Chequers, Brexit & The Long Awaited White Paper; How Will The UK Trade Overseas After Leaving The EU?

Even by Brexit standards, it has been a tumultuous week for UK politics. A much-publicised meeting at Chequers took place over the weekend to discuss the White Paper that Theresa May has spent the past 2 years preparing, describing under what specific terms exactly the UK will complete its divorce from the European Union. The discussions resulted in the resignations of Boris Johnson and David Davis, 2 key “Leave” campaigners who helped swing the referendum in favour of Brexit. The White Paper has continued to attract outspoken criticism from both hardline Brexiteers like Jacob Rees Mogg and Iain Duncan Smith, the opposition Labour party, and the EU itself.

It has been a difficult start for Dominic Raab, the new Brexit secretary, but looking beyond the chaos, we feel it is more than worthwhile to review the White Paper in detail and try to understand what the implications are, starting from an international trade perspective. There is, after all, much to be learned from this 108 page document, some of which has even met with approval from a majority of stakeholders!

This week we will look at different aspects of the paper with a particular emphasis on what it means for international trade. How the UK trades with both the EU and the rest of the world when Britain officially leaves the EU on 29th May 2019 will be key to re-establishing the country’s position on the world stage.

From a currency perspective, the Brexit effect has been nothing short of disastrous, with the pound dropping nearly 30% against the euro and the dollar after the referendum on 23rd June 2016. There is no sign of sterling paring back those losses any time soon, it seems. All the more reason for always looking to get the best deal when you are making transfers of money overseas. Using The Money Cloud to discover the best rates offered by leading brokers and money transfer agencies could save you as much as 80% on fees, per transaction. It’s easy to use and guarantees you get all the facts before making a decision that can save you a substantial sum.

In her foreword to the white paper, Theresa May sums up precisely what the government’s proposed version of Brexit means in real terms: “leaving the Single Market and the Customs Union, ending free movement and the jurisdiction of the European Court of Justice in this country, leaving the Common Agricultural Policy and the Common Fisheries Policy, and ending the days of sending vast sums of money to the EU every year.

It is an uncompromising opening that suggests there is no turning back, it seems. How can SMEs trading overseas best prepare for the new reality?

The New (Proposed) Trading Realities

The White Paper makes it very clear that post Brexit, the UK’s relationship with the EU will not be treated like any other relationship between the country and a foreign country. The paper talks about a “new relationship that works for both the UK and the EU”, and one that “reflects the UK’s and the EU’s deep history, close ties, and unique starting point.”

Economically, the UK says that it is determined to grant “frictionless access at the border to each other’s markets for goods”, through the establishment of a “free trade area for goods”.

The UK recognises that it is absolutely vital to its international trade prospects to “protect the uniquely integrated supply chains and ‘just-in-time’ processes that currently exist and have done so for more than 40 years”. This means avoiding unnecessary and expensive extra border checks and customs declarations. The UK wants to try to ensure that only one set of checks will be necessary when sending goods overseas, especially where the border between Northern Ireland and Ireland is concerned.

Extra checks would seriously harm the internal market of the UK, but leaving the single market does create the possibility of a “hard border”. The government has therefore promised that it will seek to avoid a hard border, but in a way that “fully respects the integrity of the EU’s Single Market, Customs Union, and its rules-based framework.

In short, the government wants to make it as straightforward as possible for UK based SMEs to do business and trade within the EU, whilst acknowledging that, in the short term at least, regulations and checks are likely to become more complex.

The UK is particularly keen to protect its digital and services industries, describing them as the “areas that matter most” for the economy. The UK wants to make sure that all companies, whether in the EU or UK, are competing on a level playing field and that trading conditions are “open and fair”.

Nine Points To Secure The Right Kind Of Economic Partnership

As such, the White Paper proposes a nine point “economic partnership” that breaks down as follows:

  • A common rulebook to provide for frictionless trade at the border, including ongoing harmonisation with the relevant EU rules, legislated for by parliament.
  • Accepting the rules and contributing to the costs of agencies covering goods in highly regulated sectors such as the European Chemicals Agency, the European Aviation Safety Agency, and the European Medicines Agency – as a non-EU member state.
  • A Facilitated Customs Arrangement that would remove the need for customs checks and controls between the UK and the EU, but give the UK the right to control its own tariffs for trade with the rest of the world.
  • No tariffs on any goods exchanged between the EU and UK – helping to safeguard jobs and livelihoods.
  • Regulatory freedom for the UK’s services and digital industries – and a recognition that, post-Brexit, “the UK and the EU will not have current levels of access to each other’s markets.”
  • New economic and regulatory agreements for financial services, “respecting the right of the UK and the EU to control access to their own markets” without replicating the current “passporting” regulations which allow UK based financial services companies to offer their services EU-wide without being subjected to additional regulation.
  • Continued cooperation on energy and transport. Preserving the Single Electricity Market in Northern Ireland and Ireland
  • A new framework to determine how the UK controls its borders and allows UK and EU citizens to travel to each other’s countries, and provide professional services.
  • Binding provisions that guarantee an open and fair trading environment, maintaining close regulations between competition regulators, environment and employment regulators.

Starting tomorrow, we will look at how the UK is proposing to maintain its close trading ties to the EU, whilst also maintaining a broad and ambitious independent trade policy with the rest of the world.

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