Brexiteers claim that leaving the EU single market and customs union creates a golden opportunity for the UK to regain power over its international trade. The potential future post-Brexit free-trade agreement that has received the most attention is that between the U.S. and the UK. A U.S.-UK Trade and Investment Working Group was set up in July 2017 to lay the groundwork for a potential future U.S.-UK free-trade agreement after Brexit. Political interest on both sides of the Atlantic was also boosted last week in New York as U.S. President Donald Trump and UK Prime Minister Theresa May reiterated their “mutual desire to form a wide-ranging trade deal.” The U.S. is, however, the more important market with the stronger bargaining power. The UK takes only 3 percent of U.S. exports, while the U.S. accounts for 15 percent of UK exports, as well as roughly 19 percent of the UK’s total imports of services and nearly 22 percent of the UK’s total exports of services.
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Could Brexit Benefit Africa Through Science-based Decisions on GMOs?
Prime Minister Theresa May’s recent visit to Kenya, South Africa and Nigeria was the latest in the United Kingdom’s global diplomacy effort to secure strategic economic partnerships in preparation for the UK leaving the European Union (EU). In the first visit of a UK Prime Minister to Africa since 2013, a 29 person delegation of government and private sector representatives pursued May’s goal of becoming Africa’s biggest foreign investor within four years. As a result of the trip, trade and investment deals worth some 300 million GBP were announced, involving everything from automobile manufacturing and digital money transfer services to insurance and agricultural technology. Importantly, the UK also reached a deal with the Southern African Customs Union and Mozambique to facilitate trade and announced major investments in education and voluntary family planning for the future of African youth.
Trade between the UK and Africa already is worth 31 billion GBP annually. By 2050, a quarter of the world’s consumers will be African. According to the Prime Minister, “With a shared passion for entrepreneurship, technology and innovation, now is the time for UK companies to strengthen their partnerships with Africa to boost jobs and prosperity both at home and overseas.”
According to the African Agricultural Technology Foundation, 233 million Africans are either suffering from hunger or are malnourished; 32 million of these are under the age of five. While Africa’s economy is driven by agriculture, farming continues to be largely at a subsistence level: 80 percent of the 51 million farmers are small holder farmers. Further, 95 percent of all farming in Africa is entirely dependent on rainfall. The challenge under these conditions is to increase food production by 50 to 70 percent by 2050 without destroying the environment. What will be required is a combination of increasingly sophisticated farming techniques (e.g. precision farming), precision breeding; improved stewardship; access to advancements achieved by modern biotechnology to increase drought tolerance, increase yield, and combat plant pests and diseases; and enabling regulatory policies and frameworks. Critical is the fact that more efficient agriculture directly translates into freeing women and children to pursue other economic activities and/or education.
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Preparing for the Worst: Licenses Needed for UK Export of Dual Use Items
It has always been a possibility that the United Kingdom would crash out of the European Union on 30 March 2019 but “no deal” preparation is now highly recommended by both sides. For organisations that export dual use items, the possibility of the UK becoming a “third country” vis-à-vis the EU without an exit agreement or transition period means an overnight need for export licenses where none are required today.
Seasoned international businesses understand that dual use items, which can be used for both civil and military purposes, include far more products than one might assume. In addition to the more obvious goods that may be used to produce or develop military items, such as machine tools and equipment used for chemical manufacturing, computers, drawings, technology, software, raw materials, and components also may be subject to dual use controls. Even seemingly mundane items such as protective clothing used in medical laboratories, certain commonly used chemicals, certain ball bearings, and a wide variety of other products are controlled for export and they need to be properly classified to determine if a license would be needed to ship to a UK that has left the EU. Many entities that have been operating exclusively within the EU could soon be confronted with dual use licensing requirements for the first time and global businesses may be faced with a potentially significant increase in the number of items that need be licensed.
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No Post-Brexit Arrangement on Data Protection Will Affect UK-EU Trade
The European Union (EU) is preparing to treat the United Kingdom (UK) as a third country after its withdrawal from the bloc, commonly known as Brexit. Unless a deal is agreed before 29 March 2019, the UK’s trade with the EU will be heavily impacted by regulatory restrictions, increased costs, and lengthier procedures applicable to the movements of people, goods and services. Less obvious is the impact on trade of the “no deal” scenario from potentially restricted data flows. With only eight months left until Brexit Day, the UK and EU have yet to start talks on a data protection agreement.
