Impact of BREXIT and Trade and Cooperation Act on the UK Businesses

The impact of BREXIT and the Trade and Cooperation Act on the UK Businesses
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The impact of BREXIT and the Trade and Cooperation Act on the UK Businesses
Introduction
BREXIT was one of the most contentious issues of the past five years for the United Kingdom (UK) and the country members of the European Union (EU). At the beginning of the thoughts of exiting the EU, different sentiments arose as to the consequential impact of such a move for both EU entities, including the UK, that was to move out. At the same time, it took longer for the real Brexit to be arrived at, under common grounds of agreements for the UK and the EU members under a Trade and Cooperation Agreement, which was meant to collectively include both sides’ economic interests in European trade instead of what had been perceived as being costly primarily to the UK while benefitting other European countries under the EU trade laws. After a long wait, an agreement between the UK and the EU member countries was reached on the Christmas of 2020. While there were other global concerns at the time, such as the emergence of the COVID-19 pandemic, which shadowed the actual real impacts of the BREXIT for Britain and the EU, results of trade for the UK and the EU members attested to the actual impacts of the BREXIT later on, several months after the real BREXIT (Webber, Foster & Bounds, 2021). The UK parliaments documented some of those impacts of the Trade and Cooperation Agreement, later discussed in the UK legal house, and later presented for debate across the media and scholarly fields of studies. From the results, it became apparent that there were actual real impacts of the BREXIT, and while the UK and foreseen an advantageous future after the BREXIT, the actual impacts contained many disadvantages for the country, contrary to the previous perception. In addition, while the settlement of the Trade and Cooperation Agreement was considered much better than a no-deal agreement, their subsequent implementation brought into certain business barriers in administration frameworks and regulatory systems.
Barriers to trade resulting from the Trade and Cooperation Agreement as opposed to the barriers before BREXIT
Tariff Barriers
Logistically, the TCA or what is commonly known as the Trade and Cooperation Agreement, resulted in the collective agreement of the condition of levying tariffs on goods originating in the EU and the UK by classifying goods that qualify for zero tariffs as only those originating or emanating in the EU and the UK. The implication of this regulatory condition meant that goods that did not originate in these two regions did not qualify for zero tariffs (Welfens, 2019). Indirectly, this condition translated to the fact that goods originating outside the EU and the UK had to be levied tariffs. The direct meaning is that all goods to the UK and the EU had to be taxed to be accepted in the two economic regions. Clearly, all goods from developing countries such as Africa and Asia and emerging economies such as the BRIC had to have all their goods levied tariffs if those goods had to be accepted into the EU market or the UK. Logistically, all movements of goods from these regions had to be stopped or cut out because of the uncertainty of the definitions of conditions acceptance and the subsequent extent of tariffs that were to be laid on these goods. The subsequent ambiguities brought by the TCA in laying tariffs created markets uncertainties for economies exporting to the UK and the EU (Smith, 2021). The subsequent impact was to cut off logistic contact with the European markets while waiting for market clarifications on the issue of laying tariffs for goods originating from outside regions.
Another significant barrier identified after the BREXIT was a technical issue on testing requirements, the times required to carry out these tests, and the costs involved in the overall whole testing processes. While this was only perceived as beneficial to the UK economy, the technical impact on businesses has resulted in a trade barrier after the adoption of the TCA (Webber, Foster & Bounds, 2021). The actual barrier resulted is the administrative barriers because business administration has considered these technical glitches as leading to the overall higher business expenses in terms of time, cost, and labor requirements as being cumbersome to doing business.
Similarly, the customs departments had also to hire additional employees to ensure that such fulfillment was met. Directly, these would mean that some business entities had to establish departments that would be dedicated to entirely observing the observation and adherence of the TCA requirements, implying that additional staff had to be hired, which would automatically translate to a direct increment in business expenditure. Ideally, many business entities work on reducing business expenditure. As such, the additional costs and expenses were unwelcomed, leading to a lack of mutual observation of the TCA agreements and their subsequent adherence between the two regions (Studio, 2021). Hitherto the adoption of the TCA and the subsequent BREXIT adoption, these requirements were non-existent, and as such, business entities did not have to incur any incremental costs. However, the necessity for such adoption was created after the adoption, resulting from incrementing in financial, time and labor costs for businesses, which were unwelcome.
