BREXIT REGULATORY
I
t’s understandable to have forgotten that last Christmas Eve an official trade deal between Britain and the EU was drafted. Businesses were navigating the bombshell of Tier 4 restrictions across parts of the UK, while others were mourning the loss of their plans for a Christmas surrounded by their loved ones in a year when some were setting one less place around the dinner table. But negotiators in the UK and Europe (after days of anxious deliberation that brought the fear of a no-deal Brexit close to reality) were finally able to sign on the dotted line for an 11th hour trade deal – just one day before EU trade agreements no longer applied to the UK. If the landmark £668bn a year agreement, gesticulations and fist pumping had bypassed businesses and consumers then, 11 months on, there are no longer strict Covid-19 restrictions or a calamitous Christmas to hide behind.
“I think that [the UK government] are lucky that Covid came along, and that’s all everybody’s been talking about ever since,” explains the owner of one logistics firm.
“I think [Brexit] has been massively underplayed and underreported. “People were not really prepared for it, if I’m honest. Even some of the big players weren’t as set up and as prepared as they should have been, and that’s caused massive delays. There are still backlogs, particularly with some products that are not clearing customs, and information that is being provided is still not clear.”
Christophe Pecoraro, the Managing Director of PFS Europe, an e-commerce fulfillment group, notes that the retail sector has been particularly hit with major consequences due to Brexit. Speaking to Cosmetics Business he explains: “Despite a trade deal, retailers are still contending with the huge ramifications of the UK’s withdrawal from the customs union and single market.
“The complexity of cross-border shipping to and from the EU has increased dramatically this year, and this means that customers are facing increased charges and delays, which is damaging customer service and leading to a massive increase in returns.”
cosmeticsbusiness.com
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Despite a trade deal, retailers are still contending with the huge ramifications of the UK’s withdrawal fromthe customs union and single market
Madeleine White, the owner of Juni Cosmetics, meanwhile, says she has spent many hours trying to navigate the red tape that’s been caused by Brexit. “Brexit has made everything more difficult – from exporting to individual customers and businesses to receiving EU-funded grants. I have spent many, many hours learning new systems and regulations and there is still a long way to go,” she tells Cosmetics Business. Undoubtedly, businesses and brands anticipated a period of adjustment as the paperwork was put into practice, but there’s an overwhelming feeling that companies have been let down as Brexit has not unfolded as it was promised – and that’s on top of the obstacles presented by Covid-19. “We were lied to,” says Thomas Kerfoot, co-founder of ingredients supplier to the cosmetics industry O&3 who, at the time of Brexit, hedged his bets of having a stronger foothold in Europe by establishing a base for the family in business in Poland. “Zero tariffs – that was a complete marketing spiel from the government. There are significant duties and tariffs to bring goods into the UK from the European Union, and that was marketed very differently by them,” he adds. “In terms of supply chain, it’s impacted a lot of our indie beauty brands who simply don’t have the infrastructure to cope with shipping goods from the UK to Europe, so many of our clients that are the smaller indie brands, they simply turn that function off on their website – they are just focusing on the UK market. So we’ve definitely noticed a drop off in UK brands’ business.” He continues: “We were on a roll of having the doors wide open to Europe to supply whatever country in
Europe we wanted, and we can still do that now, but my goodness with a lot of sweat and tears to get the product there.”
Meanwhile, White says she has been hit by delays in sourcing ingredients. “It’s been incredibly difficult to source some of the raw ingredients that we use in our products,” she notes. “We have had to plan ahead much more than usual in terms of keeping abreast of stock levels.”
And the reality is the customer will be the one that has to pay for the incurred costs. According to the British Beauty Council, the industry’s leading representative in the UK, £20,000-30,000 has been spent per brand on getting ‘EU ready’. Meanwhile, Kerfoot has pumped £1m into the new facility in Poland in order to set up shop in Europe.
HOW DID WE GET HERE? Ahead of Britain’s official departure from Europe’s laws and legislation, the UK’s Prime Minister, Boris Johnson, described the workings of Brexit as a “Canada-style, free trade deal” and an agreement that – poignantly – would be “without tariffs and without quotas”. Speaking at a press conference on the day a deal was finally done, a short four years after the UK voted to leave the EU, Johnson described Brexit as one that will benefit UK businesses in that it “will, if anything, allow our companies and our exporters to do even more business with our European friends”. Meanwhile, trade association Logistics UK, formerly the Freight Transport Association, looked on with optimism at the new deal. “A deal is great news for the UK economy since it removes the risk of tariffs being placed on almost every item imported from the EU, which would have raised prices and slowed the rate of economic growth,” said Elizabeth de Jong, the group’s Policy Director, at the time.
But those words have not come home to roost. In a statement to Cosmetics Business, HMRC explained that as a result of leaving the single market and the EU customs union, movement of goods from the EU to the UK is treated the same as trade coming in from other parts of the world.
“This means customs declarations are required and import taxes, including VAT and customs duties may be due, unless any relief applies,” it wrote. For goods that meet the rules of origin, the importer must claim the
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