A combination of ‘Britain’ and ‘exit’, Brexit refers to the departure of the United Kingdom from the European Union after a 47-year tenure. On 2016 23rd June, UK held a referendum, questioning voters whether the country should remain a member of the European Union. With a majority of 51.89% voters against the motion, The United Kingdom left the EU on 31st January 2020.
A transition period followed till 24th December 2020 when finally the negotiators for both parties reached a deal on the newfound relationship. Three agreements were signed: the Trade and Cooperation Agreement, The Information Security Agreement, and the Nuclear Cooperation Agreement. All rules of the agreements came into force.
In a nutshell, the agreements stated:-
The above factors will affect all trades and movements between the two nations. One primary sector to be affected though is the Fashion sector.
The fashion sector employs more than one million workers and is worth approximately £35bn to the UK. It is believed to contribute higher to the GDP of the UK automobile, fishing, film, and music industries put together. They say the sector is worth £35bn to the UK and employs one million people.
The agreements include a clause called ‘No Deal Brexit’. According to this, UK businesses continue with the existing excise, VAT, and customs procedures with the EU, ignoring the transition period.
However, under the No Deal Brexit, according to the UNCTAD (UN Conference on Trade, Investment, and Development), the UK is expected to lose up to 14% of its exports to the EU, which amounts to $11.40 billion to $16 billion of current exports. But the catch-22 situation indicates, non-tariff measures (NTM) may double the same losses.
Importing into the UK from the EUAs of 1st Jan 2021, all goods imported from the European Union to the United Kingdom will require a UK customs declaration. An interim period of 6 months has been provided for the declaration, but this may create a backlog, tax liability, and increased administration costs. Approximately 80 fashion brands will have to pay an import tariff of 8-12%, although fabrics and yarns have been made duty-free for a year. Goods not imported under proper legal methods are allowed to be rightfully seized by customs. They have the right to sell or destroy these goods.
Exporting from the UK into the EU
As of January 1st 2021, all goods exported from the UK to the EU will undergo export controls on dual-use goods like technology, software, security, and over-sensitive items. They will also require a UK customs export declaration.
As for the fashion industry, a tariff of 6-12% will be applied to all exported products. Customs has the right to inspect all paperwork anytime up to the past 7 years. A EU EORI number will be required for all goods to be exported, without which passage will not be allowed.
Value Added Tax (VAT)
The EU VAT registration number will be valid, but the UK VAT registration numbers will no longer be featured.
Moving goods from the EU to the UKGoods exported from the EU to the UK now need a customs export declaration. From January 1st, 2022, a safety and security filing will also be needed for all similar movements of goods between the two nations. This aims to secure international trade by integrating a risk assessment and fluidity of trade at all possible entry points, whatever the mode of transport of goods. It will require an obligatory filing of ENS (entry summary declaration) before crossing the UK/EU border.
Moving Goods from Great Britain to Northern Ireland
All goods moving from Great Britain to Northern Ireland from 1st January 2021, require a UK customs import registration and declaration.
1. Key manufacturing industries including the fashion sector
2. Imbalanced Trade
Although a balanced agreement was expected, as the UK is highly dependent on the EU for trade, especially in the four manufacturing industries mentioned above. The trade policies seem imbalanced. Uk has been facing heavy declines and losses since Brexit.
3. Business relocation and Employment
UK may lose its passporting rights after Brexit and witness an exodus of many EU or international companies moving base from Great Britain. This will further bring down the GDP as well as affect employment in a big way.
The EU was the provider of more than a quarter of the UK’s manufacturing sector’s workforce. EU employees perform a wide range of roles across routine and semi-routine positions in the industry. With Britain’s exit from the EU, that labor force has become nearly minimalistic, and the UK will be in serious need of skilled and semi-skilled labor soon to keep the industries alive.
5. International trade
Third-world countries would be wary of trade with Great Britain now with the hard exit scenario. The EU, being in a stronger position, will rule the import-export and trade market.
6. World Fashion: The global fashion industry has been looming in uncertainty due to the US-China war and now Brexit. Pressure on prices has been created due to the fluctuations in exchange rates. The replacement of trade deals may increase administration, and resource costs are also expected to rise with the replacement of trade deals, further putting pressure on pricing.
It took four years from 2016 to 2020 for Great Britain to exit The European Union. The process began with Prime Minister David Cameron till 2016 and followed negotiations under Prime Minister Theresa Mary, Lady May Brasier. She was also the Leader of the Conservative Party from 2016 to 2019. Brexit was expected to be a clear deal of equal rights and agreements, but it seems like the UK seems to be dipping under pressure as time goes by. The impact on imports and trade and the country’s general GDP and financial condition is governed by the Brexit effect.
Looming in darkness, the UK launched its The 'Ready to Trade' campaign on 1st February in 18 cities across 13 countries outside the EU in an attempt to strengthen its ties with future global partners. The fate of the textile sector will depend on the UK’s decision on the new trade deals.