A Deal on a knife’s edge

©Étienne Godiard/unsplash

The end of the year is rapidly approaching, and there is still no post-Brexit deal. Time is running out. Should an agreement be reached, companies would have little time to implement the regulations before the end of the transition period. Nevertheless, companies can already do a lot to reduce the impending damage.

It is still unclear whether there will be a post-Brexit partnership agreement between the European Union and the United Kingdom. In addition to content-related challenges - notably on competition rules, fisheries and governance - the adoption of the agreement poses challenges. The text, probably several hundred pages long, will have to be linguistically revised and then translated into the 24 official languages of the European Union. Only then can a treaty text pass through the parliamentary procedure in an orderly fashion. Approval by the national Parliaments of the Member States and the United Kingdom as well as by the European Parliament is also required. 

How can companies protect themselves? 

This means that time is running out for companies. There is no legal certainty until all formal hurdles have been overcome. After that, the agreements must be implemented by administrations and companies. It is possible that companies will implement the provisions late and that, for example, preferential tariffs can only be claimed later. 

However, some changes are already known today: Regardless of the outcome of the negotiations, all economic players will have to comply with customs formalities. The European Union has already made it clear that a deviation from the Union Customs Code will not be accepted. Thus, on the EU side, the same regulations apply in principle as for imports and exports to other third countries. "Neighbouring countries" such as France (customs agents | freight forwarders) or the Netherlands have already provided information material on this.  

In addition, there will be delays at the border. These pose additional challenges to companies’ distribution management. The more variety in deliveries, the more companies have to plan cost-intensive stockpiling. This part of the preparations is difficult to calculate because the border infrastructure on the British side is still under development. Functioning IT systems are lacking, for example. However, companies have to roll out software, train employees and carry out test runs to be ready in time. Despite generous deadlines for customs declarations, BDI has therefore called to speed up matters. We also advocate customs procedures on both sides of the border that are as burdenless as possible. New, resource-intensive processes are often an obstacle to market entry, especially for small and medium-sized companies. 

Reducing bureaucracy in an uncertain future 

Beyond the negotiations, the future partnership is to be supplemented by a number of unilateral instruments. Particularly relevant for economic operators are the so-called adequacy decisions in data traffic. The United Kingdom has already stated that it considers the European level of data protection to be comparable with its own legal standards. Conversely, however, there are still difficulties with adequacy: The European Court of Justice still sees difficulties in the concrete design of British investigation laws. An adequacy decision by the European Commission is only realistic if London takes the concerns of Luxembourg into account. If this step is not taken by the end of the year, many companies will have to review their processes for GDPR conformity. This can cost a lot of time and resources, which are currently scarce, partly due to Covid-19. For this reason, BDI is calling for swift action on both sides, so that economic operators can better adjust to the already complicated period after the transition phase.