Contingency Planning for Brexit

Contingency planning for

ISME has been issuing warnings about Brexit preparation for so long now that it’s probably becoming a bore! But, nonetheless, it is important for you to continue contingency planning for what might happen. We urge you not to be complacent. There is simply too much political volatility for anyone to make assumptions about what will happen in 2019.

The most obvious issue arising for goods is that of tariffs. T ariffs wi ll ad d co st an d ad ministration, but 80 per cent of goods currently traded across the border have a tariff < 10 p er c ent. O f o ur current trade with NI, 30 per cent would not be affected by WTO tariffs at all. If you want to check out the tariff status of goods you trade, contact InterTradeIreland here, who provide great support to SMEs for Brexit.

VAT is arguably a more serious issue for most traders, since, even though it is recoverable, it will have an immediate cash flow impact at point of import. Even if the UK follows a European Free Trade Association/European Economic Area or Turkish model of EU relations (which they have so far ruled out), import VAT liability arises. Start planning for that now, if it applies to your business.

However, it is so-called ‘non-tariff b arriers’ t hat w ill likely have a greater effect for most businesses, and in ways that may be very difficult to predict. These can be technical measures, such as sanitary and phyto-sanitary measures for food, or non-technical ‘Rules of Origin.’

TRANSPORT There are also many other areas of business that could be affected. Services are freely traded within the EU, but would not be covered if the UK became a third country. This would particularly impact road, rail, and air transport services.

Brexit could mean the end of the mutual recognition of driving licences, vehicles, registration documents, and certificates o f p rofessional c ompetence f or drivers.

British carriers, including EasyJet, International Airlines Group (which includes British Airways), Flybe, Jet2 and Virgin Atlantic will have curtailed rights travelling in and out of EU Member States.

The EU currently requires that train drivers hold specific licences and certifications. Those issued by the UK will no longer be valid in the European Union after the withdrawal date, potentially impacting cross-border rail services.

UK seafarer certificates w ill n o l onger b e automatically recognised by the EU-26. This may have an impact on seafarers working on ships transiting the Irish Sea.

DATA PROTECTION AND INTELLECTUAL PROPERTY Regarding data protection, the EU rules for transfer of personal data to a third country will apply to the UK. If the UK decides to diverge from the protections provided in the GDPR regulations, this will be highly impactful for the delivery of services, particularly financial and insurance services, in Ireland.

Enforcement of intellectual property rights might no longer apply to the UK. This could mean that complaints regarding IP breaches would no longer be entertained in the UK.

INTERNATIONAL LAW A big area that will be impacted by Brexit is private international law. This could have possible consequences in the areas of family law, adoption, custody, divorce and access to children. If the UK totally withdraws itself from the EU, and ECJ jurisdiction, it will remove itself from the ‘norm’ of reciprocity. Under current rules, when a person is divorced in the UK, that divorcee is entitled to automatic recognition in Germany or Ireland. Company law could be similarly affected. UK companies may lose their limited liability status. This would have significant implications for shareholders if a third party were to sue.

In summary, whole areas of business will be affected by Brexit in non-economic ways, which are very difficult to predict. More than 40 years of custom, practice and cross-border mutual recognition are threatened in ways we simply cannot quantify. If you want to delve deeper into the administrative, regulatory and legal areas threatened by Brexit, you can check the list of Brexit Preparedness Notices compiled by the EU Commission here.

Act now!