11:59, January 10 42 0 theguardian.com

2018-01-10 11:59:04
What a ‘no deal’ Brexit scenario would mean for key UK industries

Medicines

More than 2,600 drugs are manufactured, at least in part, in the UK, and many are shipped to the continent. All of those drugs need to be authorised by the European Medicines Agency, which is moving from the UK to Amsterdam after Brexit. If there is no agreement struck that the EMA will remain the “marketing authorisation holder” for the UK, then there will be a fracture. All drugs made in the UK and going to the EU will need to be retested once exported, and vice-versa. The process of tests on both sides of the channel and Irish Sea will slow down the supply of new drugs on to the market. The EU has warned the pharma sector to rethink their supply chains, and make contingency plans.

Seafarers

The EU has warned that those who have certification from UK authorities that they can legally work on vessels on the sea, will no longer be able to work on those going under the flag of the 27 EU member states, be they fishing boats, ferries or super-yachts. The development has alarmed the seafarers’ union, Nautilus International, which has demanded the UK government ensure that there are no barriers to British sailors’ employment.

Quick guide

What are Brexit options now? Four scenarios

Staying in the single market and customs union

The UK could sign up to all the EU’s rules and regulations, staying in the single market – which provides, free movement of goods, services and people – and the customs union, in which EU members agree tariffs on external states. Freedom of movement would continue and the UK would keep paying into the Brussels pot. We would continue to have unfettered access to EU trade, but the pledge to “take back control” of laws, borders and money would not have been fulfilled. This is an unlikely outcome and one that may be possible only by reversing the Brexit decision, after a second referendum or election.

The Norway model

Britain could follow Norway, which is in the single market, is subject to freedom of movement rules and pays a fee to Brussels – but  is outside the customs union. That combination would tie Britain to EU regulations but allow it to sign trade deals of its own. A “Norway-minus” deal is more likely. That would see the UK leave the single market and customs union and end free movement of people. But Britain would align its rules and regulations with Brussels, hoping this would allow a greater degree of market access. The UK would still be subject to EU rules.

The Canada deal

A comprehensive trade deal like the one handed to Canada would help British traders, as it would lower or eliminate tariffs. But there would be little on offer for the UK services industry. It is a bad outcome for financial services. Such a deal would leave Britain free to diverge from EU rules and regulations but that in turn would lead to border checks and the rise of other “non-tariff barriers” to trade. It would leave Britain free to forge new trade deals with other nations. Many in Brussels see this as a likely outcome, based on Theresa May’s direction so far.

No deal

Britain leaves with no trade deal, meaning that all trade is governed by World Trade Organisation rules. Tariffs would be high, queues at the border long and the Irish border issue severe. In the short term, British aircraft might be unable to fly to some European destinations. The UK would quickly need to establish  bilateral agreements to deal with the consquences, but the country would be free to take whatever future direction it wishes. It may need to deregulate to attract international business – a very different future and a lot of disruption.

Haulage

Long-haul lorry and coach drivers will no longer be able to rely on their UK certificate of professional competence and will need to obtain certification from one of the 27 member states if they want to continue to work across Europe, the European commission has warned. UK companies involved in transporting goods across the EU will also need to have a base on the continent or Ireland if they wish to continue to operate.

Aviation

In order to fly passengers and luggage across the EU, a carrier must have its headquarters in an EU member state. For this reason, easyJet has established an HQ in Austria. There are also ownership strictures. A carrier must be majority-owned or effectively controlled by EU member states or nationals of EU member states. The pan-European company, IAG, which owns Iberia and British Airways, faces a problem. As it stands, it will need to disinvest UK shareholders in order to become EU majority-owned or face being told that Iberia cannot fly between Madrid and Barcelona. UK carriers will also fall out of aviation agreements with third countries such as the US, imperilling pan-Atlantic services, unless bilateral agreements can be struck.

Agriculture, food and drink

Pig breeders, mineral water exporters and horse owners have been warned that contingency plans should be made. UK-based breeders of pure-bred and hybrid breeding pigs are told that they need to register their breeds in the books of the other 27 member states in order for them to be recognised in the rest of Europe. Horses entering the EU will be treated as if they come from a third country, potentially dealing a blow to the racing community in the UK and Ireland. As it stands, horses need only to have an EU passport and be on a livestock database. They do not require a veterinary export health certification or customs documentation. Mineral water exporters will need the approval of the EU member states, who have their own industries to protect, if they are to sell them on the continent.

Law

The courts in member states and the UK would no longer recognise and enforce each others judgments and “judicial cooperation with the UK (eg in relation to the service of documents and evidence) … will cease”, the European commission says. The current mechanism, whereby UK citizens can apply to courts across the EU for small claims and vice versa, will also come to an end. With regard to data transfers, the commission has warned that businesses transferring data between the UK and EU member states will have to take extra safeguards or prove that they should be given a derogation from the regulations pertaining to the sharing of data with third countries.

Development and aid

UK-based companies and NGOs successful in securing grants, prizes or contracts with the European commission to carry out development work around the world will lose their funding on 29 March 2019. Those who have submitted a tender for a contract will be rejected outright if the procurement process drags on beyond Brexit day, and they will not be able to recoup their costs.

Financial services

A notice to stakeholders is yet to emerge, but Michel Barnier, the EU’s chief negotiator, said in a speech in Brussels on Tuesday that it was “important that all businesses clearly analyse their exposure to the United Kingdom and are ready to adapt their logistical channels, supply chains and contractual clauses, including in the financial services sector”. Without the continuation of passporting rights, which allow financial service providers in the UK to operate across the EU, those headquartered in London need to establish a base in an EU member state to continue their operations, as many are today are doing.