The Brexit Trade Deal was announced first by Boris Johnson and then ratified by European Commission President Ursula von der Leyen on Christmas Eve 2020, somewhat resolving four years of tension and uncertainty. UK Prime Minister Boris Johnson called the deal his “present” to the nation.
But is the UK’s trade deal with the EU, also known as the Trade and Cooperation Agreement (TCA), actually a good deal for the nation? And what will it mean for exporters, importers and those looking to live and work in the EU?
In this article, we’ll look at what the Brexit trade deal means for businesses throughout the UK and Europe. Will your business be affected negatively, or will entirely new opportunities be able to develop in Europe and the wider world?
Tariff-free and Quota-free access to Europe?
The deal seeks to deliver tariff-free and quota-free access to one of the world’s largest markets, the EU. This is the meat on the bones of the Brexit deal, with the agreement surpassing the trading deals the EU has with Canada and Japan.
However, will the deal manifest itself like this in reality? The answer is no, not in the opinion of many international trade experts. Despite Mr Johnson’s claims that, under the new relationship, there will be “no non-tariff barriers” to trade, in actuality, because of the UK’s new trading relationship with the EU, non-tariff barriers to trade for British businesses exporting to Europe will increase.
So, what is classed as a non-tariff barrier to trade? Basically, it’s any measure other than a customs tariff which makes international trading more difficult. These barriers include rules on paperwork for exporters. While eliminating red tape for British businesses was one of the main justifications for Brexit, it appears that British businesses face increased bureaucracy when exporting goods.
Alex Altmann, partner in charge of Brexit at Blick Rothenberg, a tax and accounting firm, told the New York Times:
“To be clear, non-tariff barriers are things like paperwork for exporters, checks on imported products, licensing requirements for professionals, and differences in regulations that firms must comply with.
The Single Market eliminated many of these non-tariff barriers facing UK firms. The UK is leaving the single market so they will return.”
With these barriers making trade more costly and time-consuming for British firms operating abroad, they might well be forced to pass the costs onto the consumer or partners.
For us, this doesn’t mean that British businesses should unilaterally cut costs or pass all their new costs onto consumers. If a business does feel that it must raise prices for partners, end-users and consumers, we believe it is essential that they raise their level of service in overseas markets at the same time.
One key way of raising service levels is by improving communications. How might this look?
It could mean improving point-of-sale materials for customers, improved usage instructions or even investing in updated sales materials for your agents in the field.
The one thing that connects these seemingly disparate threads is high-quality translation. With clearer communications, your business will be able to engage with and reassure stakeholders. This, in turn, builds trust in the idea that you have their best interests at heart during this time of unprecedented change.
The Brexit Trade Deal states that there will be mutual recognition of trusted trader programmes. In effect, this forces UK producers to comply with both UK and EU trading standards.
When the UK left the EU on January 31st, 2020, it left the Single Market and Customs Union of the EU. Both parties then created two separate territories with their own regulatory, legal and customs rules. The new rules have been established to allow greater autonomy to the UK. However, this comes at a cost, as the deal significantly reduces the UK’s access to the Single Market.
There is a further potential price of the UK’s new-found ‘freedom’ – as part of the deal, the EU has retained the right to remove and modify the tariff-free and quota-free access the UK has been granted, should the UK operate in a way which is deemed to be “unfair competition” – which the EU consider will damage their economic pursuits.
What will the UK do with the greater trading autonomy it now enjoys?
Since late December 2020, the outgoing Trump administration and the UK have been attempting to tie up a ’mini trade deal’. Current US Ambassador to Britain Woody Johnson has said that a UK-US trade agreement is “not far behind” Brexit.
There could be a reduction on tariffs on products such as single malt whisky if the deal goes through. The negotiations were triggered after the UK slashed tariffs to the US.
The progress on the proposed deal has slowed in recent days, owing to developments on Capitol Hill. Despite this setback, there is potential for President-Elect Joe Biden to make a new appointment as Ambassador to Britain, allowing the deal to finally pass.
It is also possible, however, that the UK leaving the EU and its attempts to win over the Trump administration into signing a trade deal, could understandably leave Mr Biden’s administration less willing to implement a new deal.
Former US diplomats have sounded a warning that the UK-US trade deal might not be agreed until 2022 at the earliest. If this comes to pass, many UK businesses will have to cope with more difficult trading conditions in the EU, at least for another year.
