How Brexit may affect supply chains
Supply chains during the first months after Brexit day are predicted to become unreliable. If the UK government does not manage to have a deal with the EU, it may affect the production and the stock of goods. This was stated by James Hookham, deputy chief executive of the UK Freight Transport Association (FTA), a member the European Shippers’ Council. Giving an interview to Politico, he stressed that FTA is advising businesses “to make sure they are fully stocked up” for this period.
Businesses have been calling for clarity on how a new customs system will look like after the UK leaving the customs union, as the UK indicated they are planning to do so eventually. In August, the UK government published a Brexit negotiating position paper on provisional customs arrangements with the EU. “A temporary customs union” for up to 3 years is the core of this proposal. It would allow for a better preparation for a long-term settlement within a new UK-EU free trade agreement. If the EU and the UK do not agree on the transition deal, the UK would have to operate under the World Trade Organisation rules. This would mean going through customs checks and tariffs on goods. This will certainly create a lot of disruptions in the supply chain.
FTA had engaged with UK officials on Brexit. But so far, the trading sector priorities have not been sufficiently taken into account. 2 years is a very short period to prepare, and ESC is calling for the Brexit negotiators to take on board the knowledge of trade associations and supply chain partners to make sure there is a continuous and smooth functioning of the supply chains after the Brexit day.
Brexit negotiations between the UK and the EU officially started on the 19th of June 2017, with the UK’s exit planned for March 2019. The EU and the UK negotiation teams meet for 1 week every month. The priority issues on the table are the citizens’ rights after Brexit, the financial settlement of Brexit between the UK and the EU, and a practical arrangement for the border between Ireland and Northern Ireland. Negotiations on other deals including trade should start later.