Furthermore, the regional access barriers also lead to complexities in the creation and implementation of the VAT systems in the different countries in Europe, which meant that each country had to adopt its VAT and subsequent businesses to it as opposed to VAT inclusive business transactions under the EU (Peter, 2021). While eliminating access rights was non-tariff barrier, the VAT systems were a tariff barrier to business activity.
Non-Tariff Barriers
While there are not many visibly observable non-tariff barriers, there are significant non-tariff barriers that have so resulted from the BREXIT and the adoption of the TCA. Other logistic barriers that emerged included eliminating air freight and transport rights that were previously in existence. Many cargo and passenger flight entities lost their previous rights to access European region markets without any registrations after the BREXIT and the adoption of the TCA. The implication was that airline business that had unrestricted to the UK and within the EU had to seek regular access rights to the region, meaning that they lost their previous free access rights. This non-tariff barrier caused the free movement of goods and people into and out of the UK, leading to a business problem related to non-tariff barrier issues (EU/UK, 2021). All companies with previous free access to the UK airports had to seek regular permission to these destinations, translating to a disruption of the previous smooth business activity between the UK and the rest of the EU.
Another potentially resultant non-tariff barrier was the requirement for regular checks for all goods and the people entering the UK to ensure that they meet the minimum requirements set by the UK. While this does not seem like a disruptive move to business and people between the two regions, the transition period is a highly critical time of implementation, and the impact of change be exceedingly consequential as unintended or change may be adopted at a slower rate than anticipated (UK/EU15, 2021). In the case of the frequent and regular checks for all movements into the UK, there is the prediction that the continual implementation of these regular checks may lead to a permanent disruption of business between the EU and the UK because many business entities are discouraged by such legal checks all the time (Łazowski, 2020). The disruption will occur because the frequent checks require substantial time to be implemented, leading to disruption of business processes and in relation to the implementation and delays in time of doing business.
While the tariff barriers associated with increasing staff members to handle tariff regulation requirements impacted businesses, on the other side, the non-tariff impact is that there would be a requirement to increase customs department employees because so far, the existing customs departments employees have been termed as being too slow to effectively implement their customs duty services of that that they have been insufficient in number to handle the high of service required for them to fulfill. During the time of free trade between the EU country members and the UK, the role of the customs departments was not burdened with checking and verifying EU country members’ imports. However, after the BREXIT and the adoption of the TCA, the burden of the customs department extended to include verifying all EU member goods that flow into the UK, increasing the service burden for customs employees (Downes, 2020). Perhaps due to this, the increase in the service burden of customs employees led to a slackened pace of operations within the customs departments, leading to a reduced speed of doing business in the region. This is a non-tariff barrier that has resulted from the adoption of the TCA.
While most of the costs of operations that arose during the adoption of the TCA could be translated to the tariff barriers imposed on goods from outside the UK, the subsequent increase in costs such as those of transportation may be excepted traffic impacts. Directly, after implementing the TCA, many businesses experienced increased costs of operation and thus, subsequently experienced higher costs of transportation of goods to and outside the UK. These transportation costs affected businesses directly (Cadman & Donnan, 2016). The impact on business meant that the profits that businesses recouped drastically reduced, which might also translate to losses for the business entities. Such reduced profit margins may have discouraged regular transportation of goods to the UK and outside the region to eliminate the higher costs of transportation that would eventually lead to loss and or reduced profitability.
Furthermore, in the line of non-tariff barriers brought by the TCA after the implementation of BREXIT, the level of transparency between the UK and the EU countries was considered to have gone down, specifically the UK has not put in place regulatory mechanisms to show how the implementation of the TCA is being undertaken and implemented. For instance, the lack of balance of the implementation mechanisms of the requirements of tariffs, each side was considered free to decide what type of tariffs they could impose and how they would ensure that these tariffs were implemented as per the conditions set that regulate them. The level of transparency of the imposition of these tariffs would be substantially reduced because there lacks a precise mechanism of implementation that could be evaluated by either side of the business divide caused by the TCA and the BREXIT (Foster, 2021). These would directly impact regulatory frameworks on both sides and, consequently, negatively impact businesses.
One of the most significant barriers brought by ...