Changes to the Brexit trade deal are now inevitable

Alex Altmann

Alex Altmann

Six weeks into Britain’s new ‘free trade’ relationship with the EU confirms an obvious expectation

Less than one year of negotiations did not give either side enough time to formulate a comprehensive free trade agreement, which would usually cover all important sectors of the economy, to enhance trade and remove barriers between the two economies.

Some had argued that a UK/EU free trade treaty would be simple to put in place given the starting point was the most comprehensive free trade arrangement that exists, which is EU membership.

However, the opposite has proven to be true since finding a fair balance between rights and obligations for a leaving member of the club is a dilemma, in which both sides can only lose.

The result of the rushed negotiations is an incomplete UK/EU trade deal with unworkable implications for British and EU businesses, which put trade barriers in place that did not exist before.

One example is the new customs border with the EU, which requires UK traders to have a physical presence in at least one EU member state if they wish to import and sell goods in the EU.

The UK government’s response to this new burden was that British businesses should now set up a branch office or subsidiary company in the EU if they wish to maintain frictionless trade with their customers on the continent.

However, the government has not provided any guidance on how a branch office and subsidiary in the EU can be opened or what the cost implications for British businesses are, which leaves business owners exposed to dramatically fading revenues in their most important export market.

The effect of this will be that investment and resources are pulled away from the UK to facilitate and maintain trade with the EU.

Meanwhile the damage to the UK economy is taking its toll on other fronts as well. It was the political will to avoid a customs land border on the island of Ireland to not risk the Irish peace process.

As a result, a highly controversial customs sea border between Great Britain and Northern Ireland had to be created, formulated with a complicated protocol to the free trade treaty with the aim to maintain frictionless trade between Northern Ireland and the EU.

But certain goods shipped from Great Britain to Northern Ireland are now subject to customs checks on arrival at the ports of Belfast or Larne.

The recent rebellion of the local community in Northern Ireland against port officials has led to a temporary withdrawal of the customs checks to deescalate the fragile political mood.

However, the EU will insist that these checks continue to avoid sub-standard food items and other goods entering the EU single market via Northern Ireland.