Despite the recent summer months of experiencing a more relaxed pattern of acceptable risk to our lives, here we are in October and the airtime being given to Covid is increasing daily as talk of a ‘second wave’ looms large this winter. So from a commercial perspective, it’s never been more important for us to follow government guidelines and do all we can to divert another lockdown.
On another commercial matter, we’re now also becoming increasingly exposed to the effects of Brexit. Yes, that’s right. Remember that other political hurdle that lay heavy on our hearts and minds for so long? Well despite formally leaving the EU on the 31st January 2020 and Brexit largely playing second fiddle in the news, the end of the ‘Transition Period’ looms just as large as a second lockdown. Once this date passes, the UK will take care of its own fiscal policy and will no longer be required to pay the EU an average of £7.7bn net contribution annually (Source: https://commonslibrary.parliament.uk/research-briefings/cbp-7886/).
However, one thing that has given businesses cause for some optimism was the government’s decision in May 2020 to release details surrounding its new tariff rules on imported products. The new list termed the ‘UK Global Tariff’ (UKGT), was designed to replace the EU’s ‘Common External Tariff’ and provide a level of confidence to UK businesses about the imposed financial levies applied to all imports. If you are a UK importer and bringing in finished goods or raw materials like our client base does, then the link will provide some clarity on this subject if you’ve not seen it before https://www.check-future-uk-trade-tariffs.service.gov.uk/tariff?q=&n=100&p=1. The percentages have been rounded down to the nearest whole amount, have been maintained at worst or removed altogether.
Additionally, the UK would continue to replicate the EU’s Generalised Scheme of Preferences (GSP) until the turn of the year at which point it would introduce the UK GSP. This is a formal agreement that recognises the challenges many countries face in their quest for decent living standards and cultural growth. The ongoing agreement would maintain zero rate levies across 48 *least developed countries like Ethopia, Uganda and Sierra Leone after our membership of the EU ceased, whilst also opening up our shores to countries who previously had no export channel with the UK. The list of countries can be found here, https://www.gov.uk/guidance/trading-with-developing-nations-during-and-after-the-transition-period. Other eligible developing countries will be able to get trade preferences through the UK Generalised Scheme of Preferences (GSP) from 1 January 2021.
Interestingly, the way we see this, is that for retailers looking to keep some product item costs down, their ability to be able to find an appropriate source from within the current list of 48 can have significant commercial benefits. Of course, you would need to have complete confidence in the supply chain, across material quality and turnaround. But it’s clear that with fortune always favouring the brave – potential exists here that may have been overlooked before.
If you are a bricks and mortar retailer or manufacturer and would like to speak to me about any of the issues raised in this post, please email me, Nigel Davis for an informal conversation.
Nigel Davis was voted ‘One of Britain’s Top 50 Small Business Consultants’ & is a Fellow of the CIM and a Chartered Marketer.
N.B *these three African countries and their African neighbours accounted for a 4.3% UK trade deficit in 2014. (Source: ONS)