Brexit is looming. While the final arrangements between the UK and EU are yet to be hashed out, the UK Fashion & Textile Association says there are steps the industry can take now to prepare and minimise the impact on supply chains. Have a look at this top 10 checklist to see how ready your firm is for Brexit.

1: Customs checks – An exit from the EU would require UK exporters to make customs declarations

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  • Businesses should check the customs procedures for non-EU trade. If necessary, can these same procedures be applied to EU imports/exports.

2: Border delays – Potential customs checks could result in greater delays in shipments

  • Businesses need to check how resilient their supply chain is to delays. 
  • What would be the contractual implications for late deliveries? 
  • To counter problems in the immediate term before the implications of Brexit, what is the possibility of bringing in goods and shipping them earlier?

3: UK-EU trade tariffs – There is a possibility the UK will be trading with the EU based on the EU’s Common External Tariff or Most Favoured Nation status. There are a number of considerations apparel businesses must make in relation to this 

  • Know your HS codes and the EU CET/MFN tariffs that would apply to their products. 
  • Work out the potential impact of tariff costs on both imports and exports and discuss this with suppliers on how it could lead to an increase in costs. 
  • Have you considered the effect of the loss of temporary import relief on imports from the EU?
  • Do you use Outward Processing Relief? If so have you thought about the cost implications if it is no longer available?
  • UKFT advises people to register for EORI and/or approved exporter status and use the number on all paperwork
  • Have you considered setting up an EU distribution hub?
  • Have you considered running quality control and shipping direct from the point of manufacture (if outside the UK)?

4: Rules of Origin – If both parties agree to a zero tariff trade deal, UK companies would have to demonstrate their product is of UK origin to benefit

  • If you sell into Europe, can you demonstrate the origin of your products?
  • Would they qualify for zero duty? If not have you calculated the possible increase in costs?

5: EU trade agreements with third countries – The UK government has indicated its intention to replicate the benefits of existing EU trade agreements with other countries

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  •  If you import/export from the countries the EU has trade deals with – such as Turkey, Japan, South Korea and Canada – have you considered the cost implications if you could no longer access those markets under the terms of the EU deals?

6: Currency risk – There have been significant currency fluctuations during the negations to leave the EU

  • Have you considered opening Euro and US currency accounts?
  • Have you considered hedging forward to cover your order book?
  • If exporting, you might look at asking customers to pay in sterling and if selling to the EU, you may need to consider buyers want landed euro pricing.

7: Import VAT – Leaving the EU most likely means the EU VAT arrangements, which means VAT will become payable on imports from the EU.

  • How will EU import VAT affect your cash flow?
  • Are you aware of the current arrangements on claiming VAT back from non-EU countries?

8: Intellectual Property – Currently it is not certain whether trademarks registered in the EU would be applicable in the UK in the future

  • Are your trademark registrations up to date and will they include the UK post-Brexit?
  • Consider audits of both your intellectual property and design rights policies post-Brexit.

9: Contracts – Some of the terms in existing contracts may no longer be valid or relevant post-Brexit

  • Have you reviewed existing contracts to see if the UK’s membership of the EU will be an issue – for example, if you have a contract where the territory is defined as the EU?
  • Have you reviewed any agency agreements you may have?
  • Do your contracts rely on EU regulations?
  • Have you considered the implications of entering contracts where the legal jurisdiction might not be the UK.

10: Current workforce – There will be changes as to how EU nationals register in the UK, details have yet to be finalised. If you employ EU workers the UK government has issued guidance on their present and future immigration status.

  • Ensure your staff know what steps to take to register as an EU citizen working in the UK.
  • Have you considered how to keep the skills within your workforce?
  • Have you considered your future staffing needs – will you need to hire from outside the UK?