Brexit: Here’s what UK marketplace sellers should watch out for in 2020
2020 is now in full swing. The UK marketplace sellers and those selling into the UK market have intensely been wondering how the wheels of politics will spin over Brexit these upcoming months. And more importantly, what does 2020 and beyond have in store for online sales and their businesses in particular.
‘Get Brexit done’ was the slogan that brought the Conservatives a landslide win in the general elections, December last year. In line with that promise, Boris Johnson has pledged to complete Brexit by the end of 2020. That’s why we’ve prepared an article that provides you some insights, and a bit of guidance in the maze of deadlines, transition periods, withdrawal agreements and Brexit scenarios.
This article will give you an overview and insights on these topics:
- How marketplace sellers prepare their business for Brexit?
- Will anything change after 31st January 2020?
- What are the Brexit dates to watch out for?
- The Withdrawal Agreement and the tariffs for Northern Ireland
How can online sellers prepare for Brexit?
Naturally, Webinterpret will be updating you as the Brexit process progresses and the situation evolves, especially in terms of the future relationship between the UK and the block becomes clearer. However, regardless of the outcome marketplace sellers can start to prepare their business, so they can best manage the changes.
Harnessing the current volatility and taking a proactive approach to plans for the future is the most sensible option for the growth-minded online marketplace sellers.
That’s why we have put together a guidebook that describes potential opportunities and challenges after 31st December 2020.
In brief, marketplace sellers should consider Brexit preparations in these business areas:
- Delivery and returns to EU customers
- Delivery and returns to the Northern Ireland customers
- Importing stock from EU providers
- Possible currency fluctuations
The good news is …
Nothing will change for the UK online sellers selling to the EU, on the 1st of February 2020.
Yes, the country in its entirety (England, Wales, Scotland and Northern Ireland ), will be officially leaving the EU on the 31st of January. However, the beginning of February only marks the start of the official transition period. This time will allow both the UK and the EU to trade and operate on current terms. It will also be an opportunity to find and negotiate a future relationship and a trade deal, effective from 31st December 2020.
During the transition period, the UK effectively remains in the EU’s customs union and the single market. It also agrees to continue to abide by the EU’s laws and regulations, as well as to be subject to the rulings of European courts. The country will not, however, be represented in the block’s political institutions. There won’t be any British members of the European Parliament either.
For more information on how Brexit can impact your ecommerce business, download our comprehensive guidebook: Impact of Brexit on international ecommerce.
The Withdrawal Agreement
Eight days after a spectacular win in the parliamentary elections, the Conservatives won the vote in the House of Commons (with 358 to 234), over the Withdrawal Agreement Bill. The Bill has undergone further scrutiny and the cleared final parliamentary hurdle. Week commencing the 27th of January it will be sent to the European Parliament for approval.
The Withdrawal Agreement is, in fact, a renegotiated version of Theresa May’s Deal, in which Boris Johnson has successfully managed to replace the ‘Irish backstop’ with new customs arrangements.
In contrast to the previous agreement, the new deal allows the UK to negotiate, sign and implement trade agreements with countries and organizations around the world.
Northern Ireland and the EU tariffs
Nevertheless, the revised deal does not come without a downside. It technically creates a customs and regulatory border, between Northern Ireland and Great Britain. Meaning that the goods entering Northern Ireland from the rest of the UK could be subject to EU tariffs (taxes) and border checks. These would be, however, refunded if these goods remain in Northern Ireland and wouldn’t be moved, for instance, to the Republic of Ireland or other parts of the EU.
The rest of the Withdrawal Agreement remains largely unchanged from the one negotiated by Theresa May. It lays out, for example, the rights of the British citizens in the EU, and the EU citizens in the UK too. It also specifies how much money the UK is to pay the EU.
Brexit dates to watch out for
Undoubtedly, this year will see some intensified talks, lobbying and speculations about the future trade deal and the UK relationship with the block. Different political parties, but also business, like marketplace sellers will have their various views on what would be the ideal scenarios for the economy, for them, their families and the generations to come. There is also a Ping Pong of amendments, claims, and conditions between the UK and the EU to be expected. Regardless of which direction the ‘divorce process’ will take, there are some key dates that have been set out in the Withdrawal Agreement, dates the online sellers selling both from and to the UK should watch out for.
31st January 2020: The UK enters the Transition Period
This is the date the UK is set to officially leave the block and enter the transition period, lasting until the 31st December 2020. It is also the time when the talks about the future relationship and lobbying for the best possible trade deal will surely intensify. Since the Conservatives won the general elections with an overwhelming majority, experts claim that there will be no more talks of a ‘Second’ or ‘Confirmatory Referendum’. Much to the discontent of a large proportion of UK citizens who voted ‘Remain’, there is also nothing or no party that would stand in the way of delivering Brexit.
In his recent BBC interview, Boris Johnson claimed he is ‘very, very, very confident’ that the UK will secure a comprehensive agreement with the block by the end of 2020. He has also stated that the bare bones of the future agreement should ideally be presented by June. The UK has three possible scenarios in this respect:
Scenario 1: A comprehensive deal with the EU
The first scenario involves a comprehensive deal with the EU. An agreement that covers all ins and outs, including the tariffs, access to the single market, immigration, judiciary, etc. An extensive agreement like this could potentially take years to negotiate, let alone implement.
Scenario 2: A stripped-down agreement with the block
A stripped-down version of the agreement that covers purely the basics of the relationship between the UK and the EU, like the trade terms, access to the single market, or movement of people or products.
Scenario 3: A No-Deal Brexit
A scenario that both parties are inclined to avoid; ‘A No-Deal Brexit’. Meaning, on the 31st December 2020 the UK leaves the EU with no agreement about the future relationship. The initial trade is conducted on the terms set by the World Trade Organization (WTO), the world’s largest economic organization that affiliates over 162 member countries worldwide.
A no-deal scenario would also mean that EU taxes, known as tariffs, would be applicable to most goods sent by the UK businesses to the block. Those businesses would also lose today’s guaranteed access to the EU single market.
30th of June 2020: The Last call for Extension to the Transition Period
The last day of June is the next key date in the ‘Brexit process’. It is the last chance for the UK to request a transition period extension. The extension, if approved by all of the remaining 27 EU members, could be granted for one or two years. However, Boris Johnson has already hinted that he is ruling out any form of an extension to the currently set out transition period.
31st December 2020: The Transition Period comes to an end
The last day of the year marks the end of the transition period, should no extension be requested by the UK. After that point, the UK would have officially left the EU and the only way to rejoin would be to enter the formal application process and satisfy the conditions laid out in Article 49 of the Lisbon Treaty. It would also preferably move to trade with the EU on the basis of a negotiated Trade Agreement, or on the WTO terms if such agreement couldn’t have been reached or hasn’t been achieved on time – a ‘No-Deal Brexit’ scenario.
As the old saying goes: ‘It’s easier said than done’. ‘Get Brexit done’ might have been a winning slogan for the Conservatives in the last general elections, but it doesn’t necessarily mean that the ‘divorce process’ will end on the 31st of January 2020. It might well only start on that day.
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