Brexit – The Way Ahead

The UK seems to have avoided a no-deal Brexit, for now at least, but for businesses, the uncertainty does not go away. A Brexit Summit organised at breakneck speed by the BPMA sought to throw some clarity on how companies could get ready for a no-deal Brexit.

As BPMA CEO, Jon Birrell said: “This issue is not going away.” While judgments on how quickly things might develop, and in what direction, were being made a few miles down the road in Westminster, BPMA members gathered in the grand confines of the St Pancras hotel, ironically at one of the main departure points for the Continent.

More than 100 suppliers, distributors, and service providers were in attendance. It was quickly obvious that there are still a lot of questions about what was going on and how to handle it. The turnout itself was impressive, not least given the last minute nature of the event – it was organised in about a week by the BPMA team. The packed room was there not just to listen, but to share concerns and experiences, and to fire plenty of questions at the informative Kevin Shakespeare from the Institute of Export and International Trade.

The emphasis was very much on practicality, with Birrell pointing out that the BPMA was preparing a Brexit Information Pack for all members. He also encouraged them to ask the questions that mattered to them: “There’s support available. Ask questions and the BPMA will feed them in and find out the answers.” Although working with a presentation, Shakespeare proved a knowledgeable guide and regularly departed from any script he had to address specific, and often quite detailed concerns from the floor.

New best friend

One general piece of advice he gave was that there were not enough customs agents or freight forwarding companies to go around. Given their importance, businesses should look to cement relationships with them with some urgency as everyone else is trying to. Don’t leave it until the last minute, he said. Some freight forwarders and customs agents are starting to charge ‘sign on’ fees as they are so busy.

Prepare for change

A key change for companies in the event of no deal is that the UK will have third-country status. This raises lots of practical considerations such as losing access to banking platforms and other systems. Shakespeare advised companies to check that their bank had access – smaller ones, or building societies might not which could mean higher charges or payment delays. While there are no tariffs for trading goods with the EU at present, this will change in the event of a no-deal.

It will also affect trade with 74 countries covered by EU trade agreements. The UK hopes to roll these over, but at the moment, only 17 are covered. Countries like Japan, with whom the EU has concluded a trade deal, and Turkey, will now have tariffs. Shakespeare encouraged companies to create an export impact spreadsheet and find out the commodity codes that cover their goods. “This hasn’t mattered while we were in the EU, but you will need it now. It’s the first question customs will ask,” he said. “Brexit will change the way we do business. Thirty years ago, we knew how to do customs, but as EU members we haven’t had to. Now you will need good customs processes and it won’t impress if you can’t answer the first question.” Good customs records also matter because customs audits will start once everything calms down, he predicted.

New terms

When it comes to tariff levels, finished goods attract the highest tariffs because they don’t create jobs. However, trade associations can lobby for their particular interests. It could be argued that merchandise is unfinished as the branding adds value and creates jobs. Some companies have opened European bank accounts or even offices to give them a foothold in a post-Brexit world, however, banks will be aware of money laundering and companies may have to move to full legal status, warned Shakespeare. Delegates were also given a crash course in INCOTERMS and how they might change with Brexit.

Some companies, such as Starbucks, are already moving smaller suppliers from EX Works terms as it doesn’t want to be responsible for customs declarations. This will mean that suppliers will have to get their freight forwarder to take on the task, or skill up to do themselves. Either way will add cost and complexity to their business.

Rules of origin

When it comes to ‘economic nationality’ of a product, there is plenty to consider. This can be head-scratchingly complex for manufactured goods, where parts come from many locations. Add in the issue of whether a product is covered by a trade deal and can benefit from preferential origin tariffs, or is to be classed as non-preferential origin, and it becomes more bewildering still.

The good news is that the merchandise sector can factor in branding as an added value area. This is another issue where trade association lobbying could help, either through clarifying rules, or even getting some relief for the sector, said Shakespeare.

CE mark

In the event of a no-deal Brexit, the existing CE mark, which indicates conformity with health, safety, and environmental protection standards, will be replaced with the UKCA mark, which Shakespeare said would be “remarkably similar” to the CE. The only issue could be finding space to get both marks on a product or packaging. European trademarks will be cloned on to the UK register and will need to be enforced in the UK and EU separately.

People problems

EU nationals will need to be supported by their companies by helping with the settlement scheme, for either settled or pre-settled status. The rules for employing graduates change in the next academic year as graduates are allowed to stay for two years after study to find a job. For business travel, Brits will be able to work 90 days out of 180 in the Schengen zone without a visa. However, if they want to drive, they may need an international driving permit (IDP).

And there’s data

It’s not just goods that will be affected by Brexit. Everyone who thought that GDPR was done and dusted was given a rude awakening by Andy Chesterman, data and compliance director at DAMM Solutions. With BA and Marriott having received fine notices in the multimillions, data is not something that can be consigned to the ‘done’ file. In the event of a no-deal Brexit, it could take two to five years to sign a data deal and in the meantime, the UK will be a third country. EU and UK GDPR will be different pieces of legislation. Companies will need to register with both the UK’s ICO and the European regulator.

“Brexit will be a challenge, but you still have time while we are in limbo. Reassure clients that you are working on it. It’s an insurance policy for you,” said Chesterman. “Imagine what would happen if you could not transfer data tomorrow. Look at the doomsday scenario and put processes in place to protect your business now,” he advised. Summing up for the day, Birrell said that there was much for companies to take on board, but said he was proud that the level of questioning from the industry demonstrated its engagement with the issues.

“There’s a lot of acronyms – we’ll all have brain ache, but send in your questions to the BPMA. We have a lot of contacts and we will be signposting information and putting workflows together to help simplify things.” Success would come through collaboration, he added. “Do not assume that everybody else has the answer. We have to work together on this.”

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