We are proud to announce Shazda Ahmed, Managing Partner at Monarch Solicitors and former HMRC customs solicitor, will be featuring on ITV North West at 6pm tonight (8th March 2019) to discuss the impact of Brexit on imports.
If the UK leaves the EU on 29 March without a trade agreement, there will be a significant impact on importers of fresh produce from within and outside of EU.
Shazda (also known as Serena Amani) will be covering traders who import perishable goods and the 4 factors they should be thinking about.
Impact of potential increases in customs tariffs (taxes on imports).
At the moment the UK are signed up to the EU customs unions which has in place, common preferential tariffs negotiated collectively by the EU between themselves and other countries,
As the UK is still a member of the EU, it applies EU tariffs to goods coming in from the rest of the world, but has no tariffs within the EU itself.
But Brexit or more specifically a no deal Brexit will change that.
If countries don’t have free-trade agreements, they trade with each other under the tariffs set by the World Trade Organization (WTO) which are generally higher and have quotas in place. The WTO rules will apply to any imports from within the EU and outside of the EU, but don’t forget that although the UK is a member of the WTO it will need to re-negotiate tariffs and quotas with them separately.
Shazda can forsee a dispute in splitting up the quotas from the rest of the EU.
And time is running rather short to complete what are always complex negotiations, in which every country will stick up for its own interests.
The UK could choose to lower tariffs or waive them altogether, in an attempt to stimulate free trade. That could mean cheaper products coming into the country for consumers but it could also risk driving UK producers out of business.
Impact of the potential delays in the delivery of the product and the increased costs associated with the delivery of those product; for example
- Increased border controls will mean increased delays
- Even if companies are importing from a non-EU country and the goods don’t travel through the EU, the fact that there will be significant build ups at the ports will mean that the non-EU consignments will also get caught up behind all the other consignments that will now have to be checked.
- If a consignment is held at the ports a trader could face unplanned demurrage charges, making the cost of the importation economically unviable.
Case Example:
We currently have clients who have been importing seasonal products and HMRC have been significantly delayed processing their consignments due to the move of its inland clearance operations to new sites at Hayes and Milton Keynes.
These are low value fast moving fashion goods which operate on seasons. They processing delay is costing our client in significant demurrage charges. Delays of over a month have meant increased demurrage charges, delays in fulfilling contracts and financial losses to the company. If another few days go by there will be no point in even accepting delivery as no one will want those goods.
And this is before Brexit!
Impact of the potential for goods to perish and become unsaleable
- Of course, if there are significant delays fresh produce could perish and become unsaleable and thereby cause further financial losses.
- The government have started to build new facilities to process consignments but this is too little too late – It takes 6 months for the UK to fill a pothole, are we really going to be able to build these in the next 15 working days?
Impact on cash flow issues and serious financial losses
- From paying higher tariffs,
- Paying demurrage charges for the time the container is waiting at the ports to be checked, and
- The delays in the importation
- The inability to sell goods that have perished on the journey, and
- The potential contractual disputes that will arise
- Could lead to job losses and the death of the business
Final Thoughts
Traders need to be thinking ahead whether they will be able to fulfil their contractual obligations in time to their customers
The real result on the ground from the lack of preparation could ultimately be:
- higher costs of importation, leading to higher prices
- Diminished access to near EU market without any tariffs
- Business based on a quick turnaround of goods (as is the case in the perishable goods sector) going under and people losing jobs
- The result would ultimately be higher prices and less choice for UK consumers and potentially utter chaos on imports leading to civil unrest if shortages kick in!
You can watch Shazda discuss all these points on ITV North West at 6pm tonight (8th March 2019).
