Final Steps to EU-UK Separation: Is Your Supply Chain Brexit-Ready?

Posted by Arne Mielken on November 28, 2018

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Brexit-SupplyChainLast week, the European Council President Donald Tusk called a special summit of the EU leaders on the topic of Brexit. During this meeting, the European Council, consisting of the EU 27 Heads of State met to approve and endorse both the political and legal documents necessary for the separation between the EU and the UK to take place on Friday, March 29, 2019 at 0.00 CET (11 BST). So, what's next?

Orderly Brexit Includes a 21-Month Transition Period

A week prior to this, the text of the draft BREXIT Withdrawal Agreement agreed on by the EU and UK negotiators had been approved by the UK Cabinet, while the European Commission recommended the European Council (Article 50) to find that decisive progress has been made in Brexit negotiations.

Michel Barnier, Article 50 EU Withdrawal negotiator, said the EU & UK negotiators have reached a crucial stage, “an important moment in this extraordinary negotiation”. Barnier also said that the draft would ensure the UK’s orderly departure, including a 21-month transition period. This drawn-out timeline will mean “business as usual” after the March 29, 2019 divorce date, at least until December 31, 2020.

The main outcomes of the meeting on November 25, 2018 include these primary points:

  1. The European Council endorsed the 585-page legally-binding Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community.
  2. On this basis, the European Council has invited the Commission, the European Parliament and the Council to take the necessary steps to ensure that the agreement can enter into force on March 30, 2019, so as to provide for an orderly withdrawal.
  3. The European Council approved the 35-page Political Declaration setting out the framework for the future relationship between the European Union and the United Kingdom of Great Britain and Northern Ireland.
  4. The European Council restated the Union's determination to have as close as possible a partnership with the United Kingdom in the future, in-line with the Political Declaration. The Union's approach will continue to be defined by the overall positions and principles set out in the previously agreed European Council's guidelines. However, it also warned there could be no meaningful renegotiation of the agreement. EU Commission President Jean Claude Juncker said, the settlement is a “Lose-lose Brexit deal, (but it) is the best you will get.”

“Support my deal or go back to Square One.” – UK PM

The UK Prime Minister Theresa May released what she called “My Letter to the Nation” on Saturday, November 24th in which she made an appeal directly to voters asking them to support the deal. She wrote, “It is a deal for a brighter future, which enables us to seize the opportunities which lie ahead.” and described a series of EU policies that failed the UK, including the immigration system and the Common Agricultural Policy, which Britain would soon be free from. The European Parliament should vote at the earliest in January 2019, or the latest in February 2019.

What are the Impacts on International Supply Chains?

Brexit will have an impact on most supply chains. As stated above, current credible outcomes still include a hard Brexit, a soft Brexit or even no Brexit. Brexit could impact UK, EU and globally operating companies as early as the March 2019 exit date, or as the calendar is turned on January 1, 2021 (after transition period) or even thereafter. Businesses need to prepare for all eventualities with a “Plan for the worst, hope for the best.” strategy.  The so-called “hard Brexit” (without an agreement) presents the most risk of change to supply chains and global trade. While Brexit has the most prominent impact on commerce between the UK and the remaining EU27, it will also impact non-EU, international trade.

Businesses need to finalize their strategy to mitigate the costs and delays caused by Brexit.

But is there a way to actually generate better value and cost-savings as a result of the decision to leave the EU? In other words, can you turn the Brexit challenge into an opportunity which delivers value? Amber Road’s global trade management platform improves margins, reduces risk and provides agility across the supply chain. Specific to Brexit, Amber Road’s functionality, automation and valuable trade regulatory content come together to produce beneficial results, for instance:

  1. Global product classification starting with UK imports/exports
  2. Support end-to-end transaction flows to include direct filings
  3. Increase supply chain agility with accurate bonded warehouse inventory management
  4. Maximize duty savings by leveraging free trade agreements (FTAs)

Broadly, customers have also realized these benefits:

  • Best-in-class trade compliance, allowing you to mitigate expensive customs audits
  • Greater control tower supply chain visibility once and for all
  • Reduced logistics costs
  • Lower transportation spend
  • Shorter cycle and lead times
  • Duty and tax reductions, and potential use of FTAs across the globe
  • Less broker fees

Four Ways to Leverage Opportunities from Brexit

We believe it is time to see the opportunities that Brexit provides as well! Amber Road’s answer is to digitally transform your supply chain now

  1. Analyze: Once your trade information is digital, software can analyze the information for insight and value around FTA’s post-Brexit, or utilize Bonded Warehouses to defer duties until consumption.
  2. Collaborate: With your digital supply chain model, technology can share it with various FTA parties throughout the global supply chain, including your UK parties.
  3. Automate to Save costs & Improve Compliance: Once the information is digital, automation tools can process it and eliminate human tasks.
  4. Prepare for Future Event: Once the information is digital, software can adapt to changes in the business quickly and easily due to newly emerging FTA opportunities.

Next Steps

The next steps will be a ratification of the deal by the British and European Parliaments before the agreement will enter into force on March 30, 2019. The British MPs are expected to vote during the second week of December. And of course, we are ready to discuss your pre-Brexit supply chain transformation at Amber Road.  Contact us to get started!

Making the Case for Global Supply Chain Digitization

This post was published on November 28, 2018 and updated on November 28, 2018.

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Topics: Global Trade Management Software, Global Trade Content, Global Trade Management

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