Brexit's Impact on UK Businesses

This assignment examines the significant influence of Brexit on various aspects of UK businesses. Students are tasked with researching and analyzing the implications of Brexit on areas such as logistics operations, trade policy changes, the energy sector, and company law. The goal is to provide a comprehensive understanding of how Brexit has reshaped the business environment in the United Kingdom.

Running head: ANALYSIS RELATED TO BREXIT EFFECT ON AEO SCHEME
ANALYSIS RELATED TO BREXIT EFFECT ON AEO SCHEME
Name of the Student
Name of the University
Author Note

1ANALYSIS RELATED TO BREXIT EFFECT ON AEO SCHEME
Executive Summary
The report is based on the analysis of the situation that is created after the Brexit decision that
has been taken the United Kingdom. Brexit is mainly related to the withdrawal of United
Kingdom from EU. The traders in the UK enjoy free access for selling the goods within EU
member countries without too much documentations. The decision that has been taken by UK
regarding the exit from European Union has led to the changes in the agreements related to
customs and has huge implications for the business organizations in UK. The major aspects
of the business related to the trading relationship are, the nature of the customs checks, the
systems related to swift clearance in the border and the provisions related to the new Customs
Code of UK. The report is concluded by stating that the Brexit has affected the business
environment and AEO certifications to the companies also have a major impact.

2ANALYSIS RELATED TO BREXIT EFFECT ON AEO SCHEME
Table of Contents
Introduction....................................................................................................................3
Definition of AEO scheme.............................................................................................4
The benefits of the AEO Status......................................................................................5
Case study examples related to the benefits of AEO status...........................................7
Case study 1...............................................................................................................7
Case study 2.............................................................................................................10
Implications of Hard Brexit.........................................................................................11
Conclusion....................................................................................................................12
References....................................................................................................................13

3ANALYSIS RELATED TO BREXIT EFFECT ON AEO SCHEME
Introduction
The decision of the exit of UK from the European Union has been termed the “Brexit”
or “British exit”. This decision was taken by UK in the year 2016 with the help of the
referendum that was issued on June 23, 2016. The vote that had taken place for the decision
of UK to leave the European Union had defied the expectations of the global markets and the
value of British pound had fallen to the lowest level. The Prime Minister of UK, David
Cameroon resigned from the post in the following month as he was against the decision that
was taken by the votes. Cameroon was then succeeded by Theresa May as Prime Minister of
UK and the leader of the Conservative party (Baatz2015).
The process of Brexit can be divided into two parts which are “hard Brexit” and “soft
Brexit”. Hard Brexit can be defined as the withdrawal of UK from the European Union where
Britain will not participate in the single market of EU and the legal rules related to that
market as well. The full control of the immigration system of UK will be in the hands of
British government. The rules related to immigration will also become much strict than
before. The hard Brexit option would be related to the compliance of UK with the rules of the
World Trade Organization or WTO to carry out the trade with Europe. Soft Brexit can be
interpreted as the arrangements that can be made when UK will leave the European Union
that are related to trade between the countries (Bergin et al. 2017). The softer solution is
related to the strategic partnership agreement with the other countries in the European Union.
The analysis that will be performed in the report will be based on the AEO scheme
related to the Brexit effect in UK. The AEO scheme or Authorised Economic Operator is
related to the trade related schemes of the countries that are part of European Union (Busch
and Matthes2016).

4ANALYSIS RELATED TO BREXIT EFFECT ON AEO SCHEME
Definition of AEO scheme
Authorised Economic Operator or AEO can be defined as the parties who are
involved in the movement of international goods which are approved by the national
administration while they comply with the WCO or World Customs Organization about the
rules related to the security of the supply chain of the organization. Authorised Economic
Operators include, importers, manufacturers, brokers, exporters, intermediaries,
consolidators, airports, integrated operators, terminal operators, distributors and warehouses
(Chang and Wu 2015). The threats related to the security of goods have increased with the
increase in global trade and international movement related to the goods. This issue has
shifted the focus of the administrators of the customs departments towards providing the
security related to the flow of international trade from the major focus of collecting duties.
AEO is considered to be one of the major parts related of the SAFE Framework that
was introduced by WCO. The core elements of the SAFE Framework are,
 Harmonization of advance information related to the electronic cargo.
 The countries which join the SAFE Framework are committed towards the
employment of risk management programs that are consistent in nature and
are able to address the different threats related to security (Chang-Bong et al.
2016).
 The customs administration of the sending nation also needs to perform high
security checks of risky cargo and containers on the request of the receiving
nation.
 The benefits that will be provided to the businesses by the Customs who
comply to the minimal security requirements related to supply chain and
follow the best practices as well (Dhingra et al. 2016).

