue to benefit from the preferential tariff rates of the EU FTAs during the transition period.
Transition period and the EU FTAs
The EU position is that, as the UK would remain a member of the EU customs union, it would continue to follow the EU trade policy and the common external tariff. However, the UK would lose the benefits from the current EU FTAs when it leaves the Union, unless the EU makes arrangements to maintain the effects of these agreements as regards the UK. One of the alternatives would be to negotiate a protocol for each of the EU FTAs allowing for the provisional application of these agreements to a UK-EU customs union. This would allow the companies in the UK to maintain the benefits from the preferential tariff rates set in these FTAs. Such solution has already been used in the past to extend the effects of EU FTAs to San Marino and Andorra. In any case, this alternative would have to be negotiated with the EU, which gives the EU the upper in the situation.
How can businesses prepare?
Negotiations for 2nd phase of Brexit will start after the Council of the EU adopts the negotiating mandate on 29 of January 2018.
Customs4trade counts with a team of experts who can assist you preparing an impact assessment, which would provide your company with a clear view of the risks and opportunities at stake, including the risks of losing the benefits of the EU FTAs This is an essential step for your company to define the best strategy to thrive in the post-Brexit scenario.
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