Question

1 Briefly describe BREXIT, how it came about and its likely future.

2 What is the likely impact of BREXIT for American-based companies doing business in Britain?

3 What opportunities are likely to come about as a result of BREXIT?

Answer 1

1. Brexit-British exit-refers to the UK leaving the EU In June 2016, when 17.4 million people opted for Brexit, a public vote (known as a referendum) was held. It gave the Leave side 52 per cent, compared to Remain's 48 per cent. After the UK formally leaves the EU on January 31, 2020, much remains to be talked about and months of negotiations will follow. Although the United Kingdom has decided on the terms of its EU withdrawal, both parties still need to discuss what their future relations should look like. This will be worked out during the transition period (which some prefer to call the implementation period), which starts immediately after the day of Brexit and is due to end on December 31, 2020.

The transition period is meant to give some breathing space to both sides whilst negotiating a new free trade agreement. This is important because at the end of the process, Britain will be entering the Single Market and Customs Union. A free trade agreement would allow goods to travel around the EU with no checks or additional fees. If a new one can not be negotiated in time, then the UK is faced with the prospect of having to trade without an existing deal. That would mean tariffs (taxes) on goods that travel to the EU and other barriers to trade in the UK.

2. Where US businesses have a European distribution center in the UK, they will consider the potential for double tariffs on goods shipped to the UK and then re-exportedto EU27 after the Brexit implementation period has ended. These goods are likely to face tariffs on entry into the United Kingdom (up to any existing free trade agreement between the United Kingdom and subject to WTO rules), and further tariffson re-export to the EU27 under the EU customs union.

There is a real risk due to UK leaving the European Digital Single Market at the end of the Brexit transition period. The impetus behind the Digital Single Market was to provide better online access to products and services at reduced costs, generally improve digital services adoption and acceptance, and enforce common laws on data protection. Therefore, the UK will lose the ability to influence the Digital Single Market growth, and the EU27 will lose the feedback from the UK.

3. If the United Kingdom sticks to the 0.7% pledge but does not spend it through the European Commission, there is an opportunity to focus British assistance more strongly on the poorest countries and societies or transfer this aid to more effective multilateral bodies than the European Commission. This will not happen automatically and the United Kingdom should be careful to comply with WTO rules; but it could at least duplicate market access currently available under the Everything but Arms and European Partnership Agreements,