Even after 18 months of UK officially leaving the European Union, the country has failed to resolve bilateral trade issues. As Mark Neale, CEO, Mountain Warehouse opines, supplying materials to retail stores in Europe has become more complicated and tiresome post Brexit. Increased costs and bureaucracy have made trading more challenging in the region with sales of smaller brands and businesses declining.

Customs duties hitting fashion exports

Goods not manufactured in the UK and EU are being subjected to customs duty while crossing the UK-EU border. As a Drapers Online report reveals this is creating profound issues that have become even more complex in the past 18 months. Suppliers are splitting their shipments before dispatching them. They are shipping directly to a warehouse in the EU and separately to a warehouse in the UK, leading to a significant costs escalation.

And as Simon Berwin, Owner, Simon Berwin Advisory and Former Managing Director, Berwin & Berwin explains, his fashion clients are losing customers as they have been unable to supply products into Europe due to an increase in duties. The duties paid by UK businesses and consumers on goods imported into the country have surged by 62 per cent to £4.7 billion. Fashion exports have also been hit hard because of higher duty and customs charges.

UK textile and leather exports to the EU have declined 45 per cent compared to the rest of the world, indicates a Resolution Foundation and the London School of Economic report. The report ‘The Economy 2030 Enquiry: The Big Brexit’, assesses the scale of change caused by Brexit. It attributes the fall in export relationships to the inability of SMEs to afford the costs of non-tariff trade barriers or comply with the rules of origin requirements under the EU-UK Trade and Co-operation Agreement (TCA). And as Guy Mor, Co-founder, 3RD Rock says, many small businesses are dealing with rising shipping, VAT charges and duties. However, businesses can recover import VAT duties through a VAT registration in the EU country of import.

Need for greater clarity on trade issues

In force since January 2021, the Northern Ireland protocol of Brexit withdrawal agreement governs the unique customs and immigration issues at the border in Ireland between the UK and Northern Ireland and the European Union. The remaining of Northern Ireland as a part of the EU for supplies/movements of goods makes certain customs formalities applicable to goods moving between Northern Ireland and Great Britain. This increases the administrative burden of the EU as Northern Ireland requires special border with the Union.

Experts point out, issues are arising because of the requirement of border checks by EU on goods imported from non-EU countries. This is resulting in customs checks at Northern Irish ports, he adds. The UK government is looking to simplify trade between Great Britain and Northern Ireland. But this is threatening its relationship with the EU and creating issues with respect to a united Ireland.

The fashion industry is also calling for greater clarity and a honest dialogue on trade issues with Europe, sums up William Bain, Head - Trade Policy, British Chambers of Commerce.