How does Brexit affect business?
How Brexit will affect business depends on the shape of the UK’s future trade relationship with the EU, including whether the UK and EU successfully conclude a trade agreement.
During the transition period, which lasts until 31 December 2020, the same rules (i.e. the EU Common Customs Tariff) will apply to trade with both the UK and the EU. There will be no change to the rules covering trade and investment, or people-to-people links with the UK and EU during this period.
UK applied Global Tariff
The UK’s transition period ends on 31 December 2020. From 1 January 2021 the UK’s new applied Global Tariff schedule will apply to New Zealand exports to the UK. Information on the new UK tariff is available here (external link).
Tariff Rate Quotas
The EU and UK’s WTO commitments include Tariff Rate Quotas that provide access for important New Zealand exports, such as meat, dairy and horticultural products.
The UK and EU have initiated separate formal processes at the WTO in Geneva to split the EU’s current WTO bound tariff-rate quotas between the EU and UK once the transition period ends. In January 2019, the EU Parliament adopted a domestic regulation to implement these proposed reductions unilaterally. Read these proposals, together with the submissions lodged by concerned WTO Members, here (external link).
New Zealand and other quota holders have made clear that this approach would not be acceptable as it would reduce exporters’ current access, including by removing their flexibility to respond to changes in market demand between the UK and the EU27 markets. An FTA between the EU and UK (currently being negotiated) may mitigate some of the effects of the proposed TRQ splitting but this is in no way certain and will depend on the terms of the agreement and if it is successfully negotiated before the end of the year.
Read more about the government’s approach to Tariff Rate Quotas here (external link).
To help ensure continuity and stability in the arrangements underpinning our trade, New Zealand and the UK have signed bilateral agreements on:
- Sanitary Measures Applicable to Trade in Live Animals and Animal Products (the Veterinary Agreement) and
- Mutual Recognition in Relation to Conformity Assessment (the Mutual Recognition Agreement)
- Customs Agreement for Mutual Assistance on Administrative Matters
These agreements will come into effect at the conclusion of the implementation period that might be agreed between the UK and the EU. They will ensure continuation of arrangements New Zealand currently has in place with the UK as a result of similar agreements concluded earlier between New Zealand and the EU. A statement containing more detail on the Veterinary Agreement and Mutual Recognition Agreement is available here (external link).
Continuity in recognition arrangements
We have also received confirmation from the UK regarding continuity in recognition arrangements currently in place for:
- exports of New Zealand organic products
- conformity checks for the inspection of fresh fruit and vegetables prior to export (in New Zealand’s case, specifically apples, pears and kiwifruit)
- fisheries catch certification
Under the terms of the Withdrawal Agreement, current EU laws and regulations in this area will continue to be applicable in the UK during the transition period. The EU’s General Data Protection Regulation will therefore continue to apply in the UK until the end of 2020, including existing EU data adequacy decisions.
In the event that the transition period ends on 1 January 2021, without trade and political agreements being agreed, the UK will continue to implement the requirements under the current General Data Protection Regulation (embodied in the UK Data Protection Act 2018). This will transitionally preserve the effect of the existing EU data adequacy decision in respect of New Zealand.
In New Zealand’s case, entities transferring data out of New Zealand are subject to the New Zealand Privacy Act 1993. This will continue to be the case for outward transfers and will enable ‘business as usual’ to continue in respect of data transfers from New Zealand. A new Privacy Act will take effect from 1 December 2020. The Privacy Act 2020 repeals and replaces the Privacy Act 1993.
The UK and EU are seeking to negotiate a free trade agreement (FTA) that would provide for preferential trading arrangements between the UK and EU from 1 January 2021, given the UK will no longer be a member of the EU Customs Union and Single Market. In the absence of a concluded FTA, the UK and EU would trade on non-preferential terms established by World Trade Organisation rules. In either event - an agreed FTA or not - the rules that govern UK-EU trade will change at the conclusion of the implementation period.
We encourage potentially affected businesses and individuals to put in place contingency plans for a range of scenarios, to minimise the effects of any disruption from Brexit. This includes the possibility that trade and political agreements are not reached between the UK and the EU by the end of 2020.
Key things businesses should be thinking about include:
- What volume of trade do you currently have with the UK and the EU and what are the potential supply chain implications?
- What guidance for importing to and exporting from the UK and the EU do you need? There is information available through the UK government and the European Commission Preparedness notices.
- Do you need legal advice and/or to engage a migration agent, customs broker, freight forwarder or logistics provider, to support you in preparing for all eventualities, including a ‘no deal’ Brexit?
- Does your supply chain involve shipping goods between the UK and EU; or vice versa?
- Are you likely to have large orders landing on 1 January 2021 or shortly after? If so, do you have a good relationship with your importer? Are there things you can do to prepare?
EU-NZ free trade negotiations
Negotiations towards an EU-NZ free trade agreement were launched in June 2018 and negotiators met virtually for an eighth round in June 2020. Read more here EU-NZ free trade agreement negotiations.
UK-NZ free trade negotiations
Negotiations towards a UK-NZ free trade agreement were launched in June 2020. The first round was held in July 2020. Further negotiating rounds are scheduled for the remainder of 2020. Read more here UK-NZ free trade agreement negotiations
The New Zealand Trade and Enterprise website has more information about Brexit for New Zealand exporters here:
Brexit and customs
Find out what Brexit means for New Zealand-UK customs on the New Zealand Customs Service website (external link).
Brexit and the primary sector
The Ministry for Primary Industries has information specific to the primary sector here (external link).
Summary of public submissions on Brexit
Following the United Kingdom’s vote to leave the EU, the New Zealand Government called for submissions from businesses which trade with or invest in the United Kingdom. The call for submissions was made in August 2016 and ran until October 2016.
Here is a summary of these submissions.
We will update this page as more information is received. This is not intended to be, nor should it be relied upon, as a substitute for legal or other professional advice.
If you have questions or concerns about how Brexit may impact on you, contact us on firstname.lastname@example.org
For export related enquiries, you can also call 0800 824 605.