Confederation of Industry met with the EC over hard Brexit

At the beginning of February, the Confederation of Industry of the Czech Republic met with representatives of the Secretariat General of the European Commission to discuss selected aspects of immediate effects of a no-deal Brexit, which is not off the table yet.

When (or if) there will be no withdrawal agreement between the UK and the EU setting up a transition period for orderly preparation for the shrunk single market, there is nothing better for the business to do in this respect than to prepare for a no-deal Brexit on March 29, 2019. The Confederation of Industry therefore welcomed the opportunity to discuss with Ms Céline Gauer, Deputy Secretary General of the EC, with Mr Stefan Fuehring, Deputy HoU for Internal Market and Sectorial Policies, and with other members of the EC Brexit contingency unit the application of new rules in the area of tariffs, taxes and regulatory cooperation.

In the case of hard Brexit the UK will become - as of March 30,2019 - a “third country”, and as it was confirmed to our Confederation by the EC, the customs and VAT procedures will apply immediately after goods reach the EU border. The date of contract or the shipping date will be irrelevant in this respect starting from March 30, 2019 at 00:01 o’clock!

In case of regulatory cooperation, e.g. the valid certification of industrial goods, the decisive moment will be the date of placing the goods on the EU market, i.e. the date of the first commercial transaction selling it to someone else. If, for instance, a British company exports goods to the Czech Republic with a UK certificate, it can only do so if the goods are sold to its Czech business partner on March 29, 2019 at the latest. For goods to be sold after this date a new certificate issued by a notification body within the EU will be needed.

In addition, it has to be kept in mind, that after the withdrawal date it will be no more relevant in this respect if the UK continues to comply with the same certification criteria as the EU, or not. As soon as the UK stops being a part of the EU, certificates issued in the UK will be no longer valid in the EU at all. Further cooperation in this area will only serve for purely information purposes between the EU member states and the UK.

As the EC representatives stressed, the proposed withdrawal agreement not even includes a grandfather clause for current certificates. Therefore, unless a future FTA between the EU and the UK introduces this “grandfathering” principle, the post-Brexit situation will persist even after 2020 (or 2022 at the latest).

The Confederation of Industry of the Czech Republic therefore recommends to its members in possession of certificates issued by UK authorities to get new certificates for their goods meant for the EU Internal Market as soon as possible from a body located elsewhere in the EU. The only chance that this will not be needed - now or in near future - is if the UK decides to stay in the EU in the end which is rather unlikely.

This highly informative discussion with EC was kindly organized by the Czech Ministry of Industry and Trade within their premises.

The European roof confederation BusinessEurope is already dealing with issues related to future post-Brexit trade agreement between the UK and the EU. It is, however, reiterating that at the moment the most important task is to approve the withdrawal agreement assuring the transitional period for orderly Brexit preparations. With time passing by the risk of hard Brexit is increasing. The second vote in Westminster on the UK agreement with the EU was originally planned for February 14, however, as it has been hinted today there is a high probability of postponing it until the week commencing February 25, given the current state of re-negotiations with the European Commission. This meaning the second vote might well take place only one month before the actual withdrawal date. The Confederation of Industry will be following this topic on for you closely and will continue bringing significant information relevant for your business.