5ANALYSIS RELATED TO BREXIT EFFECT ON AEO SCHEME
The concept related to AEO is found in the Customs-to-business partnerships where
the operators of the business are accredited as AEOs by the Customs if they are able to prove
the high quality of the internal processes. The businesses cab prove the quality of the internal
processes related to supply chain in the following ways,
 Ensuring the integrity of information related to the things that are present in
the containers.
 Ensuring integrity of the employees, so that they do not put any wrong items
in the containers.
 Securing the access to the premises of the business so that they can prevent
unauthorised access (Geerlings, Kuipers and Zuidwijk2017).
The European Union had established the AEO concept which was based on standard
that are recognised internationally and they also created a legal base for this concept in the
year 2008 with the help of “security amendments” to “Community Customs Code” or CCC
and the provisions related to its implementation. The programme mainly aims towards
enhancing the international security of supply chain and thereby to facilitate trade that is
legitimate and is also open to the supply chain actors. The AEO status is given by the
European Union to those organizations which are established in customs territory related to
the Union and is part of the international supply chain (Grainger 2016).
The benefits of the AEO Status
The benefits that are offered by the AEO are the major part of EU legislation that
govern the status of AEO. The different benefits provided by AEO are,
 The major benefit that is enjoyed by the organizations with AEO certification
is the high level of facilitation.

6ANALYSIS RELATED TO BREXIT EFFECT ON AEO SCHEME
 The delivery of the containers related to import or export are made directly to
the ports.
 The authorized personnel are provided ID cards so that they can get problem
free entry to the various customs houses and departments (Hughes 2017).
 The organizations receive separate space that are available in the premises of
the custodian.
 The companies with AEO certification receive reduction in the bank
guarantee.
 The investigations related to any type of trade that is done the companies are
completed within six or nine months.
 The organizations also receive notifications through emails related to the
arrival as well as departure of vessel that are carrying their consignments.
 Clearances are received all through the day and night if requested by the
organizations at all the ports related to sea and airports (Kasperbauer2017).
 The scrutiny conducted by the officers related to Custom and the verification
of the seal are also waived for the organizations with AEO certification.
 The duty payments that are to be made by the organizations are also deferred.
 The various documents of the organizations that are related to import or export
are processed on a priority basis.
 The completion of Special Valuation branch is done quite fast for the
accredited organizations as compared to the normal ones.
 The release time of the cargo of the certified organization is less as compared
to the others.
 The facility is provided to the organizations so that they can paste the MRP
stickers (Kee and Nicita2017).

7ANALYSIS RELATED TO BREXIT EFFECT ON AEO SCHEME
 The access related to the consolidated data of export and import is given to the
accredited organizations.
 The discussions that are made with the organizations are paperless in nature
without any supporting documents.
 The fees related to overtime of the merchant is also waivered for the
accredited organizations.
These major benefits are provided to the organizations which have a AEO status. The
European Union has also established the AEO status which are related to the countries and
the business organizations of those countries which are part of EU (Lu and Koufteros2014).
Case study examples related to the benefits of AEO status
Case study 1
The first case study is titled as “The perceived impacts of AEO security certifications
on supply chain efficiency – a survey study using structural equation modelling”. The impact
of AEO status of the organizations on the supply chain activities is the main topic of
discussion in the case study. The criminal activities related to the supply chain which include
counterfeiting of the cargo, theft related to the cargo are the major vulnerabilities of supply
chain. The parliament of Europe has also reported theft related to cargo and lorries in Europe
which amounted to a value of 8.2 billion Euros (Urciuoli and Ekwall2015). The Federal
Bureau of Investigation of USA has also reported theft of cargo within the range of 10 billion
dollars and 30 billion dollars. Other reports related to this issue have shown that the pirated
and counterfeited items in Europe have amounted to 176 billion dollars in the year 2007.
According to researches that were done in the year 2006 have shown that more than 3 million
of the total pharmaceutical products were counterfeited (MacDonald 2016).

