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Customs &
Trade News

August 2, 2018

Post-Brexit trade with the United Kingdom: nothing definite yet

The United Kingdom (UK) will withdraw from the European Union (EU) on March 29, 2019 at 11 p.m. and although the "Brexit" is only eight months away, the UK government has not come to an agreement with the EU on border, customs and trade issues.

The British government issued a proposal that would keep the UK within the EU for customs purposes, while being out for everything else. This would allow British, European and international traders to keep business going without having to change any customs issues, and would allow Britain to keep, if only temporarily, the benefits of EU trade agreements such as the Canada-EU free trade agreement (CETA). Opposition to this option is high within the ruling Conservative party, and it finds little support within the continental EU.

Other proposals, for a "hard" Brexit, would have the UK be totally out of the Union at the end of the day on March 29, with full border and customs implementation on both sides coming into effect. This would also exclude the UK from the benefits of EU trade agreements such as CETA.

The current uncertainty is starting to affect trade with Europe, as the UK is linked to the continent in ways that are often similar to Canada-U.S. business links. Several European manufacturers have begun to avoid including British components in their finished goods so as not to risk being denied benefits when exported to EU trade agreement partners. Equally unsettling, any regular trade or outstanding orders of merchandise may become dutiable on March 30, on both sides.

The uncertainty also affects Canadian importers and exporters. The Canadian government has issued an official Canada Gazette notice to explain its position on the issue.

The notice says: "Should the European Union and the United Kingdom not reach an agreement on their future relationship in time for Brexit, the Government of Canada is discussing a transitional agreement with the United Kingdom that will allow a seamless transition of CETA, while respecting the United Kingdom's lack of jurisdiction to negotiate free trade agreements while it is a Member State of the European Union."

"Post-Brexit, once the United Kingdom has the legal competence to negotiate trade agreements, Canada will work with the United Kingdom to ensure we take full advantage of our particular bilateral trade relationship."

For now the uncertainty remains as no agreement is currently in sight between the UK government and the EU.


Transport &
Trade News