According to an article in The Independent, the UK car industry is likely to suffer a major blow as a result of the EU rejecting a UK plan to avoid tariffs on exports. Apparently, “Ministers had asked for parts brought in from Japan, South Korea or Turkey to be treated as British, to qualify under strict rules-of-origin if a trade agreement is struck.” This means that car exports face tariffs unless the majority of a vehicle's value originates from the UK or EU. Typically, only about 44% of the value a UK-assembled car actually originates here.
However, the rejection of the UK proposal applies to other manufactured goods including prepared foods. As with cars, a manufacturer of a prepared food product will have to show that the majority of their product's value originated here. This may severely impact those who make a product that includes, say, dried fruits and nuts from the USA or elsewhere in the world.
The Brexit deal negotiated by Theresa May contained proposals to minimise restrictions on rules of origin but that deal was rejected by the government and was subsequently removed from the withdrawal agreement signed by the Prime Minister last year.
TradeScope has been banging this drum all along – it doesn’t matter whether you voted to leave or remain in the EU, or whether you believe in a deal or no-deal, Brexit always meant there was going to be major pain for UK exporters and importers, as it was unavoidable that they would be subject to increased operating and admin costs, as well as having their supply chains come under serious strain, in particular those companies exposed to “just in time” supply models.
Brexit transition period a full stop?
While we have never believed that Brexit will be the end of the world, we are increasingly worried that, come 1 January 2021, trucks may come to a complete halt at Britain’s ports, such is the scale of the changes involved in juts customs procedures and passport controls with an apparent lack of preparation on the government's behalf for it all.
Are you a food and/or beverage producer who will be adversely affected by our leaving the EU? Have you prepared for all these eventualities? Have you begun planning to minimise the possible worst impact Brexit may have on your business? We’d love to hear from you and learn about your experiences preparing for 1 January 2021. Please contact Ted Horton to chat (he’ll give you his views too).