• As of February 1st, 2020, United Kingdom has ceased to be a EU Member State. However, until the end of 2020, the UK will be bound by the same rules as the entire EU. Over this period no new customs duties will be levied, there will be no transport limitations nor customs clearances on the border between the EU and the UK. Also unrestricted flow of people and employees will be maintained, and an ID card will still be honoured as a travel document. The situation may change no sooner than as of January 1st, 2021.
• The UK ultimately left the EU on February 1st, 2020, after both parties entered into a withdrawal agreement. The transitional period in the EU-UK relations, effective since February 1st, 2020, is the time when United Kingdom is still treated like a Member State, with all the related rights and responsibilities. However, the transitional period will irrevocably end on December 31st, 2020.
• Currently, the EU and the UK are in the course of negotiations on the future agreement, covering, among others, future economic cooperation. Regardless of the result of negotiations, there will be changes in the trade between the EU and the UK.
• MRPiT has launched a website: www.brexit.gov.pl, including a comprehensive, electronic guide for entrepreneurs, containing the essential information on the upcoming changes in the previous economic cooperation between the EU and the UK as of January 1st, 2021. The website features up-to-date, most important information on the ongoing negotiations, including the information about changes crucial for entrepreneurs.
• Should the EU and the UK fail to reach an agreement on continued trade cooperation, their economic relations will be governed by World Trade Organization principles. This means, among others, levying customs duties and changes in VAT and excise tax clearance rules, the need for the entrepreneurs and exporters to adapt to British regulations, and restrictions for transport companies.  

MRPiT aid for entrepreneurs cooperating with the United Kingdom

Poland opts for continuation of most intense cooperation with the UK. However, the termination of the transitional period in the EU-UK relations may be particularly difficult for entrepreneurs who are unexperienced in maintaining trade, export or import relations with a country from beyond the EU customs union and unified market. MRPiT is open to any doubts of entrepreneurs and offers them substantive support, in liaison with competent offices and experts.

MRPiT’s activities related to preparing the entrepreneurs for new relations with the UK:

• Since 2016, the Ministry has kept in touch with entrepreneurs and undertakes actions related to further steps of Brexit and its aftermath.
• Meetings with representatives or organizations and sectoral employer unions, as well as with the entrepreneurs are held on a regular basis. During the meetings, the Ministry presents the current state of affairs and the prospects regarding negotiations.
• The website www.brexit.gov.pl features up-to-date, most important information on the pending negotiations, including information on key changes for entrepreneurs, recommendations, links to expert analyses and to websites containing more detailed information, including the websites of the European Commission or other public administration bodies, presenting sector-oriented information in a more thorough form.  
• Using a dedicated e-mail address: brexit@mr.gov.pl, entrepreneurs may directly ask experts in public administration questions about their business activities, in the context of Brexit.

MRPiT answers all questions after consultations with substantively competent experts in respective offices or ministries, based on the available knowledge and information gained during negotiations, often with breakdown into various negotiation result scenarios.

In mid-November this year, MRPiT published, at www.brexit.gov.pl, a comprehensive electronic guide for entrepreneurs, containing the essential information on the upcoming changes in the previous economic cooperation between the EU and the UK as of January 1st, 2021. The guide takes account of various aspects of conducted business activity and, using a series of links, creates a map of information available at the websites of the European Commission, the United Kingdom and Polish government. It helps an entrepreneur search for up-to-date information and suggests appropriate advice as to adaptation to new conditions.  

Negotiations between the EU and the UK on continued economic cooperation  

The EU and the UK are in the course of negotiations on the future agreement, covering, among others, future economic cooperation. EU Member States have accepted the agreed assumptions – negotiations guidelines for EC, aimed at preparing the text of the Agreement acceptable to the EU, to secure the interests of EU entrepreneurs, among others, by ensuring conditions of fair competition against the UK entrepreneurs.  

The most important goal of the negotiation is to maintain trade exchange with the UK in the form as similar to the current one as possible, and to ensure least troublesome difficulties and changes in trade. Maintenance of fair competition conditions, given the geographical proximity of the UK, depends on such issues as appropriate, well-determined regulatory environment, as well as similar public aid rules.

Currently, the most controversial matters of the negotiations are the issues concerning, among others, public aid, agreement management and fishery. It is necessary to strive for solutions ensuring that the United Kingdom – with the current large-scale trade exchange maintained – will be a partner observing the regulations guaranteeing fair competitions in various regulatory aspects.

In the present, final phase of negotiations, a controversial issue are also the discrepancies, among others, in the scope of fishery, including future mutual access to fishing grounds. Both for the UK and the EU countries in this region, it is an important item in the negotiations, due to the high importance of this sector for local economies of countries located by the sea. The lack of determinations in this scope will have a direct impact on the negotiations in general.

