Category: Brexit

Everything Brexit Related

5 Brexit Opportunities

 

In the early days of the new EU-UK trading relationship, unfortunately headlines are more crisis related than opportunity focused, but this is not surprising either considering the teething problems with implementing the Trade and Cooperation Agreement (TCA). The TCA was concluded in record time for a trade agreement of this scale with the result being a “Hard Brexit”, and as such, many supply-chain impacts will emerge in the years ahead due to the necessary customs obligations, treatment of VAT, regulatory divergence, lack of mutual recognition of (some) qualifications etc. As Ian Wright, the head of the UK Food and Drink Federation told the House of Commons Future Relationship Committee recently, “unless the [TCA] deal changes in some material way we’re going to see the re-engineering of almost all the EU-UK and GB-NI supply chains over the next 6-9 months.”

So in the midst of this crisis, what great opportunities lie ahead? Arvo have identified the following 5 categories of opportunity presented by the UK’s departure from the EU;

1. Supply Chain Changes
New border administration processes surrounding UK Trade and the complex “originating” requirements for preferential tariff treatment is causing many delays on shipments to, from and through the UK. Opportunities have immediately emerged for supply chains which can bypass the UK, particularly those that depended on the UK Landbridge in the past.

Early indicators are that there will be some GB suppliers unable or unwilling to supply goods to the island of Ireland in the short-term, which presents opportunities for local competitors. This opportunity exists in the UK also, where local suppliers may emerge as more competitive, depending on their respective supply chains. This opportunity is acutely present in Northern Ireland, whereby under the Protocol sourcing from the EU has less friction than GB trade purchases, triggering supply opportunities to NI for many EU businesses.

Longer term opportunities have already taken place since 2016 and will continue in future, where commited UK companies to the EU market, have already invested in permanent offices and made job announcements in Ireland, France, Germany, Holland, Belgium etc, as a direct result of Brexit. The converse opportunity has emerged in the UK also where some EU businesses will require a local presence to continue operating in the UK, within the future regulatory regimes.

Similarly, many opportunities will exist for businesses that can re-engineer their supply-chains to benefit from zero duties, by ensuring the TCA “Rules of Origin” are respected. The days are limited for low value agents and distributors serving ‘UK and Ireland’, with significant opportunities for those willing to invest in alternative supply-chain arrangements. This opportunity extends through the supply chain to manufacturers willing to invest in new locations to ensure “substantial transformation” takes place in the designated market.

Many of these opportunities derive from the Brexit impact on goods trade, but there are varying changes expected in the services industry also, where doing business from the UK into the EU is going to become a lot more complex (& vice versa). As before, where complexities exist, opportunities will arise for those brave enough to take a chance on the prevailing circumstances. In particular for Ireland, visa-free travel and the mutual recognition of qualifications with the UK, creates an opportunity for Irish service providers to the UK versus their mainland EU competitors.

2. Customs Opportunities
Customs Clearance Agents in Western Europe have been promoted from the back office to the front of house with the advent of Brexit. There is a severe shortage of knowledgeable Customs Clearance Agents who can deal with the mountain of complexities and paperwork emerging as a result of the recent TCA. Coupling this administration with the new customs systems introduced by Revenue and HMRC in recent months, has led to a steep learning curve for all actors in the supply chain.

The future landscape is as bleak, as aside from the basic customs clearance requirements, not least the Safety and Security declarations and SPS certificates, there are ranges of sophisticated procedures materialising to claim preferential treatments (e.g. determining bilateral cumulation and fungibility easements etc.), not to mind the opportunities and paperwork required to seek binding tariffs. This bureaucratic minefield will present many opportunities for those willing to upskill, while it will be a full time job to keep abreast of the many changes and customs easements to come within the future EU-UK trading relationship.

From a practical perspective, one would expect many Bonded Warehouses to sprout up in the UK in the next 12 months also, presenting glorious opportunities for those with the capacity and capability to deliver.

3. EU/UK Representation
As per the UK’s prerogative to embark upon a new regulatory regime, cross border traders will have to comply with dual legislation or face the penalties of this invisible trade barrier. CE, REACH and GDPR (possibly, with confirmation due in April/June) are three of the most infamous regulations where divergence will cause pain for businesses, but many more standards, licenses and qualifications exist which will now belong in disparate regulatory regimes. Like all crises, this will present opportunities for those that preempt the supply-chain fallout to position themselves favorable with the regulators, and pick up commercial opportunities where the pre-Brexit supply-chains can no longer fulfil supply.

Further opportunities will exist within the EU and UK also, where representative may be required in some supply-chains to continue serving either market e.g.

