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CLEARING THE BREXIT MINEFIELD WITH RE:SOURCE

By Andrew Leighton | 24th September 2018

As most of us are aware, from 29 March 2019 to 31 December 2020, the EU and UK will begin operating under the agreed ‘Brexit transition period’, which paradoxically, gives the UK the ability to negotiate, sign and ratify its own trade deals during this period; yet the UK will remain party to existing EU trade deals with other countries.

Frustratingly, even though the above agreement was announced back in March 2018, information is still scarce, leaving many of us feeling left in the dark. So the question on many of our minds is: during the ‘transition period’, can the UK trade differently to the EU?

I put this question to our esteemed lead trade analyst on re:source, Dr. Sheng Lu, Associate Professor from the Fashion and Apparel Studies Department at the University of Delaware; he acknowledged the above, adding that: “any of the UK’s trade agreements won’t take effect until after the transition period, unless so authorised by the EU.” (See official EU document for further information).

So during the transition period, we can expect to see things on the tariffs side remain largely the same for now . However, what happens thereafter is still uncertain. It’s this uncertainty - even at this late stage in the game - that we are planning for in re:source. With that in mind, let me explain how re:source will help you through (and beyond) the transition period…

During the transition period

Technically - and behind the scenes - it’s likely we will clone the UK as a proxy member of the EU because it will still retain its access to the EU’s trade agreements and tariffs.

Tariffs

In Tariff Finder, UK will appear as a new importer in the drop-down list.

This means you’ll be able to select either the UK or EU as a separate importer. Both will show the same EU import tariffs during the transition period. However, UK will also show its pending trade agreements and their respective tariff rates, if any are agreed before the transition period ends (somehow, I doubt we’ll see any so soon!).

And because re:source shows pending agreements with a red exclamation mark, you’ll be able to recognise them as ‘not yet in force’.

Trade agreement profiles

re:source will provide easy-to-read digests of any UK-specific trade agreements that are being negotiated, signed or ratified. All details on rules of origin, tariff phase out schedules and product-specific exceptions will be provided and explained, once they’re announced.

Trade data

Because the UK is officially leaving the UK at the beginning of the transition period, from 30 March 2019 users of re:source will be able to search and extract UK-specific and EU27-specific trade data.

In the charts you’ll see the addition of UK as a principal apparel importer.

In Data Finder, users will be able to select UK as a separate importer, alongside EU27 and all individual EU countries.

Country profiles

Currently, re:source profiles the duty prospects for the major importers we track. From 30 March 2019, the UK will have its own page, with commentary on our latest expectations for duty rates into the UK after December 2020. This will be the place to bookmark to follow the latest in the unfolding saga.

After the transition period

On 1st January 2020, our ‘clone’ of the UK as a proxy member of the EU - which was created for the transition period - will change. The UK will be an independent principal importer (or ‘partner’) of trade agreements, and users will be able to view its trading situation entirely separate from the EU’s.

Tariffs

Tariff Finder will still look and function exactly the same, but now you’ll be able to see and compare UK- and EU-specific tariff rates across all apparel products from all exporting countries. In particular, the World Trade Organisation’s (WTO) Most Favoured Nation (MFN) rates will be split out for each importer, showing the new UK-specific tariffs. This is in the event of there being no trade agreements in place between any of the exporting countries and the UK.

Sheng Lu: “The UK is likely to have its own WTO membership after Brexit. Negotiation on the tariff rate is also likely but not necessary. As a WTO member, the UK must report to other WTO members about its detailed tariff schedule., which the WTO will release.”

I’m sure we will all know what the MFN tariffs will be before January 2021 (at least we hope to) - therefore no doubt we’ll have scope to show them before the official trading period begins.

And that’s it; a step-by-step guide explaining how re:source will keep you informed and up-to-date during this uncertain period. re:source is a tool built for the job; luckily before we knew we’d all need it!

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