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BREXIT


Vision sees through Brexit red tape


The UK Industrial Vision Association’s Neil Sandhu and Allan Anderson assess some of the implications of the trade deal between the EU and the UK


W


hen UK Prime Minister Boris Johnson announced on 24 December that a trade deal


had been agreed between the UK and the European Union following Brexit, he said: ‘Te devil is in the detail.’ Well, the UK vision industry is certainly


finding that to be the case, as it picks its way through the changes that the deal is bringing. However, while there are many operational complexities in adjusting to the new requirements, it is also very important to recognise the opportunities that the deal will bring. UKIVA members include suppliers of


machine vision components and systems, machine builders and systems integrators, and original equipment manufacturers (OEMs) which make use of vision in their products. Some members operate solely in the UK, while others have an international business base, so the association acts as a useful barometer for the impact of the deal in the industry.


Te taxing question of tariffs One of the major headlines around the deal was that there would be no tariffs or duties on goods traded between the UK and the EU, but that is only true to a limited extent. Zero tariffs apply to products manufactured in the UK being exported into Europe for use in Europe, or to products manufactured in Europe being imported into the UK for use in the UK, but with both subject to the ‘rules of origin’. Rules of origin are a standard part of


free trade agreements to prevent a country without a trade deal finding a cheap back door route to one market through another, such as accessing the EU market through the UK or vice versa. Te rules of origin essentially require that only a certain


percentage of the value of any product can originate from outside the respective territory for a product to qualify for zero tariffs, and there needs to be documentary evidence to prove this. Te exact percentage varies from one


product to another, and is determined by the harmonised system (HS) code – developed and maintained by the World Customs Organization – assigned to the product. Tis code also determines the amount of duty (if any) that must be paid. HS classification of a product is based on its function, form or composition. Tis can be a difficult and challenging process.


Te impact on the vision sector Clearly, the additional import and export paperwork required as a consequence of the deal increases costs for vision companies, and things such as the allocation of HS codes are still being sorted out for products in the vision industry, which adds to the problems. Errors in the paperwork, such as the application of the wrong code, could even lead to a hold-up in supply of a particular consignment. In addition, certain components may also require export licences, based on their end use. While the logistics of this are challenging


at the moment, many vision companies already have well-established systems to deal with the paperwork needed to import and export products to non-EU countries, and in due course the process for EU transactions will also become routine, although this may take several months. Nevertheless, there will inevitably be some residual additional administrative costs, and companies will have to decide whether to increase prices or take a reduction in profits. Exchange rate changes may mitigate this to some extent – at the time of writing,


8 IMAGING AND MACHINE VISION EUROPE FEBRUARY/MARCH 2021


the value of the pound against the euro has increased by around 1.3 per cent since the announcement of the deal, making imported goods cheaper. However, exchange rates can be volatile for many other reasons, so relying on beneficial exchange rates may not be the best business practice. Te small UK manufacturing base for


vision components means that around 90 per cent are imported, so the biggest impact of the new deal is likely to be felt by component suppliers. Of course, not all these components come from Europe; they are also sourced from many different


‘Early disruptions should be outweighed by the increased opportunities for machine vision’


regions including US, Canada, Japan and other countries in the Far East. A further complication for this sector, however, comes from the fact that products imported tariff- free from the EU will be subject to tariffs if it is subsequently re-exported to the EU. Many UK vision companies serve


markets in the Republic of Ireland, so for these transactions, tariffs would be added. Any goods from Great Britain destined for Northern Ireland, however, will not be subject to tariffs as long as they are not deemed to be at risk of leaving the UK customs territory. EU tariffs will be applied, though, to goods that are deemed ‘at risk’ of entering the EU’s single market. Suppliers that have significant sales in Ireland and mainland Europe, may need to consider establishing local offices and warehouses in these territories for direct supply, rather


@imveurope | www.imveurope.com


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