eCommerce and Cross Border Trade in EU: Will Brexit Break it?

British Exit or Brexit, as they are calling it, is the UK’s decision to leave the EU after invoking Article 50 of the Treaty on the European Union. And, it has achieved commendable popularity in the eCommerce and Political world.

Everyone is wondering what is beyond Brexit, whether or not they belong to either Britain or anywhere in Europe.

After the UK’s win in the referendum held in 2016, where 51% of voters agreed with the decision that the UK should leave the EU and take the reins in its own hands, the final date when the event would come into action has changed quite a few times.

As per the most recent extension, whether or not the UK and EU can come up with an agreement, the UK will withdraw on October 31, 2019, which will be the No Deal scene.

Before the Brexit comes alive, the countries who happen to be a member of the EU enjoy the “Open Borders” between all of them, which implies:

1. Goods and People with or without purpose, are allowed to move freely between countries.

2. Companies across the EU trade with benefits such as “no additional customs or taxes on imports and exports.” While businesses from countries out of the EU are subject to these Trade barriers.

3. The UK is a member of the European Single Market. All members of the European Single Market enjoy four freedoms, which are nothing short of Heaven-sent. Freedom of:

• Goods: No impediments in principle of Customs duties and Taxation, Quantity, and counterparts.
• Capital: No impediments in principle of the flow of the capital abroad employing Bank Account in Foreign, in the act of buying shares in foreign companies and Investments, and in the act of buying real estate abroad. Companies have no barriers in Owning, Investing in, or purchase Foreign EU Companies and get investments from other EU countries.
• Services: No impediments in principle of Establishment, Production and Delivery Services in any EU country other than the origin.
• Labour: No impediments in principle of movement of People in any of the 28 members of EU, for a reason or without one, and for Opportunities of recognition of skills.

Whether or not Britain is going to retain its participation in the EU Single Market Post-Brexit depends on various factors, with respective implications.

The Possible natures of Brexit, which are merely a prediction at this point, can have these scenes:

1. No Deal Brexit

Cause:

If the UK walks away with Brexit without coming to any sort of agreement with the EU, then such an event will be a No Deal scene.

Prospective Changes:

Under such circumstance, the UK will be cutting ties with:

1. Single Market
2. Customs Union
3. Courts of Justice.

Prospective Gain:

And on the positive side, the UK will be in control of the reins of political and economic aspects of Britain as well as they can have the right and freedom to instigate Trade relations with other countries on its wish list such as the USA.

Implications:

The effect of such an event would lead to Britain’s withdrawal from the EU budget and affect any future trade deals between the two parties. 

Exports and Imports will be subject to additional taxes and duties as well as border checks, and overall competition will be affected.

The trade relations will be subject to rules and limitations laid down by the World Trade Organisation, and there will be no transition period. 

The nature of no deal and no trade is highly unpredictable, and its rigidity will affect the whole of the UK in ways that cannot be all positive.

There are rumors about the expected crash in the economy of Britain, and supplies coming and going out will possibly be hampered, leading to disorderliness in trade for an unpredictable amount of time.

2. Hard Brexit

Cause:

When Britain would enter into a deal with the EU covering the freedom of exchange of goods and services between the two parties, the result would be a Hard Deal Brexit, where the UK will be in more in charge of its political and economic reins. 

Prospective Change:

Unlike the “No Deal Brexit,” here UK will remain in some kind of agreement with the EU for Trade purposes and Migrations of British and Non-British citizens.

Britain will leave the significant institutions of the EU, just as in the case of No Deal.

There will most definitely be a Transition Period before the UK and EU can get into some kind of a mutual agreement over the prospective Trade deals.

Meanwhile, the regulations from the World Trade Organisation will be applicable.

Prospective Gains:

For trade practices in the UK independent of the EU, the competition will reduce since the counterparts in other states of the EU will be funneling through the borders, making them expensive and lesser in quantity. The added costs to non-native products due to any applicable taxation can most definitely help independent trades based in the UK, and it is highly likely to leave the UK markets for native products.

