Thread by @Joe_Mayes

New: the Brexit red tape mountain gets real. The latest headache... rules of origin 📜😬1/ bloomberg.com/news/articles/…

It's one of those issues that sounds pretty boring -- admittedly is rather dry -- but will be yet another time and cost suck for all companies who export to the EU - even if there's a UK-EU trade deal.

Settle in... 2/

From January, even with a deal, exporters to the EU will need to prove the origin of their goods to qualify for 0% tariffs.

Why? It's to stop products sneaking into the EU that have actually come from countries which don't have a free-trade agreement with the bloc 3/

So take Specac, a U.K. maker of laboratory equipment. They make ~£1.8m selling to the EU each year.

They now need to go through their 1,000 product catalogue and work out the origin of all those goods 4/

`It's a hell of a lot of work' says David Smith, @SpecacMD. `It’s a huge burden to dig into your supply chain and find the ultimate source.'

The cost of an origin certificate is ~£30 per shipment, so add that to the time and human resource cost of doing the work 5/

Big cos. are used to RoO, so they'll have systems and people in place.

But this will be a wholly new burden for the ~100,000 exporters who trade only with the EU.

Many won't bother and will just pay the tariff - or cease exporting to the EU entirely, Smith said 6/

But the plot thickens for the multinational industrial giants e.g. Nissan and BMW.

To qualify for 0% tariffs, they'll need to prove their product contains more than ~55% local content -- but so many car parts are shipped in from abroad... 7/

So they desperately need an agreement on RoO which counts parts brought in from the EU and other countries as `local'.

This is the famous principle of cumulation, which @SamuelMarcLowe does an excellent job of explaining here 8/ medium.com/@SamuelMarcLow…

Otherwise, a UK-EU FTA is no good to the big carmakers with their continent-spanning supply chains.

And you can't just rejig these things overnight, says SMMT boss @MikeHawesSMMT 9/

So keep an eye on the RoO outcome in the Brexit talks (assuming we get a deal in October, which is still very much up in the air...) 10/

bloomberg.com/news/articles/…

Return to what we know for sure. Exporters will definitely face this new extra RoO red tape from 2021, adding to the pressures of coronavirus.

Plus the other bits of Brexit red tape which are certain: customs declarations (~£32 per shipment), export health certificates... 11/

Add in the uncertainty of whether the border will actually work - relying on an untested and in development app, plus the EU saying it will impose full customs controls... 12/

bloomberg.com/news/articles/…

And a stark shortage of customs agents to process documents, with anecdotal evidence of freight rates spiking as demand outstrips supply... 13/

bloomberg.com/news/articles/…

And you can see why it's looking pretty sketchy for businesses, even with a trade deal...

But the show rolls on! (ends)

bloomberg.com/news/articles/…