Brexit: damper for German-British foreign trade

December 27, 2021


The United Kingdom (UK) officially left the European Union (EU) on January 31, 2020. Due to a transitional arrangement, the country participated in the EU's internal market until December 31, 2020. Since January 1, 2021, trade relations between the two economic areas have been regulated by a trade and cooperation agreement.

The agreement, which was agreed at the last moment (December 24, 2020), provides that trade in goods between the EU and the UK can take place without tariffs and quantitative trade restrictions if the companies involved comply with the rules of origin, which are considered complex and product-specific (Ayele et al., 2021a). There are also formalities such as customs declarations and controls of product standards and compliance with veterinary regulations and their controls. All of this makes trade more expensive for both the EU and the UK. The EU has been using border controls since January 1, 2021, the UK has given companies relief, such as the option to postpone declarations by up to 175 days (GOV.UK, 2020) and will only gradually introduce certain controls until January 1. July 2022 (Jerzewska, 2021, 3).

In order to save the expenses and costs associated with providing evidence of the rules of origin, some companies even do without the proof of origin and accept (low) customs duties. Calculations by the UK Trade Policy Observatory of the University of Sussex come to the result that from January to July 2021 about 25 percent of the British export value to the EU was subject to tariffs, although duty-free access would have been possible (Ayele et al., 2021b, 7 ).