Everything you need to know before starting a business in France after Brexit
This article is very good if you’re intending on starting a business in France after Brexit. The two sides started discussing the terms of Britain’s withdrawal after the UK decided to leave the European Union in a referendum in June 2016. The UK legally left the EU institutions on 31 January 2020, and 11 months later, on December 31, 2020, it departed the single market and customs union. However, although the trade agreement reached on December 24, 2020, prevented a “hard Brexit”—a complete withdrawal from the EU single market with the reintroduction of customs taxes and quotas—frictionless commerce in the post-Brexit world is far from assured. Because of this, it’s critical for your organization to respond swiftly and recognize the threats to your business model.
Brexit background
The United Kingdom formally became a “third nation” on January 1, 2021, outside the EU, the single market, and the customs union, with significant commercial implications. When the UK left the EU customs union, it had to reintroduce:
Customs declarations for both imports and exports are required at the border.
Checks for security
Inspections of live animals, plants, and products of animal and/or plant origin for sanitary and phytosanitary reasons
Both the French and British customs agencies prepared for the effects of Brexit. The Hauts-de-France area, which is home to large ports, the Eurotunnel, and ferry firms, also started laying the foundation early on as the European region closest to the UK. Now that Brexit has been completed, it is on to businesses doing business between the UK and the EU to prepare.
FRICTIONLESS TRADE ENDED BY WITHDRAWAL AGREEMENT
Negotiations between the UK and the EU resulted in a zero-tariff, zero-quota free trade agreement.
However, as the first few weeks of 2021 shown, the agreement does not guarantee the same level of trade freedom as previously. On the contrary, new trading circumstances between the United Kingdom and Europe have resulted in significant fundamental changes in their relationship, with more to come.
Consequences of Brexit
What changed in France after Brexit?
The key issue will be exported from the United Kingdom. Indeed, the EU received 50% of all UK goods exports, despite the UK accounting for just 6% of EU manufactured exports. Furthermore, the Centre for European Reform estimates that leaving the EU would lower UK goods trade by £10 billion by 2021.
The following are the new laws that might jeopardize EU-UK trade:
CONTROLS AT THE BORDER HAVE BEEN REVISED.
1/ The reintroduction of border controls has resulted in new administrative processes that delay the transit of goods between the United Kingdom and the European Union. Companies must still complete customs paperwork and manage other procedures, such as veterinary and health inspections for live animals, plants, and plant and animal goods, even with the free trade agreement in place. Paperwork, as well as the items themselves in certain situations, is reviewed at the border, with the danger of shipments being returned if everything is in order. The new normal includes a slew of new laws and checks, which might have a significant influence on your company model.
What problems could your business face after Brexit?
2/ If you export goods from the UK to Europe, they must meet all relevant European standards, with post-Brexit items bearing the UKCA (UK Conformity Assessed) label instead of the European CE mark. Some may show both, but only if the UK and European regulatory standards are in sync. Producers in the EU will be permitted to use the CE mark for exports to the UK until December 31, 2022—and until December 31, 2023, for medical products—but only if the conditions stay the same. Furthermore, items bearing the UKCA mark are only eligible for export to the European Union if the EU deems applicable laws to be equivalent—a condition that may alter over time and between sectors. Many exports may need an export license; this is the case for medications, chemical items, and plant and animal products, to name a few.
If the regulations diverge, the UKCA and CE marks will no longer be considered equal, which might cause issues for EU clients and hurt your company. These additional obstacles, along with concern about the long-term viability of agreements, may cause your activities to be disrupted.
ADDITIONAL COSTS FOR GOODS CAUSED BY ORIGINAL RULES
3/ The origin requirements outlined in the UK-EU free trade agreement are stringent and precise. They impose a limit on “non-originating” components—content that does not originate in either the UK or the EU—for items that may be exported tariff-free. While the complexity and details of these standards differ by sector and product, ensuring that your organization is compliant might take time. This will be particularly problematic for exporters. In the automobile sector, for example, vehicle makers may incur a 10% tariff. Indeed, since more than half of all UK-based vehicles are exported to the EU, the cost of the Rules of Origin will be felt heavily in the UK. As a result, their whole supply chain will need to be rethought.