Tuesday, 19 February 2019 09:55

Prepare for a ‘no-deal’ Brexit

Written by  Pam Tipa
NZ’s trade commissioner to London, Nick Swallow. NZ’s trade commissioner to London, Nick Swallow.

Businesses should start preparing for a no-deal Brexit, says the trade commissioner to London, Nick Swallow.

Read: MPI is focussed on the worst-case scenario of a no deal Brexit.

As we move closer to March 29 – when the United Kingdom is due to leave the EU – nobody knows what will happen, Swallow told a business briefing in Auckland last week.

Brexit was due to go before the UK Parliament again late last week but a deal with the European Union was not expected to be passed at the time of Rural News going to press.

New Zealand’s Ministry for Primary Industry (MPI), the Ministry for Foreign Affairs and Trade (Mfat) and Customs all told last week’s briefing they were preparing for the worst-case scenario of a no-deal Brexit and advising business to do so.

Swallow said if the UK Prime Minister could secure a withdrawal deal there would be a transition period lasting to December 2020 minimum. For NZ business that would mean nothing changing in the near future: the terms of trade for products going into the EU and the UK would remain the same.

The EU and the UK would work on a free trade agreement although achieving one by December 2020 would be “breakneck speed”. A FTA with Greenland took six years and there was only one issue at stake.

Swallow says an extension of time is now needed for article 50 – which triggers UK’s exit from the EU – or a deal by March 29.

If not, the UK leaves without a deal.

The UK and the EU governments have changed their language slightly on the no-deal: they are encouraging businesses to prepare and the governments are preparing.

The UK has boosted funding for a no-deal contingency plan, France will have 700 more customs officials at the border, Ireland is adding 1000 staff (700 of them customs officials) and Netherlands is putting 900 new customs officials into Rotterdam (the main port city) alone.

The UK Government is sending a lot of letters to UK businesses.

If there is no deal on March 29, the UK will leave the EU customs union and the single market and will become a third party of the EU.

“If you want to send goods from the EU to the UK you will have to pay a tariff and go through customs formalities; that will apply vice versa.

“[No deal] means there would be no transition period; this would happen overnight on March 29.”

 

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