  • Under REACH, an Only Representative (OR) takes over the tasks and responsibilities of an importer of a substance, for a company based outside the EEA. However, the OR opportunities come with a health warning, as an OR is fully liable for fulfilling all obligations of importers for the substances he is responsible for as a registrant
  • With regards to CE & UKCA, an Authorised Representative is someone who has a formal contract with the manufacturer to represent them within the EU (for CE) or UK (for UKCA)
  • While under GDPR, a representative can act on behalf of the controller or processor with regard to their Data Protection obligations

4. Legal Expertise

Considering the 1,246-page TCA deal was only published 3 weeks ago and enforces regulatory red-tape and border controls on more than $1 Trillion in annual trade between the UK and EU member states, legal scrutiny, challenges and deciphering will continue for years to come. ‘The devil is in the detail’ cliche has never been so apt for EU and UK businesses, and many opportunities exist for legal trade experts to dispute the interpretation of and regulatory controls, emerging to govern this new trading relationship. Disputes will arise based on pre-Brexit trade contracts and future misinterpretations of the likes of Incoterms, so expect the legal profession to prosper on the back of the UK’s decision to leave the EU.

5. Technology
Considering the plethora of trade challenges alluded to above and the future pitfalls to emerge with the full implementation of the TCA, many innovations and disruptive technologies will emerge to ease the pain of EU-UK trade. Think;

Customs Administration Bots
AI Sourcing
Digital supply chain audits
Kwayga.com

This is a brief overview of the early opportunities to emerge from the Brexit crisis, with many more to follow. Feel free to join the discussion below or contact [email protected] to discuss these items further.

Brexit Supplier Help

Over the past 12 months, the Brexit dial has moved ominously from safe ‘Soft Brexit’ impact to the unsettling ‘Hard Brexit’ scenario, with a worrying time more recently where it seems ‘No Deal’ is a possibility. Throughout this time, we have been working with businesses across the island, analysing their supply chain risks with feedback from the trenches including;

  • “My NI-based supplier is the holder of product authorisations under REACH” – Paint Producer, Cork
  • “Our supplier has a factory in Naas and Leeds – I presume our products are coming from Naas?” – Food manufacturer, Sligo
  • “Our biggest customer is also our biggest supplier, based in Bristol” – Aviation Maintenance, Shannon
  • “We have a UK agent who is the sole distributor for UK & Ireland” – Motor Factors, Carlow
  • “Our suppliers are in mainland Europe but it’s a bulky product shipped via the UK” – Wholesaler, Athlone
  • “I have just realised 80% of our raw materials comes from the UK or NI” – Cleaning Company, Leitrim

Brexit is another business risk and Arvo use strategic sourcing techniques to reduces costs and risks associated with Britain’s exit from the EU, while defining appropriate sourcing strategies so as there is minimal interruption to our client’s supply chain.

Arvo provide strategic sourcing consultancy and have delivered practical workshops & training, specifically focusing on Brexit supply chain risks and helping SME’s answer questions such as; 

  1. What suppliers will impact the business most if they cannot supply you tomorrow?
  2. Do you know what % of your goods and services are coming directly or indirectly from the UK/NI?
  3. Have you researched alternative non-UK suppliers?
  4. Are there contracts, licenses or regulations restricting your global sourcing strategies?
  5. Are you aware of the potential additional costs to import from Europe in terms of hubbing, customs, logistics partners, Minimum Order Quantities plus the impact on cash flow?

Therefore, let us know today how we can help build resilience into your supply chain for Brexit (& other Political, Economic & Technological events that may cause risks for your business in future).

The outcomes from an Arvo engagement include a Strategic Sourcing Plan, a completed Kraljic Analysis defining your strategic and bottleneck suppliers while we have also created a Sensitivity Analysis Tool to analyse how the different values for a set of independent variables (costs) affect a dependent variable (price/margin) under certain specific conditions (Brexit).

Take note of these Brexit Planning Tools and Resources, to reduce your Brexit exposure.

Finally, Arvo are working with Enterprise Ireland, InvestNI and Intertrade Ireland, who all have Brexit supports to help you on the journey to develop your contingency plan;

Contact Us or the agencies above to get support for your Strategic Sourcing Brexit risk

Brextension – Current Brexit Status

On April 10, 2019, the latest Brextension was formalised with the EU offering the UK a six-month Brexit delay, pushing the withdrawal date to Halloween. This six-month extension was a compromise solution which stopped the clock on a no-deal withdrawal occurring at the end of the first Brexit-extension in April 2019.