Data flows play an increasingly important part in international trade and are estimated to contribute up to 2.8 trillion USD to the world economy. In 2016 alone, EU services reliant on data exported to the UK, such as finance, telecoms and entertainment, were worth approximately 36 billion EUR. Data flows from the UK to the EU constitute as much as three-quarters of all data from the UK. Under the EU’s General Data Protection Regulation (GDPR), however, personal data included in such data flows must be protected. For companies, this can include employee data (e.g. payroll information, biographical information, etc.) and customer data (e.g., contact information, transaction information, biographical information, social media profiles, etc.). Data flows from the EU to a third country are permitted if there is an adequacy decision by the European Commission that the third country’s data protection laws are adequate to meet the objectives of the GDPR or through another adequacy mechanism approved by the European Commission (e.g., EU-approved Binding Corporate Rules, use of Standard Contractual Clauses, etc.).
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BREXIT UPDATE: European Commission Warns Importers and Exporters of Goods with Possible UK Origin
On 4 June, the European Commission advised economic operators to prepare for the consequences of the United Kingdom leaving the European Union on their imports and exports. Following the UK’s withdrawal, UK inputs, including materials and certain processing operations, will no longer be considered EU origin for purposes of enjoying preferential treatment. Whether a particular good qualifies depends on the rules of origin specified in each trade agreement between the EU and its trading partners. The Commission advises EU exporters to treat any UK inputs as “non-originating” when determining the EU’s treatment of their goods post-Brexit and to take appropriate steps to be able to prove the preferential origin of goods without counting UK inputs as EU content. Economic operators importing goods into the EU also are advised to take steps to ensure that the exporter can demonstrate compliance with EU preferential origin rules given the exclusion of UK inputs after Brexit.
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New Customs Rules for a Post-Brexit United Kingdom
March 2019 is coming and importers and exporters need to be prepared for what lies ahead. The UK is leaving not only the EU but its Customs Union. No longer will imports into a distribution center in the EU cover sales in the UK. Companies will need to set up logistics to manage UK imports and exports and be compliant with new UK customs regulations. It is likely that a two year “standstill” or “transition” period will be agreed for the April 2019 to March 2021 period. Should the UK leave the EU without an agreed deal on trade and customs, however, the UK would be a third country vis-à-vis the EU (now typically referred to as the “EU27” denoting the 28 EU Member States minus the UK) and all imports and exports between the UK and the EU bloc would be governed by WTO rules.
According to the British Retailers Consortium, with Brexit more than 180,000 companies could be required to make customs declarations for the first time and the UK is expecting more than 200 million additional customs declarations annually. The most significant impact is feared for goods that are transported by road between the UK and the EU27 due to the lack of infrastructure at port facilities to handle queues of trucks on both sides of the Channel. The Republic of Ireland faces significant obstacles given its use of the UK as a land-bridge to the EU single market. While it is unimaginable that a solution will not be found, without an open skies agreement between the UK and the EU27, airplanes carrying everything from people to post, packages and time-sensitive goods will not be able to fly.
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Food Standard Controversies Looms Large in Potential U.S.–UK Trade Deal
With Brexit on the horizon, UK representatives are reinvigorating relationships with key trading partners on every continent. On 24 July, UK International Trade Secretary Liam Fox and U.S. Trade Representative Robert Lighthizer and U.S. Commerce Secretary Wilbur Ross launched a Trade and Investment Working Group to lay the groundwork for a trade deal to be negotiated after the UK exits the EU. Fox reportedly arrived in Washington with a list of “confidence building” measures outside the EU’s purview that could be undertaken without violating the prohibition on negotiations with third countries while still an EU Member State. Initial talks are said to focus on “commercial continuity” and increasing bilateral trade.
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Breggsit: Soft or Hard Boiled?
The basics are well-known: having triggered Article 50 to terminate its membership in the European Union, the United Kingdom has a precious 18 months to get a deal done. Unless every one of the 27 other Member States approve an extension of time, the UK will be a so-called “third country” vis-à-vis the EU on 30 March 2019. The UK Government, under the leadership of Prime Minister Theresa May, has proposed a “hard Brexit” that enables the EU to conclude trade agreements with other countries in what has become known as the “Global Britain” approach. Aspirations aside, the deal to be negotiated between the EU and the UK can range from virtually no change to the status quo for years to come to a quick and risky departure that greatly increases the pressure on the UK to negotiate favorable trade agreements with the EU and other trading partners.
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