Brexit Jargon Buster
An A-Z of need-to-know terms for businesses that export and import to successfully navigate Brexit
So-called ‘backstop proposals’ set out the UK’s plan for temporary customs arrangements with the EU if a new permanent deal is not ready in time. They are intended to avoid a hard border between Northern Ireland and the Irish Republic, which is an EU member.
EU member states follow the same standards and regulations for goods. The UK Government wants to follow a "common rulebook" by aligning UK legislation on goods with the EU's standards and regulations. The UK Government hopes the plan will protect the supply chains of firms such as car manufacturers, while also reducing trade frictions at the UK-EU border.
The EU’s 28 member countries, plus a number of smaller states, have a trade agreement not to impose customs tariffs on goods moving between EU member states. A common tariff is applied to goods imported from outside the EU. The UK Government has said the UK will leave the EU customs union when it exits the EU.
A political and economic union of 28 countries, namely: Austria; Belgium; Bulgaria; Croatia; Cyprus; Czech Republic; Denmark; Estonia; Finland; France; Germany; Greece; Hungary; Ireland; Italy; Latvia; Lithuania; Luxembourg; Malta; Netherlands; Poland; Portugal; Romania; Slovakia; Slovenia; Spain; Sweden; United Kingdom. It was established in 1957.
The government's plan for post-Brexit customs arrangements with the EU. The FCA would see goods coming into the UK but destined for the EU charged an EU tariff. Goods intended to remain in the UK would be charged the UK's own tariff, which could be set differently to that of the EU's. The plan relies on technology to identify the end destination of goods arriving in the UK and, it is hoped, avoid customs checks in Ireland.
The term used to describe a Brexit scenario in which the UK would give up its access to the European single market and customs union as well as the EU. The arrangement would prioritise giving the UK full control over its borders, making new trade deals and applying laws within its own territory.
The scenario in which the UK leaves the EU without agreement on the terms of its withdrawal and future trading arrangements. UK trade with the EU will be on WTO terms. Free circulation of goods between the UK and EU would end so businesses would have to apply the same customs and excise rules as countries outside the EU.
A trade area without internal borders that guarantees the free movement of people, goods, services and capital throughout its territory. The European Single Market encompasses all EU member states and four other countries which have certain opt-outs. The UK Government has said the UK will leave the European single market when it exits the EU.
A Brexit scenario in which the UK could potentially remain in the European single market and customs union. The UK's relationship with the EU would be kept as close as possible to the existing arrangements. The UK would no longer be a member of the EU and would not have a seat on the European Council. It would lose its MEPs and its European Commissioner. But goods and potentially services would be traded with the remaining EU states on a tariff-free basis and financial organisations would keep their "passporting" rights to sell services and operate within the EU.
Alternative Brexit models
The EU-Canada Comprehensive Economic and Trade Agreement (CETA) is a free trade agreement between the EU and Canada which removes many tariffs and barriers to trade. It is a model frequently referenced during discussions about Brexit.
A model that has been discussed as a possible alternative for the UK to EU membership. While not a member of the EU, Norway is a member of the European Economic Area, allowing the country to be part of the EU single market, and in return contributes to the EU budget, accepts most EU laws and allows free movement of people.
These city states do not impose import or export tariffs at all but have adopted a unilateral free trade approach. Hong Kong's free trade policy means the Chinese special administrative region maintains no barriers on trade, with no tariffs on imports or exports. Licensing is also kept to a minimum.
Covers some but not all areas of trade Switzerland also makes a financial contribution but smaller than Norway's to the EU. It does not have a general duty to apply EU laws but does have to implement some EU regulations to enable trade. Freedom of movement applies.
Turkey is not part of the EEA or EFTA but does have a customs union with the EU. There are no tariffs or quotas on industrial goods it sends to EU countries. The customs union does not apply to services or to agricultural goods. Turkey must apply the EU’s common external tariff to goods it imports from non-EU countries. It must align its rules and standards to those of the EU in areas in which it is able to freely trade.
The government has said the UK will leave the EU’s single market and customs union when it exits the EU. However, it is hoping to negotiate an economic agreement with the EU for the movement of goods with minimum obstructions.
The Taxation (Cross-Border Trade) Bill will allow the UK to set its own tariff on leaving the EU, deal or no deal. This will replace the EU Common Customs Tariff, the tariff which currently applies to goods imported from outside the EU, for imports to the UK.
No Deal terms
In the event of a ‘no deal’ Brexit, free circulation of goods between the UK and EU would end so businesses would have to apply the same customs and excise rules as countries outside the EU. Businesses would need to provide import or export declarations, revise their International Terms and Conditions of Service to reflect they are an importer or exporter, and provide an import or export licence for controlled goods. Custom checks may be carried out and VAT and any import duties would be payable. The carrier of the goods would have to make entry or exit safety and security declarations.
In a ‘no deal’ scenario, a business will need to register for an EORI number before importing or exporting goods to or from the EU. The UK Government has said it will make further information on this available later in 2018.
The EU-wide computerised monitoring system would no longer be used to control suspended movements between the EU and UK in the event of a ‘no deal’ Brexit, but would be used to control the movement of duty suspended excise goods within the UK.
The ECJU is the part of the Department for International Trade responsible for the UK’s system of export controls and licensing for military and dual-use items (those with both military and civilian uses). The export within the EU of many of these items does not currently require a licence but would in the event of a ‘no deal’ Brexit.
Failure to secure a free trade agreement in a ‘no deal’ scenario will mean that UK trade with the EU will be on WTO terms. The UK and EU would apply to each other the tariffs and other trade restrictions they apply to the rest of the world. This is because WTO rules allow countries to discriminate in favour of a trade partner only in a limited number of circumstances, including a full bilateral trade deal.