A range of professionals will no longer be given the automatic qualification recognition they previously enjoyed. Medical professionals, pharmacists, architects, and engineers are some of the professions that are affected by this loss of automatic recognition.
This means, for the time being, they will have to register for recognition in the EU member state(s) they hope to pursue work in. The deal has, however, laid out a framework which will reinstate the right of professional bodies to mutually recognise professional qualifications in the coming years.
As of now, special protections have been put in place for lawyers advising on UK and international law. This appears to be a prudent step, as the complexities of the UK-EU trading relationship could open up instances of legal wrangling in the future.
The deal as it is does enable bilateral recognition of qualifications between regulators and industry bodies. The UK and given EU member states could begin hammering out deals which provide for the continuation of the free exchange of services in the meantime. What isn’t in doubt is the fact that these agreements will be easier to reach with some member states than others.
What will a blue passport mean for the freedom of movement?
Before becoming a political hot potato, the principle of freedom of movement within the EU member states was a given right, taken for granted by many millions. The December 2020 Eurobarometer survey, revealed that 81 per cent of European citizens believe free movement has positively impacted the economy.
However, the issue of freedom of movement within the Member States was one of the most shared concerns of Brexit voters. Freedom of movement to and from the UK for Brits and EU citizens ended when the Brexit agreement was signed into law on December 31st 2020.
Freedom of movement gave Britons the opportunity to live, work and retire anywhere in the EU, and as many as 1.3 Million Brits are still resident in EU member states.
Now, however, UK nationals have lost the rights and freedoms to start a business enterprise, pursue work, study and live where they choose in the EU. This doesn’t mean that employees and businesses can’t work or tradein Europe completely, but those individuals will need to arrange a visa if their stay is longer than 90 days.
One positive of the new rules is social security, benefits and healthcare coordination will enable Brits to work abroad without losing historic contributions to national insurance. This is because employers can obtain a Portable Document A1 or E101 Certificate which exempts the employee from some contributions in the overseas market, while contributions in the UK continue.
Despite the disappointing end to the freedom of movement throughout Europe, we remain optimistic that strong collaborative ties between the UK and individual EU member states will remain in place.
However, despite political promises that Brexit would give Brits back the freedom many believed they voted to restore, it has taken our freedom of movement away, making trading with Europe more difficult. With the introduction of visas for work stays of more than 90 days, the trade deal has served to increase red tape for organisations looking to do business in continental Europe.
Sadly, the UK has now left the Erasmus university exchange scheme. The move came as the UK Government decided not to accept the EU’s offer that, to become an associate member of the scheme, they would need to sign up to a payment plan lasting seven years.
There’s still positive news in Ireland, as the Irish Government has confirmed that students in Northern Ireland will still be granted access to the scheme.
In 2020, more than 54,000 students were engaged in placements abroad. What does this mean for the future of language studies? And could this have a knock-on effect on linguistic skills among the UK population? Could there even be a smaller pool of translators in the future?
To ease fears, the government has announced the Turing Scheme as a replacement. Rather than being confined to studying in Europe, Boris Johnson has hinted the students will be able to attend “the best universities in the world”. It remains to be seen whether this is just empty rhetoric, or if the government will be able to deliver on this promise.
£100m will be ploughed into the new scheme, beginning in September 2021, this will offer funding for 35,000 students to study abroad, around 20,000 fewer than were studying and working abroad in 2020.
Are British businesses better off under the new trade deal?
It’s clear that a gargantuan readjustment is going to need to be undertaken by British businesses, as the true effect of the new rules become clear. Certainly, businesses will face more red tape when looking to export goods and services to EU member states.
The changes to how professional qualifications are viewed will also pose challenges to various sectors, including the legal and medical sectors.
The ending of freedom of movement is a challenge too, with businesses forced to arrange visas for their employees expecting to work abroad for lengthy periods.
All of this, when combined, makes effective communication a must-have for businesses which trade overseas. Our professional language translation services offer effective localisation thanks to our expert language translators. With content and communications tailored to your target markets, your organisation can get its message across loud and clear. This aids in demonstrating the dynamism and attractiveness of British businesses to European consumers and businesses.
Get in touch with us today to discuss your project goals.