Duty on exports to and imports from the United Kingdom

Even the most ambitious Agreement will not allow to avoid all the new requirements related to trade with a third country and will not replace the internal market gains. Goods transported through and out of the border between the EU and the United Kingdom will be subject to customs clearance as well as all the related formal requirements. The United Kingdom will be treated as a third country, requiring to maintain all the customs procedures applied against third countries (i.e. countries outside of the EU). It means that customs procedures will apply to goods imported from the United Kingdom to EU-27 countries or exported from EU-27 to the United Kingdom.

In addition, importing excise goods and passenger cars from UK to the EU and the export of excise goods and passenger cars from EU to the United Kingdom will be treated as imports or exports of excise goods and passenger cars. That will result in the need to adhere to the formalities as described in the customs legislation (for instance, submitting a customs import or export declaration).

It is estimated that adopting to the new rules will be easier and faster for large companies. Small and medium enterprises face a greater challenge, in particular those who have never traded with companies outside of the EU.

This type of trading may involve additional costs and formalities, which may become the greatest barrier to overcome by the SMEs in a short period. At the same time, it is possible that some small entrepreneurs will decide to resign from cooperation with a British contractor and seek for partners inside the EU instead.

EU-the United Kingdom relations, what will change if the agreement is not signed?

It cannot be ruled out that the future relations between the EU and the United Kingdom will not be settled by the end of 2020. In economic terms, such possibility will bring consequences similar to “no deal Brexit,” i.e. the United Kingdom will leave the EU without an exit agreement. That means that the trade relations between the EU and the UK will be carried out in accordance with the rules of the World Trade Organisation, entailing, for instance, the introduction of customs duties and changes in the rules of VAT settlement, excise duty and the need for the business owners and exporters to adjust to the UK regulations, restrictions for transport companies, etc.

The likely and most significant negative effects of a lack of an agreement include:

•     imposing a customs duty on most goods at the level in force for third countries,
•     an obligation to pay VAT on imported goods at the border (in principle),
•     introduction of changes related to the collection of excise duty,
•     introduction of lengthy and thorough border, customs, phytosanitary, veterinary inspections, etc.
•     possible difficulties in exporting animals and goods of animal origin in case of animal diseases,
•     new costs due to the adjustment to the new, British technical standards, sanitary and phytosanitary standards,
•     extension of delivery times due to the restoration of border controls and border queues, which will hinder deliveries (transport-logistics disruptions),
•     the risk of weakening or breaking supply chains,
•     potential difficulties in rendering services in Great Britain – in particular related to cross-border services,
•     the lack of the country-of-origin principle, resulting in the obligation to render services based on British regulations,
•     hindered access to financing and investment opportunities,
•     limits regarding the transfer of personal data to the UK.

Economic relations between Poland and the United Kingdom

The United Kingdom is and will remain an important economic partner for the European Union and for Poland. It is the third largest recipient of Polish exports – the total value of exports to the UK reached PLN 42.5 billion (5.7 percent share in the country). During the third quarters of the current year, the total value of commodity exchange between Poland and the United Kingdom amounted to PLN 57.5 billion (EUR 13.1 billion).

The United Kingdom is the second largest (after Germany) recipient of Polish agri-food products. Approximately 9 percent of the Polish exports from the agri-food sector is exported to the stores in the UK with a total value of nearly PLN 10 billion after three quarters of the current year.

The United Kingdom is also a particularly important recipient of Polish services (no. 2 in Germany in 2019). Revenues from the export of services to the UK market last year reached a value of nearly PLN 21.1 billion (7.8 percent share on a national scale). The leading export services to the United Kingdom include business management, telecommunications, IT services, information services and transport.

The Polish government is aware that the future, well-regulated economic relations with the United Kingdom are of great importance to many Poles who live and work there and engage in active and successful business exchanges with the British partners. That is why it aims to ensure that Polish entrepreneurs experience the least difficulties related to the so-called transition period on 31 December 2020.

Regulations governing the stay of Poles in Great Britain

The residence rights of Polish nationals residing in the UK until the end of the transition period are already regulated by the Withdrawal Agreement. This means that Polish citizens who come to the UK before 31 December 2020, can apply for the so-called settled or pre-settled status.

An important change for citizens wishing to emigrate to the UK will involve the newly adopted migration system, which takes into account the UK’s withdrawal from free movement. The greatest changes include: the so-called point-based system The following criteria will serve as the basis for assessment:

• English language skills,
• education or competence,
• the need to reach the required salary threshold,
• obtaining prior approval for arrival.