Brexit and businesses – No-deal withdrawal
For business activities, a no-deal Brexit would mean that trade with the UK would constitute ‘third country’ trade rather than trade within the single market. A no-deal Brexit would affect for instance companies that engage in trade with the UK or whose products and services use content produced in the UK, or Finnish companies with production in the UK.
Each Ministry is responsible for communicating about the preparedness measures that concern its administrative branch. When it comes to trade and business activities, a significant portion of the preparedness measures fall under the administrative branches of Ministries other than the Ministry for Foreign Affairs. Overall coordination is the responsibility of the Prime Minister’s Office.
The responsibilities of the Ministry for Foreign Affairs include trade policy legislation and international trade agreements. The most important changes in the event of a no-deal Brexit are described below.
EU's free trade agreements no longer apply to the UK
The EU has around forty free trade agreements covering approximately 70 countries worldwide. Some of the agreements apply mainly to tariff reductions on goods. Some agreements are comprehensive. They are used to create rules and to facilitate trade in a number of fields covering various sectors, including trade in goods, trade in services, public procurements, or protection of intellectual property.
In the event of a no-deal Brexit, the United Kingdom will cease to be a party to the EU’s trade agreements. A no deal scenario could mean, for example, that
- Finnish companies with production in the UK would no more benefit from the Union’s free trade agreements (from zero tariffs, for instance).
- Finnish companies whose products include components manufactured in the UK, for example, cannot state that the products are manufactured in the UK. Because of the rules of origin included in the agreements, these products will no longer be entitled to zero tariffs in the partner countries.
An ex-post notification of exports to the UK of dual-use items must be provided separately
For dual-use items, exports to the UK will become subject to export control under the ‘general export licence’. Companies must report the export of dual-use items to the United Kingdom within 30 days of the export.
The European Union’s trade policy can be applicable in the UK, too
The Union’s trade policy legislation and legislative measures apply only to third countries, not to EU Member States. In the no-deal Brexit scenario, it is possible that the UK will be a target of trade policy actions. Products imported from the UK may be subject to EU import protection measures. In practice, this could mean higher tariffs for certain products, for instance.
How can businesses prepare for Brexit?
Key considerations for businesses in a no-deal Brexit include:
Obligations in supply chains: Businesses have various obligations by law that are related to the position of the company in the supply chain (e.g. manufacturer, importer, wholesaler, etc.). These obligations may change.
Certificates, licences and authorisations: Authorisations issued in the UK will not necessarily be valid after Brexit. It may be necessary to apply for entirely new certificates, licences or authorisations, or to exchange them for ones granted in the EU.
Customs, value-added taxes and excise duties: Post-Brexit, trading with the UK will change considerably. Businesses should familiarise themselves with the EU procedures and rules for trading with third countries.
Rules of origin: Post-Brexit, companies will no longer be able to count on UK-produced inputs being EU-internal. The EU’s free trade agreements would not be applicable to the UK or to content produced in the UK. Products from the UK will have to be treated as a ‘non-originating’ production inputs.
Import and export prohibitions: There will be restrictions at EU borders on the import and export of certain products from and to third countries. Post-Brexit, these rules will apply to goods imported from and exported to the UK.
Transfer of personal data: Businesses must prepare for the possibility that, post-Brexit, terms concerning the transfer of personal data to the UK could change.