Practical ways to ease post-Brexit trade and combat US protectionism
As the March 2019 deadline looms, a ‘wait and see’ option is no longer viable for companies trading across EU borders. Fortunately, Chris Giles, the FT’s Economics editor, sets out ‘Nine ways companies can prepare for life outside the EU’. None is straightforward; all involve endless bureaucracy. His advice includes: building a corporate customs infrastructure; gaining Authorised Economic Operator status; making use of EU free trade agreements; auditing supply chains and international contracts; budgeting for VAT and inventory; protecting your IP, and more. In some cases, a transition deal will ease the worst pain, but won’t make it go away. An example of the inherent complications can be found the inscrutable wording used to explain Northern Ireland’s regulatory alignment as explained by David Allen Green.
While EU leaders seem unimpressed by the UK’s Brexit preparations, they are none too happy with the US’s own trade-restricting tax reforms either. The FT reports leading EU finance ministers ‘saying it would “be at odds” with free-trade international rules because it risked being discriminatory towards foreign companies.’ In a letter to US Treasury secretary Steve Mnuchin, the EU ministers write that ‘the 20 per cent excise tax on transactions, including a US company’s imports of products from its own foreign factory, would impact genuine commercial arrangements,’ and could ‘discriminate in a manner that would be at odds with international rules of the World Trade Organisation.’
Not that the US necessarily cares about the integrity of WTO rules. One can get a sense of this from the FT’s profile of Robert Lighthizer, Donald Trump’s trade Tsar, who ‘stands to be a more important and potentially disruptive figure in the global economy than either Mr Mnuchin or [Commerce Secretary Wilbur] Ross.’ A China hawk and WTO critic, Mr Lighthizer has fully embraced Mr Trump’s ‘America First’ philosophy. Perhaps naively, he also believes that it is possible to ‘construct a broad bipartisan coalition backing renegotiated agreements like Nafta.’