The UK made history in 2016 when voters approved a referendum directing the government to withdraw from the European Union (EU). At the end of 2020, after more than three years of often contentious negotiations, Brexit was finally completed. Now, in a post Brexit world, global trade is impacted.

There wasn’t much good news to report during the UK-EU negotiations. But now that things are all said and done, the global trade community can take solace in the fact that the two parties managed to agree to a free trade deal that prevented WTO trading rules from automatically kicking in. But not all is sunshine and roses. Even with that agreement in place, global trade management faces challenges while the world waits for the UK and EU to work out all the kinks.

Changes in Customs Practices

Brexit’s most contentious points are nearly all related to customs. Obviously, customs practices had to change. Nearly halfway through 2021, it is apparent that those changes have impacted exporters and importers alike. The impact is being felt most by European companies that rely heavily on exporting to the UK.

Europe’s automotive sector automatically comes to mind. Without a solid UK market, European manufacturers will have trouble reaching the same volume as they were used to prior to Brexit. As such, it has become even more important for exporters to have solid global trade management programs and policies in place.

UK businesses might not necessarily do any better. Some suspect that changing rules will make it more difficult for them to export to Europe. They may choose to lean heavily on other markets, like the U.S. for example, but reducing exports to the EU will most certainly hurt business.

Global Trade Chain Reactions

It would be understandable to view global trade in the Brexit era as a ‘business as usual’ scenario for all but the UK and EU. But it is not. Both markets represent a significant volume of the total global trade. Any problems between them are likely to set off a chain reaction of events around the world.

Primary supply routes that keep goods flowing across the European continent remain intact. But for the next 12 to 36 months, there are going to be some rough patches. International organizations doing business in either the UK or EU should be prepared for challenges.

A simple customs issue in the UK could easily impact exporters in North America, Asia, etc. Supply chain slowdowns could prevent both raw materials and finished goods from reaching their destinations in a timely manner. It is all the more reason to put extra time and effort into global trade management.

Logistics and Compliance Issues

A big picture view of global trade in the Brexit era reveals a wide range of logistics and compliance issues moving forward. Where logistics bottlenecks occur, innovative solutions will be needed to keep goods flowing. In terms of compliance, we are still learning the details of the Brexit deal. Moreover, negotiators continue working on the finer points. The deal is by no means settled as of yet.

If your company is involved in international trade to any extent, Brexit has either already impacted you or will be an issue in the future. This is no time to fall asleep at the wheel. Make sure your global trade management programs and policies are in place and working as they should be. If you need help adapting to the new normal in global trade, we are here to help. Our global trade management services will keep you ahead of the competition.

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