I last wrote about Brexit in this publication in November 2016. 2016…..that’s over three years ago and we finally have some conclusions. As I write this in early January, 2020, the gov.uk website states: “A Brexit deal has been agreed in principle with the EU. Both the UK and the EU need to approve and sign the withdrawal agreement. They will then start to negotiate new arrangements. There would be a transition period to prepare for new rules. The UK could still leave with no deal if the withdrawal agreement is not approved by 31 January 2020, or at the end of a transition period.”
However, my guess is that by the time you are reading this the paperwork has been completed and we are in that very transition / negotiation territory. But what might that mean to the sporting goods industry?
Importantly on the 1st of February 2020 nothing will change for online sellers insofar as selling to the EU goes. This will be the first day of the Transition – a period of time during which all of the current rules stay the same allowing the UK and the EU to negotiate their future relationship and that is due to last until the 31st of December 2020.
Many of the brands within the industry (particularly the major brands) are based in central European warehouses and send goods into the UK from there. Under EU free movement of goods this process was seamless. While we are in the Transition period this will not change, however after 31st December 31st, 2020, the government advise the following steps to ensure that you are able to continue to import goods (see https://www.gov.uk/prepareimport- to-uk-after-brexit)
1. Make sure that your business has an EORI number that starts with GB
You’ll need an Economic Operator Registration and Identification (EORI) number starting with GB to continue importing goods.
2. Decide who will make the import declarations
You can hire someone to deal with customs for you, or you can do it yourself.
3. Apply to make importing easier
You can apply to use ‘transitional simplified procedures’ to reduce the amount of information you need to give at the border. You may also be able to use the Common Transit Convention (CTC) to simplify how your goods pass through customs and when you pay customs duties.
4. Set up a duty deferment account especially if you import regularly
Set up a duty deferment account if you want to be able to make one payment of customs duties a month instead of paying for individual shipments. You must set one up if you plan to use transitional simplified procedures.
5. Check the rate of tax and duty you’ll need to pay
You’ll need to pay customs duties and VAT on all imports.
6. Check what you need to do for the type of goods you import
7. Get help and support
Until December 31, 2020, the UK will be part of a post-Brexit ‘implementation period’ and the elements outlined above will not be required.
During this time, it will be up to Mr Johnson to secure a trade deal with the EU, which could involve close alignment with the EU – such as the ‘Norway’ model of Single Market membership except fisheries – or a more streamlined trade deal with certain elements of EU policy. At the end of this period, in theory, the UK will begin its new agreement with the EU. The Government has also stressed it will not seek an extension to this period of negotiation, so could in effect mean the Prime Minister takes the UK out of the EU without a deal – cliff-edge – if he cannot secure a suitable one.
For many I am sure that this list will look like a daunting prospect and, perhaps for those businesses that have found trading increasingly difficult in our industry in recent times, this may be the final nail in the coffin.
But what about the flip side? What about the businesses based in the UK? The brands that supply the UK and are based here. The wholesalers. Should they now begin formulating post transition plans?
First thoughts are that the domestic opportunities for these brands may now be fertile hunting grounds. If it becomes a more drawn out, challenging and costly exercise to bring in sporting goods from those European central warehouses, can the UK sports retailer find suitable alternatives within our own shores?
Certainly this is likely to prove difficult in certain sports and with certain brands, however my guess is that there are many areas where reduced competition from Europe will assist the “local” brands.
Perhaps most interestingly is the opportunities that open up for our sporting goods wholesalers. We only have two of note, Reydon and Cartasport, however both are comfortable importing goods from Europe and both I’m sure would see that Brexit offers an attractive opportunity as UK distributors where previously goods were shipped in from Europe. Other distributors may also find that the chance to pick up new brands to add to their portfolio may be easier through 2020.
Yes prices to the retailer and, ultimately, the end consumer, will rise, however, convenience, lack of paperwork, easy top-ups and all the other advantages that come into play when purchasing via wholesalers and local distributors will appeal to many sports retailers.
Likewise those European brands that might see servicing the UK market as more challenging may be actively seeking local wholesale or distribution solutions. Quite a shift from the time that it was looking like both the wholesale and distribution models may be under threat due to our highly competitive industry.
Brexit still has a long way to go before it plays out, however for those forward thinkers in the industry it might be prudent to begin planning for 2021 and beyond.
Change will happen. There will be new rules and, whatever the outcome, it does seem that UKbased sporting goods brands may well be set to benefit.
Enjoy the ride!