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Summary

  • Custom restrictions now postponed by a year because of the pandemic.
  • Post-Brexit there have been a dramatic turn of events, and the call from several quarters to postpone the Brexit date
  • The future of UK and EU trade relationship would be in focus after the boarder restrictions go online next year

The coronavirus pandemic it seems has impacted the Brexit process. After the United Kingdom finally parted ways with the European Union on 31st January 2020, custom restrictions on border entry and exit points were set to go online by July of this year. The British government, however, has decided that the restrictions would not go online till at least July of next year given the extraordinary hardship that manufactures, and businesses have to face lately because of the coronavirus pandemic. The pandemic and the resultant lockdown has pushed most of the European countries to the brink of recession, and most have been seeking remedial measures to ameliorate the effect of the pandemic on their economies. The postponement of the customs restrictions by the United Kingdom will go a long way in easing the tough trading conditions on both sides.

Since 31st January 2020, many of the tariffs and other restrictions were set to go online progressively between the United Kingdom and its European Union counterparts. These new regulations imposed on goods entering the United Kingdom would initially be restrictive for businesses on both sides, but over a period of time, they would reduce with the increase in the business activity levels. The outbreak of the pandemic, however, magnified the hardships of businesses several times over. The sudden drop in business activity levels in most countries meant that many businesses are on the brink of collapse, under such circumstances, the imposition of a tariff would only make survival difficult for most of them.

During the past few months since the pandemic broke out requests have been made from several quarters including European Union parliamentarians, the International Monetary Fund and several trade bodies within the United Kingdom itself to either postpone the Brexit date or delay in implementation of several regulations so that the businesses on both sides could have ample breathing space for navigating through the troubled economic conditions induced by the pandemic.

The Freight Transport Association and the Road Haulage Association were the first to welcome the government's decision. The Freight Transport Association in a statement said that they are extremely grateful that the government had listened to their concerns while the Road Haulage Association, who had usually been critical of the government's hardline stance on Brexit, also supported the announcement.

There are several industries who will also be benefited by this decision. The British car industry, for example, has been a large importer of components from smaller European union countries who manufactured them cheaply and helped the British car industry remain internationally competitive. In the wake of the new tariff being imposed the industry risked losing its competitive advantage to other countries, the deferment decision will give the industry more time to make alternative arrangements to meet its requirements. Similarly, the food and beverage industry is also a major importer of goods from Other European Union countries, who risked increasing their costs due to the new tariff restrictions. During this time of the pandemic, the hospitality industry is one of the worst affected, and an increase in the cost of food and beverages would have brought in an extra burden on their margins.

The outbreak of the coronavirus in the United Kingdom and the resultant lockdown posed unfathomable hardship for people and the businesses in the country. The country is staring at a recession that could be the worst in more than a hundred years, while the unemployment rates in the country have reached unprecedented levels. Most industries which are dependent on foreign travel have been severely hit as a ban has been imposed by almost all countries on international air travel. Domestically the industries which relied more on their cash registers and footfall on their premises were the hardest hit as a business totally dried up. Most of these sectors now face an uphill task to gain back their business momentum and return into the green. The government though has decided to open up the economy in a phase-wise manner, but with the social distancing measures still in place, it will result in the businesses not picking up so quick. Overall the British economy faces a challenging time ahead at least till an effective vaccine for the pandemic does not come to the market, reducing the threat to human life.

The United Kingdom has made it clear at more than one occasion that it is not going to walk back on Brexit. The current relaxation is a temporary measure to help out the businesses in the country through the current troubled times. It emphasized that this move is not to be a government’s change instance in its relationship with the European Union. Post parting ways, United Kingdom, has been holding parleys with a number of countries including European Union countries to enter into bilateral trade deals so that it may be able to get back most of the advantages it enjoyed being part of the Union. Being not part of the Union also makes it easy for the United Kingdom to enter into trade agreements with large economies like the United States of America, which will give it a great economic advantage. The country will, however, continue to engage with the European Union directly as well as on a country to country basis and trade and commerce will only continue to flourish. The current move to defer tariffs for one year is a desperate need for the hour to protect businesses from falling apart. When the dust settles over the pandemic, these regulations will00 go online as earlier intended by the government.

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