The UK agreed with the EU by extending Article 50 until October 31 2019 at the latest, whereby during the course of the extension, the UK will continue to hold full membership rights as well as its obligations. The EU has agreed that the extension can be terminated if the Withdrawal Agreement is ratified within the UK. If the Withdrawal Agreement is ratified by both parties before 31 October, the withdrawal will take place on the first day of the following month i.e. Brexit could occur on July 1st, August 1st, September 1st, October 1st or most likely October 31st (which incidentally is the only date on which a no deal exit could happen).

As the UK did not ratify the Withdrawal Agreement by the 22 May 2019, they were legally obliged to hold European Parliamentary Elections on May 24th.

Although Parliament has rejected leaving without a deal multiple times, no deal remains the legal default at the end of the extension period if a deal cannot be agreed. If the Withdrawal Agreement can be agreed, this offers a time-limited implementation period providing a bridge to the future relationship and common rules will remain in place i.e. businesses trade on the same terms as now until the end of 2020.

Contact Us ([email protected]) to get support for your Strategic Sourcing Brexit risk

GDPR Post Brexit

A lot has been said and written on GDPR. At a time when we are just beginning to grasp the fact that ICT cannot be without GDPR, mainly due to the ‘consent’ email bombardment, comes Brexit and the uncertainty of it in relation to GDPR as it is an EU regulation. People and businesses are asking ‘’what will GDPR be like post Brexit?’’ Fortunately, a lot of articles have been written and discussions are going on from different perspectives, GDPR post Brexit won’t be a scenario of ‘’ how to manage your expectations during the first few days, weeks, months of dating’’ rather it is a subject of forward looking, information gathering, be in the know of suggested options especially for companies dealing in B2C or even B2B in case data management dealings don’t go according to plan.

Before going further, here is a brief recap on GDPR for those who need it. In the beginning, the European Union adopted the DGPR (2016) as an EU law on Data protection to provide privacy for all individuals in the EU and the EEA. The regulation which became enforceable beginning of May 2018 has two main priorities, to; give individuals control over their personal data and, to; simplify the regulatory environment for international businesses by unifying the regulation within the EU. GDPR also addresses export of personal data outside the EU and EEA. With Brexit in sight, this is where GDPR post Brexit questions arises, with UK about to become a third country, will the Britain abide by GDPR? What guarantees are there in terms of data privacy? – Whether in terms of B2C or B2B. Individually, people and businesses alike are researching the topic and informing those who are anxious.

Looking for Answers

Questions and answers have been suggested, with the amount of publications on the topic, we are becoming bombarded again. My opinion is to answer GDPR questions whatever perspective, we must go to the heart of GDPR – the principles (the core conditions that governs the regulation GDPR (2016/679) especially the 7th “Accountability”.

ICO wrote about GDPR principles, to be;

  1. Lawfulness, fairness and transparency,
  2. Purpose limitation,
  3. Data minimisation,
  4. Accuracy,
  5. Storage limitation,
  6. Integrity and confidentiality (security),
  7. Accountability.

Monique Magalhaes of Techgenix, in January 2018 wrote and highlighted that – ‘’organisations need to follow these principles when collecting, processing and managing European citizens personal information regardless of whether the business is in EU or elsewhere in the world.’’ I believe this explanation applies to Britain once it becomes third country.

According to another website tripwire.com; there might be a common misapprehension which might be a wishful thinking for some British businesses who don’t want the hassle of achieving GDPR compliance, thinking that UK businesses might not need to comply with GDPR post Brexit as it is an EU regulation. The fact is, currently the UK adopted all the rules of the GDPR into the Data Protection Act 2018 – which means that UK businesses will have to continue complying with the GDPR after Brexit and those that deal with EU citizens have to comply with GDPR directly.

Important for UK businesses to remember; compliance with the key principles is a paramount building block for good data protection practice for those involved. Failure to comply with the principles may lead to substantial fines. Article 83(5) (a) states that infringements of the basic principles for processing personal data are subject to the highest tier of administrative fines. This means a fine of up to €20 million, or 4% of your total worldwide annual turnover, whichever is higher.

Brian Honan of independent.ie writes; GDPR and Brexit will potentially bring many challenges to organisations over the coming years, but proper planning and keeping abreast of how talks regarding data protection post-Brexit will help keep on top of those challenges. This suggests that businesses and the concerned alike need to keep eyes open for the future is unclear.

For more information visit the pages referred;

https://www.dataprotection.ie/

https://www.independent.ie/business/data-sec/gdpr-will-the-uk-still-be-a-safe-place-for-your-data-postbrexit-36741468.html

Six Myths People Still Believe About GDPR

Contact Us with related queries or to get support for your Strategic Sourcing Brexit risk
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