The transition agreement means little change for retailers and importers

The transition agreement means little change for retailers and importers

This week, the UK and EU agreed a provisional Brexit transition deal on their relationship from March 2019. So what's going to change next year? More or less nothing, writes Mike Flanagan, adding that the end result is likely to mean little more than 'Brexit existing as name only' – or Beano.

21 months ago, I excitedly wrote about the implications of Britain's Brexit vote to leave the EU. This week, the UK and EU agreed a provisional transition deal on their relationship from March 2019.

And of all the outcomes discussed in 2016, the latest agreement was more extraordinary than anyone could possibly have imagined.

About one-third of Britain's apparel imports are made – or at least have some value added – in other EU countries. Almost as much again arrives from Asia at continental ports like Rotterdam, passes through customs there and then travels straight to retailers' warehouses in the UK.

If Britain had announced this week that it was really going to leave the EU next year, the effect on its apparel industry would have been completely disastrous.

The country imports a higher proportion of the clothing it wears than of the wine it drinks or the Mediterranean vegetables it eats – and most would have had to come through British customs posts that have not even been built yet.

So what's going to change next March? More or less nothing.

Even the widely-publicised proposal to change the colour of Britain's passport seems to have been forgotten. It's not clear how long nothing will change – but for the foreseeable future, the most controversial issue seems to be who's going to set catch limits for fishermen. And that seems to be an issue only in Scotland.

The provisional deal

Though the whole agreement is still provisional – and most of it incomprehensible – traders should assume that, as far as our industry is concerned:

  • For the foreseeable future, there will still be free movement of people between the UK and the rest of Europe – including designers, shop staff, multilingual help desk operators and potential garment makers.
  • Clothing will continue to move across borders between warehouses and customers throughout the current 28 EU member states without going through customs checks.
  • Apparel from outside the EU will still be cleared for UK customers at whichever EU frontier post most suits the shipper.
  • The UK will continue to act as members of the same free trade deals as the rest of the EU, and offer the same duty concessions to poor countries, with the same rules of origin, as the rest of the EU.

The longer term

It is also clear (to me, at least) that the Brexit negotiation process has thrown a new light on Europe's attitude to trade with the rest of the world.

  • The EU has agreed that the UK can begin looking for partners to sign "UK only" trade deals with. Apart from the US (well, apart from Trump), no-one has shown any interest. Few sane people will start negotiating any kind of new trade deal with the US while Trump is in the White House.
  • Whatever separate negotiations the UK might start (with countries like Singapore, say, or Chile), it is reasonable to expect any agreed deal will be virtually identical to whatever such countries sign with the EU (and its European mini-me, EFTA, the European Free Trade Association).
  • We can expect the UK to more or less mirror the EU's stances in any trade spats with Russia, India or China. As well as in any trade agreements with countries like Canada or Japan.
  • In the long run, the UK, EFTA and EU will turn into one big single market (possibly called the Union of Europe), with one big more-or- less universal trade deal with the TPP11 (probably, once Korea joins, the TPP12); a slightly less ambitious deal with the US; and more-or-less free trade with its immediate neighbours (like Turkey, Morocco or Israel).
  • How long is the long run? Long.

Ordinary UK citizens, meanwhile, will find the important things stay unchanged: we'll still be able to stock up on limitless tax-free booze – and take continental cheese and spring cherries home without some official inspecting us.

But who cares?

In the short run, though, not only is nothing going to change; no-one seems interested. The Daily Mail, for example – the most feared pro-Brexit British tabloid – didn't even put Brexit on its front page. Instead, it carried a story about an alcoholic TV star.

The end result is likely to mean little more than lip service to the idea of leaving the EU. It's been called Beano (Brexit Existing As a Name Only) – which in the UK refers to a children's comic, and in the US to a range of underwhelming things, from an alternative name for bingo to a dietary supplement.

And there's the real importance of this non-story. To anyone outside Britain's media bubble, it's been obvious for months that nothing was going to happen.

Was the Brexit obsession just a bad dream?

In a way, it has always been. The media were telling us how everyone had been surprised at the result of the Brexit referendum – though since over half the population had voted to leave, it couldn't have been much of a surprise to most voters. They'd told us the result showed how unreliable opinion polls were – though for the week before the vote, the polls had been predicting exactly the result that happened.

Is it possible that it's not the opinion polls or politicians out of touch with the voters, but the media?

And is it just possible that the reason no-one's buying clothes any more is largely that too many of our retailers have become preoccupied with what sounds good to journalists, and lost touch with their customers on the way?