8ANALYSIS RELATED TO BREXIT EFFECT ON AEO SCHEME
As discussed by, Urciuoli and Ekwall (2015), the supply chain operators of Europe
who are interested in mitigating and preventing the consequences that can occur due to the
breach in security have the choice of joining voluntary programs of certifications,
certification of the businesses and the certifications of the authority that are issued by the
governments. The supply chain managers have to face new challenges that are related
decisions that are made related to the choice of certifications and also to evaluate the impact
that the certifications can have on the supply chain of the organizations. The research related
to the organizations have many diverse opinions related to this issue. The researchers
sometimes claim that the costs related to certification are sometimes an extra burden for the
organizations. The loss of efficiency is related to the loss of competitive advantage that the
organization holds in the market (Masouros and Papadopoulos 2016).
The main purpose of the case study is to boost the understanding related to the
impacts that AEO certification has on the efficiency of the supply chain of an organization.
This research is mainly conducted to analyse whether the AEO certification is able to provide
companies which comply with rules of the certification with benefits that are beyond the
improvement of security (McGrattan and Waddle 2017).
The AEO programme is comprised of a wide range of programmes related to trans-
border security which are available to the managers so that they can secure the supply chain.
The AEO certification is not mandatory for the organizations. however, they voluntarily
apply for this. The AEO concept is a major part of the SAFE Framework which is related to
the standards that are designed by World Customs Organization (WCO) which help in the
dissemination the requirements of security. The legal requirements of the AEO programme
are explained in the European Council Regulation. The AEO certifications are evaluated with
the help of the Customs authority. The certificates of AEO are provided based on criterion
that can benefit the organizations. The certifications related to AEO are available in many

9ANALYSIS RELATED TO BREXIT EFFECT ON AEO SCHEME
different forms including, AEO-C, AEO-S, AEO-F (Mendez-Parra, teVelde and Winters
2016).
The real impact of the AEO certifications on the efficiency and security of the
organizations are questioned by many researchers. The implementation of the AEO
guidelines are not performed in an efficient manner as it is the complete responsibility of the
organizations without any detailing done by the AEO certification body. The security of the
organizations can be hampered in the process and the company can incur monetary or non-
monetary loss. The impact of AEO certifications can also be analysed from the efficiency
point of view. The major importance lies in the mutual recognition and this requires data
sharing from government-to-business viewpoint. Mutual recognition is important for the
organizations, which operate on an international basis.
The certification of AEO gives the international organizations a quality mark that is
recognized internationally and they do not need to follow multiple certifications (Thompson
2016). Complying with the requirements of the AEO certification intensifies the way by
which communication and data sharing is performed between the international companies.
This could further result into an extra burden for the administration of the organization. The
improvement of security related to the organization can further increase the efficiency of the
organizational processes. The relation between the efficiency and security has been discussed
in the case study that is taken into consideration. The analysis in the case study has revealed
that the AEO certification is used by the organizations to facilitate the trade related operations
rather than enhancing the security of the operations. The European organizations have
therefore been affected by the rules and regulations that are set for the countries that are
members of EU. Brexit will further impact the laws of AEO related to the United Kingdom
(Urciuoli and Ekwall2015).

