Prep now for hard Brexit

Time to re­view your po­si­tion, says Kerry Tea­han of Car­son Mcdow­ell

Belfast Telegraph - Business Telegraph - - Front Page - By kerry tea­han, Car­son mcdow­ell Part­ner and head of Pro­cure­ment

There is still no real clar­ity as to the form that Brexit will take when the fast-ap­proach­ing 2019 dead­line hits. Theresa May’s cur­rent stance that “no deal is bet­ter than a bad deal”, and the re­cent com­ments made by the EU’S chief ne­go­tia­tor, hint heav­ily that the so-called “hard Brexit” could po­ten­tially re­sult in North­ern Ire­land busi­nesses’ worst case sce­nario — a hard Brexit with a bor­der on the is­land of Ire­land.

Michael Barnier, in his first ma­jor speech since talks be­gan in June, com­mented that “fric­tion­less” trade with the EU will be im­pos­si­ble if the UK leaves the sin­gle mar­ket,

As such, bid­ders re­liant on trade with EU mem­ber states should re­ally be con­sid­er­ing the fol­low­ing steps now. • When ten­der­ing, due plan­ning should be given to how to “price in” or ad­just pro­pos­als to take ac­count of po­ten­tial fu­ture risks such as re­stric­tions on free move­ment of work­force, im­po­si­tion of taxes, levies, du­ties or po­ten­tial changes in law without los­ing a com­pet­i­tive edge.

Any at­tempt to re-ne­go­ti­ate con­tracts post-brexit to take ac- count of these types of changes is likely to prove dif­fi­cult given the cur­rent le­gal re­stric­tions on mak­ing “ma­te­rial” changes to pub­licly pro­cured con­tracts.

If a ma­te­rial change that does not fall within very lim­ited ex­cep­tions is re­quired, this may mean the con­tract is ter­mi­nated and a fresh pro­cure­ment process re­quired.

While these rules could po­ten­tially be re­laxed in the long term for con­tracts be­ing pro­cured within the UK, in the short term, the rules will re­main the same and any change to the EU po­si­tion longer term is un­likely. • Pre­pare for the sit­u­a­tion where there will not be some form of free trade ar­range­ment with the EU, a prospect which looks pos­si­ble given the Govern­ment’s cur­rent pro­pos­als and the EU’S ne­go­ti­a­tion stance.

North­ern Ire­land busi­nesses should con­sider there­fore wheth- er it is pru­dent to set up a busi­ness en­tity within the EU, the most ob­vi­ous prospect per­haps be­ing the Repub­lic of Ire­land, to en­sure the same con­tin­ued ac­cess to the EU mar­ket post-brexit.

There is a rel­a­tively low cost in­volved in do­ing so, for ex­am­ple, set­ting up an Ir­ish sub­sidiary firm.

This may be a par­tic­u­larly im­por­tant step for those bid­ders wish­ing to en­sure they can still avail of the same rights and reme­dies they are cur­rently af­forded by the EU pro­cure­ment law when bid­ding for pub­lic con­tracts.

If the UK was to exit the EU and rely on the World Trade Or­gan­i­sa­tion and Govern­ment Pro­cure­ment Agree­ment (GPA) to reg­u­late its pro­cure­ment re­la­tion­ship with the EU — an op­tion that has been mooted in more than aca­demic cir­cles — this would re­quire a Uk-spe­cific sched­ule to be ne­go­ti­ated to the GPA. The UK is a mem­ber of the GPA sim­ply by virtue of its EU mem­ber­ship, not as a stand­alone mem­ber.

If not ne­go­ti­ated in time, then bid­ders based in North­ern Ire­land may not be able to in­voke the same rights and reme­dies in pub­lic ten­der com­pe­ti­tions as their com­peti­tors in the Repub­lic of Ire­land.

Con­versely, those bid­ders es­tab­lished out­side of the UK, or who do not cur­rently have a UK pres­ence, should con­sider set­ting up an en­tity within the UK to ad­dress the prospect of the UK ex­it­ing without some form of free trade deal and/or that the pro­cure­ment rules within the UK evolve longer term to of­fer some form of ad­van­tage for Uk-based busi­nesses.

We are rec­om­mend­ing that those re­liant on EU and UK ten­ders start to take ad­vice now to get their ducks in a row. Whilst there is cer­tainly an ap­pre­ci­a­tion of the need for ro­bust trade agree­ments to be put in place, and the Govern­ment ap­pears hope­ful that this can be achieved on time, time is short and there is a lot of work yet to be done.

While we can all hope for the best, it is pru­dent and in­deed nec­es­sary to re­view your po­si­tion now and en­sure that you are pre­pared for all po­ten­tial sce­nar­ios. As the old say­ing goes, fail to pre­pare, then you may pre­pare to fail.

North­ern Ire­land busi­nesses should be­gin prepar­ing now for Brexit and the new trad­ing chal­lenges it will bring

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.