100 days on

Brexit news, reflections, options, and the customs union

What is the state of things – and minds – in the UK three months after the Brexit vote? News, possible scenarios, the relevance of the customs union and what the business community is up to.

Where do we stand at over three months after the vote to leave the EU? It’s high time for an update, an insight into the state of things – and minds – here in the UK. Let’s take a look at some recent media headlines to start with. There is an abundance to choose from, of course. And our friends around the world keep the topic in the news, too. So, just a few glimpses at some local media updates – with focus on global trade, as usual.

Four headlines around trade without the customs union

  1. Boris Johnson wants ‘jumbo’ Turkish trade deal – as published by the BBC 27th September 2016. The article refers to the Foreign Secretary’s recent visit to Ankara and his discussion with Turkish Foreign Minister Mevlut Cavusoglu. It says that the UK will be able to negotiate its own trade deals with other countries once it leaves the EU and its customs union, and that it will look forward to a “new partnership” with Turkey as one of its key trading partners.
  2. Liam Fox signals Britain will leave the single market in ‘hard Brexit’ – as posted by the Telegraph on 29th September 2016. The article says it is the strongest hint thus far by the UK’s International Trade Secretary that the government will prioritise border controls over membership of the single market and its customs union after leaving the EU. Instead, Britain is expected to pursue a deal which will “maximise access” to the single market while retaining the ability to make free trade deals.
  3. Brexit minister says wants ‘freest possible’ trade with EU – as reported by Reuters on 2nd October 2016. The article cites the Secretary of State for Exiting the European Union, David Davis, saying that Britain will seek to maintain the freest possible trade terms with the EU in its exit negotiations, while taking control of the country’s own affairs. This statement was made at the Conservative government’s annual conference that took place from 2nd to 5th October.
  4. Brexit is being handled by ‘three blind mice’ who are staggeringly naive, says former Tory minister– as published by the Independent on 3rd October 2016. The article quotes a former conservative minister and cites Nick Herbert, former leader of the Remain campaign, who voices strong criticism of the three Cabinet ministers navigating the UK through the Brexit process despite being in general agreement with the UK’s vote to leave the EU.

As I said, just a glimpse. Please bear in mind that we are in the “political conference season” at the moment. The Labour party’s annual conference takes place in autumn each year and the Conservative’s annual conference has also just taken place last week. Official messages were long-awaited by the public as well as voters on either side, and as usual, statements are confusing at times and the media is having a field day with it.

Busy business bees

Some of the current headlines feed public uncertainty all over again, but generally, as I said, we are looking forward and carrying on. We now have a date to focus on, too: Prime Minister Theresa May announced last week that negotiations to leave the EU would begin by the end of March 2017.

I have spoken to some businesses that are keeping a close eye on what is happening but are not actively doing anything. And I have spoken to others that are already mapping out their what-if scenarios so they are ready to react. Of course when I speak to individuals, I always get their personal opinions and these are as diverse as they were in the lead up to the referendum vote.

Slightly less dominant in the media headlines, especially on an international level, is the active engagement taking place within the business community. There are many conferences and work groups on the topic, and businesses across sectors and trade are coming together to discuss options for the way forward.

In fact, AEB is leading such a discussion round tomorrow. We’re hosting the event “Brexit – global trade compliance and export controls in dynamic markets” in partnership with the Chartered Institute of Logistics and Transport, CILT(UK). It’s the 7th time we’re coming together in autumn for this annual compliance conference and this year’s event generated more interest than ever before.

The topic is on everyone’s mind – how upcoming changes will impact our own global trade and business processes. AEB’s annual conference always includes an expert panel discussion and a business workshop. I promise to share all relevant findings with you here – as I did last year. You can find our delegates’ 2015 feedback on current and future risk management challenges here.

In the summer edition of our monthly, international newsletter, we featured a short article about four existing economic models that could serve as examples for the UK to develop its own, future model. It is not clear at this point whether the UK will base upcoming negotiations on any of these models. Following recent media reports, it seems that priority may be given to controlling the movement of people rather than access to the single market. But, of course, we will not know for sure until official negotiations start.

Let’s remind ourselves of current scenarios that other countries outside of the EU operate under with the examples Norway, Switzerland, Turkey, and Bangladesh:

  • The Norway scenario: the Norwegians have full access to the single market for goods and services and can move capital into and out of the EU without restrictions. As part of the agreement, they grant free movement to workers from the EU and make significant contributions to the EU budget. They negotiate their own free trade agreements with non-EU countries.
  • The Switzerland scenario: the Swiss have negotiated 120 bilateral agreements with the EU on various issues, affording them broad yet limited access to the single market, excluding, for example, the financial services sector. Switzerland also negotiates its free trade agreements with non-EU countries individually, contributes to the EU budget, and allows the free movement of workers.
  • The Turkey scenario: no free movement of workers, no contributions to the EU budget. The EU and Turkey can share all goods duty-free – except coal, steel, and agricultural products – under the A.TR. movement certificate. Turkey has not yet gained access to the EU single market for services.
  • The Bangladesh scenario: this serves as example for a country operating under no other special trade agreements than those applicable under general WTO rules. This would apply to the UK if no agreements with its global trading partners were in place by the time current agreements as EU member state would cease to apply. WTO members do have access to simplified customs procedures, but current estimates still indicate a significant rise in customs duties if this scenario would come to pass, which is not expected at this point.

Looking ahead

What I find most important throughout all of this is exchanging. Staying in discussions and dialogue within – and beyond – our own networks. With customers and partners, with government representatives and industry associations, with staff and teams, with family and friends. Staying calm, looking forward, thinking constructive – and outside the box.

I very much look forward to coming together with supply chain and global trade professionals at our conference tomorrow. I look forward to the insights from experts, discussions on possible options, and personal views that industry executives will share.

As promised, I will ensure to make all approved results that can add value to your business available to you in my next post. Stay tuned, and let me know if you have any questions or comments. I look forward to hearing from you on LinkedIn.

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