How Brexit will affect your US business
There are NO current trade agreements between the US and UK. So long as the UK is of the EU, they cannot have separate agreements. On Oct 31, one way or another, the two countries are starting over from scratch.
Quick Review: The Brexit Situation Today
Britain is currently a member of the European Union’s single market. This enables all 28 member states to trade with no border or traffic checks… along with any number of shared regulation and policies that make doing business in the UK simple and smooth.
But it won’t be for long.
By referendum, the UK people voted to leave the European Union. Ever since that 2016 decision, the UK and the European government have been negotiating how goods, services and people will cross the borders between the UK and the rest of Europe.
There are two possible outcomes: a withdrawal agreement or a separation without an agreement (called the hard break or “no-deal” Brexit). One of those two outcomes is set to happen on or before October 31, 2019.
How will Brexit affect my USA-based business?
After October 31, 2019, the UK will have to re-evaluate nearly every aspect of its international trade, including how it handles imports and exports with the USA. Since the USA currently trades with the United Kingdom under EU rules, there will be a scramble for all new policies and procedures.
In particular, companies dealing with partners in the UK will struggle with:
- Transportation logistics
- Patents, copyright, and trademarks
- Transfer of personal data between UK and the rest of the world
- Licenses and relevant qualifications
- Import and export of goods and services to and from the European countries
- Employment of European citizens in the UK and vice versa
- State aid, block exemptions, and grants
How long will it take to adapt to Brexit?
According to a survey conducted by YouGov and Sage, businesses in the UK are bracing for an adjustment period of 15 months. (On the EU side, the estimate was 9 months). Keep in mind that the separation is now just days away, so the adjustment period is sure to be rocky.
If you haven’t already, it is important to start planning and putting in place measures that will help you through the situation.
How will my UK partners be affected by Brexit?
All businesses in the UK – and those American companies dealing with the UK — will be affected by Brexit. For instance:
- Blockages at European ports will affect the flow of goods to and from the UK. Expect delays of up to two days or more for goods leaving the UK. Perhaps even more for good going into the UK.
- Tariffs and duties are likely to change, causing increased costs within the UK for raw materials. If you import finished goods from the UK, expect those costs to be passed along. If you export goods to the UK, your customers may end up paying higher fees (and ordering less!)
- Some of the financial services at the border will be affected.
- The flow of financial and personal data, some of which is protected by the GDRP, may be affected.
- The prices for energy, including gas, and electricity, may increase sharply
- Business travel will slow down as UK customs and immigration services suddenly has to handle visitors from across the EU.
- UK citizens working in other EU countries may lose their healthcare coverage or other rights
What about the General Data Protection Regulation (GDRP)?
The UK independently adopted GDRP as part of the Data Protection Act 2018, so the same protection and requirements will apply even after the UK leaves the European Union. In other words, if you have correctly been implementing the GDRP within your process, your US or UK business won’t have to change how it handles personal data.
If the UK becomes a “favored nation” through an “adequacy decision” on behalf of the European Union, there will be a free transfer of data hence eliminating the need for additional safeguards.
Conclusion
There is no doubt that the process of preparing your business for Brexit continues to get complicated due to the uncertainty of the outcome.
If there is a no-deal Brexit and the UK leaves the European Union as planned, businesses will face their worst fear and encounter painful periods for decades. Even in the best case – a clear agreement for exit – any company dealing with the UK is in for a long period of adjustment.
Guest Author : John Russell is the Managing Partner of Russell & Co, a prominent accountancy practice in Ireland, and Founder of My Start Up. Both companies specialise in startups and small business.