Whereas for businesses that depend upon the other EU states, the business will be suffering through the thinning bottlenecks at the borders making trade less smooth.

3. Soft Brexit:

Cause:

If Britain comes into agreement with the EU such that Britain will not sever ties completely. The terms will be softer and more friendly. The concept of a hard border would not come into existence.

Prospective Change:

Britain will not leave the EU Single Market, and the fundamental freedom of movement of goods, services, capital, and people will not change. The two parties will remain in a partial relationship with European Economic Area and/or Customs Union, possibly. 

There will be a healthy transition period, and the negative impact of the break would be lesser than the two other possibilities. 

Meanwhile, Britain will still remain a contributor to the EU’s budget. This will be an arrangement where both the parties involved will benefit in one way or the other. 

Prospective Gains:

The Cross border eCommerce will be affected such that, now, the Native companies with independent trades will have more competition since cross border trading will have no impediments, and the markets will remain the way they are. 

Whereas Native Companies dependent on companies outside the UK will remain enjoying the freedom of capital, good, and service exchange cross borders without any applied costs.

In addition to this, the UK might or might not enjoy the freedom to instigate trade relations with any country out of the EU.

4. Chequers Deal

Cause:

Under Chequers Deal, the UK has come up with a standard rule book to appeal to the UK and the EU alike, by agreeing upon some and leaving some other parts of the current terms. This scheme intends to retain the harmony between the parties without causing any kind of long term sufferings for either of them. 

The current scenario concludes a massive rejection from a large portion of people involved in the Deal, and members from both the party are standing against it.

Prospective Changes:

The UK will leave the EU and end free movement of goods and people with hard border principles in action. Britain will no longer be a contributor to the Budget of the EU. They will leave the EU Court and create their own jurisdiction to entertain more control inside the nation.

Prospective Gains:

While Britain will enjoy more freedom to form trade relationships with nations other than EU members, it will also ensure a free movement of goods and people beyond the border and come up with a commonly agreed-upon framework for Trades and Economic Relations.

Meanwhile, the Deal promises measures to offer a higher standard and improved quantity as well as the quality of employment and environment, which is most definitely a matter to look forward to.

How can Businesses out of the EU and the UK prepare themselves? 

The deadline for October 31, 2019, is not far away. Businesses, even if they are a part of the UK or EU or not, need to prepare themselves fast enough.

Brexit has the potential to impact the Globe, and whether or not it breaks the economy is yet to be seen.

Thus, all those involved in Global eCommerce need to be ready to go. They can try to set up themselves to take some of these actions within a few days’ notices.

Look out for Alternatives

In case the business is involved in cross border eCommerce globally, or in the UK/EU, they need to be ready with alternative services in terms of deliveries, local warehouses, virtual presence, etc.

Navigate Opportunities elsewhere

For the business in and out of the UK/EU who have been dealing with only either or both of them, they need to look out for opportunities in other markets such as North American, South Asian, etc. If the Global trade stops in the UK even for a small transition period, the smaller Merchants are going to suffer a great deal.

Look up an expert and consult for possible changes in policies

Be ready with an Economy and Business expert as well as a Legal help beforehand, so that when the changes arrive, merchants can seek advice and proceed not just safely but within the new legal rights without losing money or time.

Look out for Marketplaces that support easy Translations such as Fruugo

Make sure you go for Marketplaces such as Fruugo and Frameworks such as Magento, which support international trading, VAT calculations, Tax Adjustments as per the current rates, currency translations, support multiple languages, and much more.

Be aware

The most crucial part of being ready is to be always in the know. Merchants need to keep up with what is new in Brexit and make sure that they can adapt accordingly with concise recovery time. 

Further, whether or not Brexit is going to break the cross border trade in the EU is yet to be seen. But it is better to take measures and prevent something than go for a recovery stage after suffering loss.