Parts distributors and suppliers as well as industry trade bodies have been reacting to the Brexit trade deal, belatedly agreed between the UK government and Brussels on Christmas Eve. The Trade Cooperation Agreement, ratified on New Year’s Eve, provides the opportunity for tariff and quota free shipments, albeit with a lot more paperwork.
Mike Hawes, Chief Executive of SMMT gave the new rules the most cautious of welcomes, but warned that even with immediate ratification there will be no time to adjust to the new rules, saying that a ‘phase-in period is critical to help businesses adapt’.
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“For automotive, Brexit has always been about damage limitation, and the draft Trade Cooperation Agreement, while no substitute for the completely free and frictionless trade with Europe we formerly enjoyed, will address immediate concerns. The TCA provides the opportunity for tariff and quota-free trade, foundations on which the industry can build” said Hawes.
Sue Robinson, Chief Executive of the National Franchised Dealers Association gave the agreement a slightly more positive welcome, although she added that her organisation will be picking over the details ‘in order to understand the full implications for our members’.
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“It is positive that the UK Government has reached a Brexit deal with the EU that avoids tariffs on vehicles and vehicle parts. As an industry, we now have further clarity, which will enable greater investment into the sector and support consumer confidence” said Robinson.
“Franchised retailers will now be able to focus on what they do best, ensuring that customers get great service and value for all their vehicle-related needs” she added.
Suppliers that export to the EU broadly welcome the deal, but have echoed concerns that the last minute patched-up deal left no time for preparation. One such supplier is Shropshire-based Morris Lubricants. MD Chris Slezakowski said: “The long-running negotiations left businesses to figure out how to respond with little guidance. Knowing that we would leave the EU was one thing, but it was quite another to understand what tariffs may apply, what customs procedures needed to be followed, documentation, shipping orders, packaging, regulations, compliance and labelling”.
“Meanwhile, we have registered our interests and activities with every relevant agency and have set up an office in the EU to maximise our ability to keep our business running smoothly.”
Ahead of the deal being finalised, Mark Blinston, Commercial Director of emissions component supplier BM Catalysts explained that his company had carried out ‘considerable’ work to prepare for Brexit and said: “What is certain is that the UK will experience some level of disruption whatever the outcome and so our preparations have been focused on ensuring we alleviate any issues for customers” adding that the ‘full resource’ of the firm’s preparations would be available for customers.
One person who gave the deal a distinctly frosty reception was former Prime Minister Theresa May. She told MPs ahead of the deal being ratified that told MPs that her plan, which was scuppered by the man who is now PM, was “a better deal” than the one now being signed into law and said she was “disappointed” the new trade agreement does not have a wide-ranging services agreement.
More complex than it looks, and as they say, the devil’s in the detail! If you are UK based and buying outside the EU and then exporting to the EU you will not have tariff free access. The import tariff on the commodities you import will be applicable as usual, but add in the fact that your customer in the EU will also have to pay the same tariff on goods you are exporting to them, dependent on the Incoterms you have agreed, it will make you potentially uncompetitive, or you will have to raise your prices to compensate for it.