Brexit Implications Need Urgent Business Focus

PREPARING FOR A ‘NO-DEAL’ BREXIT ON OCTOBER 31st 2019

This document is aimed at providing a quick guide to the current situation in respect of Brexit for businesses based in Guernsey and those businesses outside of the Bailiwick who trade into the Bailiwick.

As the 29th March 2019 date has passed and we approach the new potential leave date of 31stOctober 2019, the States of Guernsey is actively reviewing its ‘No-deal’ planning processes and preparing to initiate once again its No-deal management processes and contingency plans. The States of Guernsey continues to work with the UK Government Department on all Brexit matters. There is still much uncertainty around Brexit and therefore both the UK Government and the States of Guernsey must plan for every possible outcome including No deal. Without a Deal, businesses may need to take action before 31st October 2019.

The Current Situation

Currently, the 31st October 2019, is the legally defined date at which the UK will leave the European Union. This date was agreed by the EU Commission and remains the legal default position in both a Deal or No-deal scenario. Without any further progress in agreeing a Deal, it is prudent that both the UK Government and the States of Guernsey continue to prepare for the re-establishment of our operational contingency plans over the summer months in order to ensure we are best prepared for all eventualities.

It is important to consider what impact a No Deal Brexit on 31 October 2019 could have on your business and how this differs from the impacts that were anticipated in March 2019. The following information may be helpful to understand how leaving the EU may affect your business and what how you may need to amend any existing contingency plans;

The Bailiwick of Guernsey forms part of the Common Travel Area (‘CTA’), along with Jersey, the Isle of Man, the UK and Ireland and allows for a simplified process enabling citizens within the CTA to move as freely as possible. The UK Government and the EU, which includes Ireland as a Member state, have an agreed commitment to protect the CTA in a No-deal Brexit.

The rights of EU/EEA/Swiss citizens and their family members, resident in the Bailiwick of Guernsey will change when the UK leaves the EU.

The UK and the EU have agreed that affected citizens’ rights will continue until 31 December 2020. As a result, if those citizens want to stay in the Bailiwick of Guernsey beyond that date, they will need to apply under the EU/EEA/Swiss Settlement Scheme. This will allow those citizens and their family members to continue to live and work in the Bailiwick of Guernsey and will allow the continuation of their rights to healthcare, work arrangements and public services.

Bailiwick of Guernsey based businesses which rely on the free movement of their workforce from Guernsey into the EU will need to ensure that members of their workforce are travelling with all current and relevant travel documentation, and whilst it is not anticipated that there will be any particular issues with entering EU Member State countries, it is not unreasonable to suggest that

1. Workforce – Employing EU Citizens, Free Movement of workforce within the Common Travel Area (CTA)

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some border controls, especially those at busy airports and ports, could become congested at immigration checks at EU border control posts.

2. Goods and Services – Importing, Exporting Goods and Services and Transporting Goods

It could be the case that congestion is particularly evident on the Dover Strait routes such as the Channel Tunnel and those regular routes used by frequent travellers (both air and sea) where delays may be incurred for UK arrivals (and departures). The knock-on-effect could lead to some travel disruption. Those Guernsey businesses which rely on the movement of goods in and out of the Island, particularly those reliant on supply chains, both originating from the UK and where goods arrive from the EU into the UK before onward shipment to Guernsey (and vice versa) are advised to review their supply chain carefully and consider alternative routes for critical goods if necessary. Analysing the supply chain will ensure that your business has identified what products come from and go to the EU and by which routes. This information will assist in preparing your business for a‘No-deal’ Brexit scenario.

It is expected that in a No-deal scenario all goods entering the UK from the EU will be subject to HRMC checks and that a streamlined customs process will be in place to ensure that goods can flow as quickly as possible. It is important to note that the UK will not be dropping any of its Border procedures relating to the movement of goods, or people at UK frontiers, but will be streamlining the border processes to continue to protect the integrity of the UK Customs territory whilst ensuringthat goods, particularly those transported in heavy goods vehicle’s (‘HGV’s’) will continue to flow,albeit at a potentially reduced rate.

In comparison, freight traffic destined to the EU from the UK could be subject to some delay, as at the point the UK leaves the EU, UK freight movements will become immediately subject to additional customs declarations and checks as third country goods as they enter the EU. Therefore it is not unreasonable to suggest that flow rates for freight movements, particularly those moving through the Dover straits could potentially be impacted.

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3. Disruption and Delays in Services – Essential Supplies

It is not anticipated that there will be an overall shortage of food in the UK or onward to Guernsey but due to the potential for disruption within the supply chains, certain product lines may be limited. This will be particularly relevant for certain types of fresh and short shelf life foods, as supplies may be subject to border delays.

Therefore it is possible that due to the impact on the logistical chains, certain items may be in short supply, especially considering preparations for Christmas, which is the busiest time for food retailers and logistical companies. It is important to note that the shortage of certain food lines may not simply be related to the supply of that particular product line, but could be related to the short supply of other critical ingredients, chemicals or packaging. With the increase in demand there is also the potential for an increase in price.

4. Information and Data Sharing – Data Transfer and Data Protection

In the event of a ‘No-deal’ Brexit, it is anticipated that the UK will not have made a data protectionadequacy agreement with the EU before the 31st October 2019. The reason for this assumption is that it takes a number of years to reach agreement and, due to the complex nature of any negotiation achieving this the short timeframe makes this highly unlikely. Therefore this could disrupt the flow of personal data due to new legal requirements between the UK and EU only.

Guernsey has already put in place steps to mitigate any issues relating to the transfer of data and has already adopted legislation based on the EU General Data Protection Regulation (GDPR) which maintains our adequacy status by the EU Commission. This will not change as a result of Brexit.

The Committee for Home Affairs has published a Policy Letter outlining the contingency plan to enable the continued exchange of data between Guernsey and the UK. This will provide certainty to businesses operating from Guernsey and their clients both in the UK and Europe. We will continue to engage with the EU and the UK to ensure that this mitigation strategy is understood.

5. Summary Information

Guernsey based businesses are asked to consider the practical implications of a No Deal Brexit in a proportionate and balanced approach. Guernsey has a built-in resilience to minor disruption to the supply chain due to the very nature of being an island economy, particularly in the winter period when inclement weather can cause some minor delays. However, this must not lead to complacency. It is anticipated that delays to supply chains could manifest in a similar manner where some items which are routinely available in all sectors may not be available or subject to delay for a period of time. This could also be exacerbated due to the time of year and proximity to Christmas which also puts added demand on the supply chain. The disruption experienced as a result of a No Deal Brexit may be prolonged for a sustained period. It is very much against this background that we are asking businesses to prepare.

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The States of Guernsey continues to work very closely with all stakeholders both locally and in the UK to ensure that any disruption is kept to a minimum. However, the States of Guernsey cannot guarantee continued supply and therefore we ask businesses to closely analysis their operations to identify any areas of concern with the aim of mitigating these prior to the 31st October 2019.

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