Business finance specialist Rangewell, has published a blog post that seeks to clarify how SMEs will be impacted by the Brexit deal.
Agreed upon last week, the UK government is calling the deal a big win for the UK’s sovereignty.
Nic Conner, Rangewell’s Research Consultant said it will be a heavy lift for the UK’s 6 million-plus SMEs to fully comprehend the impact of the 1246 page document. Rangewell has attempted to bring it down to a more ingestible size. Notably, Connor supported the Vote Leave movement and says he has worked closely with several individuals engaged in the Brexit negotiations.
“Neither the hardcore no-dealers nor the uber-remainers are going to be happy with this deal but the truth be told, it’s not a bad deal at all, in fact, it’s quite a good deal for British businesses. By reading the agreement you can see the negotiation lines and the compromises play out on the pages. On one side of the table, you had the UK pushing to maximise the benefits of being outside of the EU. While on the other side the EU wanted to ensure the UK does not undermine the EU zone. The result being the UK granted to sell in the EU without extra charge on goods and services in exchange that the UK does not undercut the EU. There is a deal for services in the agreement, which is in contrast to the fake news being shared by some that it was left out. The agreement provides a significant level of cooperation on the trade in services, going far beyond the baseline of the WTO’s rules. It is important to note that negotiations for financial services are ongoing. The UK and EU have stated that they aim to have an agreement on the framework for regulatory cooperation on financial services by March 2021. The negotiations will mainly cover the question over equivalence on financial services. Until then, the UK and EU have got themselves in a MAD (mutually assured destruction) position where the UK’s equivalence decisions will be adopted in the UK’s interest and similarly, the EU will consider equivalence when they are in the EU’s interest”.
Below is Rangewell’s summary of key points of the Brexit deal.
Trade in Goods.
- Zero-for-zero tariff argument. This means if you buy or sell goods to the EU, there won’t be a new, additional charge added in January.
- A number of situations in the agreement to turn off zero tariffs and a few clues which will see them progressively introduced.
- New ‘Rules of Origin’ for exporters on the components and/or materials in products – could be an extra charge if a component is made outside the UK or EU.
- The UK and EU will become two separate regulatory and legal areas. This means that all there will be different regulations and rules on products.
- Be prepared for paperwork when exporting to the EU which may ask for details of the origins on all of the components used in a product.
- All goods imported into the EU from the UK will be subject to regulatory checks.
- Prepare for slight delays on goods being shipped when the system is first introduced.
- If you already export to the EU, you may be eligible for “trusted trader” status.
- If a bottleneck emerges in trade (delays at Dover for instance), then the UK and the EU are able to quickly amend rules for customs processes.
- Product standards and technical regulations based on the same international references.
- This includes the continued use of self-certification of conformity by the manufacturer where it is currently applied in both the EU and the UK.
- Agreement to stop any unjustified barriers to trade.
- Commitment to continue an open, secure and trustworthy online environment for businesses.
- Maintain high standards of personal data protection.
- No requirement for UK data to be stored or processed within the EU.
- UK/EU will continue to cooperate alongside other nations at multiple levels to ensure the highest possible protection.
Trade in Services
- There is a deal for services in the agreement including for financial services.
- The agreement provides a significant level of cooperation on the trade in services, going far beyond the baseline of the WTO’s rules.
- As of 1st January, UK service suppliers will lose their automatic right to offer services across the EU.
- Service businesses that operate in the EU may need to establish an entity in the EU to continue to operate.
- Firms will no longer be able to operate the ‘passporting’ concept.
- In the deal, a non-discrimination clause was agreed in order to ensure that service suppliers or investors from the UK will be treated no less favourably than EU firms within the EU.
- There is a review clause encouraging the EU and UK to consider whether there are possibilities to improve trade of non-financial services in the future.
- The actual level of market access for UK firms will depend on the way the service is supplied and whether it is supplied on a cross-border basis.
- United Kingdom professionals will need to have their qualifications recognised by the relevant Member State to supply those services in the relevant Nations.
- The agreement foresees a mechanism whereby the UK and the EU may later agree on specific professions to have mutual recognition of certain professional qualifications.
- Negotiations continue for financial services, with the aim to be finalised by March 2021. They will mainly cover the question over equivalence on financial services.
- Until the new agreement, the UK’s equivalence decisions will be adopted in the UK’s interest and the EU will consider equivalence when they are in the EU’s interest.
Public Sector Contacts
- UK & EU companies will be able to participate on an equal footing in bids for procurement tenders covered by the agreement.
- The Agreement further provides for non-discrimination of UK/EU companies for small-value procurement.
Intellectual Property Rights
- The agreement enhanced standards in copyright.
- Collective management of rights and rights such as the resale right for visual works, which are not covered by international conventions, are covered.
- Trademarks, design rights, patents, the protection of trade secrets, plant variety rights and the enforcement of intellectual property rights have enhanced standards.
- All EU geographical indications already registered in the EU by the end of December 2020 will be protected in the United Kingdom.
- Future geographical indications the EU may want to protect will have to be agreed with the UK at the time and won’t be automatically applied.
New Rules for EU Workers and Traveling to the EU for Work
- EU/UK nationals will still have short-term visa-free access of up to 90 days within a 180-day period.
- For longer stays in the EU, you have to follow individual nations’ immigration rules.
- The UK created the EU Settlement Scheme to continue living in the UK after 30 June 2021. The deadline for applying is 30th June 2021. You must have started living in the UK by 31 December 2020.
- Intra-corporate transferees who need to work in the EU can continue to do so but the maximum duration of such transfers is now capped at three years.