10ANALYSIS RELATED TO BREXIT EFFECT ON AEO SCHEME
Case study 2
The second study has been titled as “The adoption of Authorised Economic Operator
standards in the UK”. United Kingdom is considered to be one of the largest traders in terms
of goods in Europe. The International trade with the member countries of the European
Union and the non-member countries have been an important part of the European economy.
This has contributed hugely in the competitiveness of the country, levels of the employment
and the living standards of the citizens of the country (Gond 2016).
The EU AEO Programme had been launched in the year 2008, which encompassed
the import as well as the export related activities in the supply chain of the organizations. The
members of the European Union are legally bound to implement the AEO certification in the
organizations and volunteer the other organizations as well. The customs of the Member
states of European Union needs to build public and private partnerships and promoting the
certification provided by AEO to organizations, which can fulfil the requirements in the
supply chain. The offer that is given by this certification is favourable for both the parties, as
on one side the operators of the companies can enjoy simplified and faster procedures related
to the customs, on the other hand, the customs officers also need to do few checks
(Wadsworth et al. 2016). The required resources can be allocated to the areas, which are
high-risk zones. The numbers of organizations, which are certified organization under the
AEO, are growing from the year 2008 to 2010.
The case study mainly discusses the role that is played by the government of UK in
increasing the number of AEO certifications. The dynamics related to the standardisation of
the organization are related to three major perspectives, which are, standardisation by
organisation, standardisation of organisation and standardisation as organisation. The AEO
Programme related to European Union comprises of multi-level thematic standards. The
principles and values that are related to the AEO are formulated from WCO on an

11ANALYSIS RELATED TO BREXIT EFFECT ON AEO SCHEME
international basis to the European Union. The various aspects of the AEO certification
intertwine many different domains like, competition, economy and compatibility with legal
texts, data protection of WTO (Ziv et al. 2018).
According to, Gond (2016), the two major aspects of the case study related to AEO
are major AEO drivers of the business organizations in the private sector and thereby
exploring the relation between the benefits of AEO and the business performance of the
companies certified by AEO. The other aspect of the case study is the standardisation and the
governments that are under AEO context which focus on the government-to-business
relationships, mutual recognition and the IT related solutions that act as the enablers so that
the performance of the customs administration can be improved. The competitiveness is the
major advantage that is desired from the European Union single market. The single market
for trade can be achieved only with the collaboration of the individual governments of the
states and the EU standardisation as well (Gond 2016). The AEO certification has been of
major help for trade related to the different countries who are the members of the European
Union.
Implications of Hard Brexit
The major implications of “Hard Brexit: will be faced by the United Kingdom in the
year 2019 without the Free Trade Agreement. The scenario that has been developed between
European Union and the UK will relate to the mutual membership in the WTO. United
Kigdom is quite less dependent on the intra-regional trade as compared to the other members
of the European Union. This less dependency is related to the central position of the country
in Europe and the high involvement of UK in the business related to the rest of the world.
The exposure of United Kingdom to the trade that occurs within EU is quite significant. In
the year 2015, 46% of the total British exports go to the EU and around 55% of the imports

12ANALYSIS RELATED TO BREXIT EFFECT ON AEO SCHEME
from United Kingdom come from the EU. Therefore, Hard Brexit can have huge impact on
the trade between the organizations of the Member states of EU.
Conclusion
The report can be concluded by stating that the Brexit situation has a huge impact on
the trade between the member countries of the European Union. The AEO certification helps
in the increase of the security and efficiency of the supply chain of the organizations to a
certain extent. The withdrawal of the United Kingdom from EU can further affect the AEO
rules and regulations that are set by the body. The foreign trade is affected by the
vulnerability in the situation that is created due to the Brexit effect.
The amount of AEO certified organization varies largely between the member states
itself. This number is the lowest in case of the United Kingdom. The transition from zero fees
to the WTO-bound fees can have huge impact on the foreign trade of UK.The two case
studies have shown different implications of Brexit on the UK and the supply chain of the
organizations as well. The over strict nature of the security management programs can cause
a loss in the flexibility and reliability of the transport chains. This further affects the
capability of the organization to react instantly to the volatility in the market.

13ANALYSIS RELATED TO BREXIT EFFECT ON AEO SCHEME
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14ANALYSIS RELATED TO BREXIT EFFECT ON AEO SCHEME
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15ANALYSIS RELATED TO BREXIT EFFECT ON AEO SCHEME
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