The UK Government's Brexit White Paper - What does it mean for international trade?

10 February 2017

The UK Government has released a Brexit White Paper - its official policy document setting out its Brexit policy plans. This paper follows on from the Prime Minister, Theresa May's Lancaster House Brexit speech on the 17 January setting out her 12 Brexit negotiation objectives.  Unfortunately, the White Paper really doesn't give us the additional detail we have been awaiting. It is also unclear what plans or strategies the UK Government will employ if it cannot reach an agreement with the EU within the Article 50, two year period.

Notable in the White Paper, though, is the assertion that the UK will bring forward separate bills on immigration and customs.  This prompts the question as to whether the UK will make substantive changes to existing EU Customs laws when drafting their own and what that might mean for importers and exporters.  This does present an opportunity for business to lobby for more favourable legal provisions to support and facilitate trade and to introduce more cost efficiencies.

Brexit Secretary David Davis provided useful oral commentary on the Brexit White Paper in the House of Commons, which gives some additional detail or at least clarification. The International Trade comments I picked up on were:

  • we would leave the Customs Union, that we would not seek EEA or EFTA membership but our own Free Trade Agreement with the EU (EEA and EFTA - both having been discussed greatly as alternatives to EU membership). Also, the White Paper states that the UK does "not seek to adopt a model already enjoyed by other countries" which confirms that the UK is confident that it can achieve a deal which is 100% beneficial to the UK.

  • the common travel area policy between Ireland and Northern Ireland would be maintained, and he added that the customs border wouldn't be a hard border, but would be administered using mutual recognition regimes and technology to create as frictionless a border as possible (the appetite from both sides of the Irish border to achieve this is great, but, achieving similar frictionless procedures with continental Europe will be, in my opinion, be far more difficult).

  • the rules of Origin set out in the UK EU FTA are likely to be similar to those of the Canada EU FTA, therefore, I am now expecting some goods to be excluded or 'derogated' from the FTA, some to be covered by the substantial transformation rule of changing the first 4 digits of their classification code and some to be under 40% or 60% content rules to qualify for a nil rate of customs duty when moving across the new Brexit border. Many EU businesses will never been impacted by such rules before and may be frustrated at the continued uncertainty.

  • that we will seek to replicate as much as we can from our current EU FTA position with global trading partners.and with countries that have fast growing economies and with whom the EU does not have FTAs.

We will all need to remain patient for details and clarification, which we expect will come overtime, likely through oral commentary, as above.  Our Brexit journey will officially begin by the end of March 2017, with the prime minister promising to trigger Article 50 by then. Shortly thereafter, can we expect to know the EU's Brexit negotiation objectives?

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