Immediately after the Brexit referendum was held, the Brits saw the effect of their voting: the exchange rate of the British pound fell and consequently, purchasing power towards foreign goods decreased.
In 2016, Danish companies exported goods worth DKK 40 billion to the UK, hence the effect from Brexit may influen- ce the Danish economy. What EU principles are at stake, how may this effect your business, and is there anything you can do right now?
Danish export to the UK in numbers
Strangely enough, we did not see a decrease in Danish export to the UK immediately after the referendum in 2016. Quite to the contrary, Denmark experienced an increase in export to the UK in 2016, and in 2017 too.
Numbers from 2018, however, show that this tendency is exposed to huge fluctuations. It is unknown if this is due to the uncertainties Danish exporters (and/or British importers) face on account of Brexit. A lot of basic principles of impor- tance for trade to and from the UK are thus at stake when leaving the European Union.
EU principles at stake
The Treaty on the Functioning of the European Union (TFEU) set out the principle of free movement of goods and further set out a series of rules abolishingrestrictions on international trade.
The two most important principles when talking trade are the customs union and the prohibition of quantitative restric- tions between member states.
The customs union among other things ensures that there are no customs duties on imports and exports within the European Union.
The prohibition of quantitative restrictions between member states means that no member state may
set up restrictions making it harder for foreign vendors to sell their products in the country.
When Britain is no longer a member, the treaty will no longer apply and restrictions may therefore be imposed. We still do not know what kind of deal the UK and the remaining 27 member states are going to agree to, and we therefore do not know the amount and extent of such restrictions.
If you are trading on the British market and you expect to be on the British market after expiry of the transition period (31 December 2020) you should, however, be prepared for chan- ges relating to your business.
The possibility of new tariffs, country rules of origin certifica- tes, product standard checks and other customs procedures will surely introduce uncertainty into some contracts. The possibility of quantitative restrictions on imports/exports or other measures having equivalent effect will do the same.
However, such uncertainties may be dealt with already by identifying the possible implications of Brexit on your com- pany, your commercial relationships and your contracts and by inserting the relevant reservations into your contracts. Holst, Advokater is naturally there to assist if you wish a pre- liminary Brexit check of your contracts or drafting of a new contract taking the current situation into account.
