Impact of Brexit on businesses

On 24 December 2020, the EU and the UK concluded their negotiations on the Trade and Cooperation Agreement (TCA) and complementary agreements on security of classified information (Security of Classified Information Agreement, SCIA) and nuclear cooperation (Nuclear Cooperation Agreement, NCA). These agreements have been applied from the beginning of 2021.

The UK exited the EU single market and the Customs Union on 1 January 2021, as the UK and the EU are now two separate market areas with different regulations and laws. The free movement of goods, services, capital and people ended.

The TCA is a comprehensive package. It covers such typical free trade agreement areas as trade in goods, trade in services, digital trade, investments, public procurements, intellectual property rights, small and medium-sized companies, energy, good regulatory practices and regulatory cooperation, as well as fair competition or sustainable development. It offers, among other things,

•            zero tariffs and quotas on trade between the UK and the EU, where goods meet the relevant rules of origin

•            comprehensive rules on equal conditions of competition and

•            extensive access to tendering for British public procurement processes.

The agreement does not replace the single market. Significant changes in trade between the EU and the UK after 1 January 2021 show, for example, in the form of new formalities and increasing bureaucracy.

How these changes will affect an individual company depends on factors such as the company’s field of activity, location and position in the production chain. Some of the changes are product-specific.

The Foreign Ministry’s sphere of responsibility includes, for example EU free trade agreements.

EU free trade agreements

The EU has a free trade agreement with more than 70 countries, which means that the network is one the most comprehensive ones in the world. From 1 January 2021 onwards, the UK ceased to be a party to the EU’s trade agreements.

This may have consequences for such exports from Finland or the EU to countries that are parties to the EU’s trade agreements that use British content. Content originating in the UK is no longer considered EU content, which may have an influence on whether a product is held as originating in the EU in third country markets and whether a product can benefit from the tariff preferences provided for in the trade agreement (including lower tariffs or zero tariffs).

Export control of dual-use items

Dual-use items exported from the EU to the UK are subject to an export authorisation from 1 January 2021 onwards. The Union General Export Authorisation EU001 is applied, which means that Finnish export companies register as users of this export authorisation in the Foreign Ministry’s e-services. The conditions of the export authorisation must be met. If the conditions of the Union General Export Authorisation are not met, the exporter must apply for an individual export authorisation.