Over the past four years, 'Brexit' has become familiar to everyone. Brexit is a portmanteau of the words "British" and "exit" coined to refer to the U.K.'s decision in a June 23, 2016 referendum to leave the European Union (EU) with 51.9% of the ballot. Moreover, the United Kingdom (U.K.) government used Article 50 of the Lisbon Treaty as the first process of leaving the EU. Not only it's the first time a country withdraws from the international trade cooperation group, but it also happens with the European Union (EU), one of the strong political and economic partnerships. Therefore, many countries worry about the impacts of Brexit on the global economy and closely monitor the U.K. - EU future relationship after the Brexit.

The Brexit process, the withdrawal of the U.K. from the EU, is protracted over four years since the 2016 referendum, with the deadline of the negotiation with the EU before 31 December 2020; otherwise, the U.K. has to leave without a new trade agreement. The Brexit negotiations process took several steps, including the Withdrawal Agreement, completed at the beginning of 2020 due to the complex issues. Then, the U.K. and the EU have begun negotiating an agreement to determine their relationship after Brexit since March 2020, with various issues appearing to be unable to find common ground. Many parties thought that the U.K. would leave the EU without the deals, which can cause large damage to the business sector. However, both the U.K. and the EU finally agreed on the EU-UK Trade and Cooperation Agreement on 24 December 2020.

The significant success of the Brexit Agreement allows the UK and EU to continue trading with zero tariff and zero quota, the customs clearance process and health requirements have become more complicated and expensive. However, there will be more complex customs procedures, product checkpoint at the border, import and export declaration requirements, etc. In the future, the EU will make the principles of fair competition and the right to use comprehensive countermeasures as the norm for negotiating trade agreements between the EU and other countries. The preliminary agreements from Brexit are as follows: 1) zero tariff and zero quota on import and export 2) ending free movement of workers between the U.K. and the EU 3) establishing border checkpoints between the EU and the U.K. 4) No establishing hard border checkpoints between Northern Ireland and Ireland 5) the U.K. will take back 25% of the EU's fishing quota, with changes phased in over five-and-a-half years 6) remain contract partnership to build collaboration on environmental aspects, global warming, carbon emissions reduction, and other matching interest aspects such as energy, safety, and public transport 7) Mutual agreements to protect labor rights and society 8) Maintain tax transparency standards 9) Labor and passenger rights in transportation business 10) continuing programs that the UK has with the EU until 2027.

However, after the 1st January 2021, exports from the countries with no trade agreement to the U.K. will use UK Global Tariff (UKGT) instead of Common External Tariff (EU CET). The U.K. has considered adjusting the UK Global Tariff (UKGT) to suit the country's needs and support its domestic business to be more competitive. The U.K. reduced tax rates to consumer products, household products, materials, which are essential in the production of the supply chain, the products that cannot be manufacturing by themselves, and the products that support the green industry. Moreover, the U.K. also temporarily exempts import tariffs on medicine and medical equipment used to prevent the COVID-19. Thai exporters will get advantages from the U.K.'s new tax rate structure including Fair Competition and Trade Creation. With tax exemption, many Thai products will get benefits. The significant products that Thailand will benefit from the lower import taxes include processed chickens, rubber gloves, car equipment, and components, Jewelry, etc. Furthermore, if Thailand reaches a free trade agreement (FTA) negotiation with the U.K., Thailand will have more competitiveness compared with other countries especially agricultural products and processed agriculture products, clothing, automotive parts, tires, and electrical appliances, etc.

Overall, it can be said that the Brexit agreement will boost Thailand exports, especially in the rubber gloves industry, tires, and automotive parts. Thailand will benefit greatly not just from the new UK tax rate structure but also from more trading opportunities.

Mr.Chaiyos Sincharoenkul

President

The Thai Rubber Association