I fully appreciate that hearing that DIT advises UK companies to set up in the EU is shocking. It really isn't good PR given that one of the goals of Brexit was to avoid red tape.
But there really isn't anything particularly unusual about it.
Think of it this way
/1
A UK company is exporting to Vietnam and the supply chain becomes more complicated over time, more integrated. The company no longer only exports but moves parts back and forth, perhaps has a sister company in Vietnam that it purchases from but still invoices via the UK
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That part of the business is big enough to be crucial for the company. At some point, it will consider setting up a presence in Vietnam to avoid non-tariff measures and simplify the process.
/3
This is exactly what's happening now only
1⃣ our supply chains are already highly integrated,
2⃣ many UK business models rely on distributing to the UK
3⃣ all the barriers are new.
/4
Setting up in your target market, one where a significant proportion of your supply chain is located is not unusual.
It's one of these real-life, obvious consequences of taking back control and introducing a new border.
/end
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Love being quoted just based on my tweets (especially the sarcastic ones). Thanks Express.
So let's unpack this. Should companies be setting shop in the EU?
/1
Some- yes.
It's all about what the company does, where it brings goods from, what happens to the goods in the UK and where they're sold to.
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In some cases, you'd have double or triple duties after bringing goods into the UK. Rules or origin might be an issue (Percy Pigs). And then there is VAT and cases where you might need a representative in the EU country and loss of triangulation.
/3
Just been talking to someone about long term effects of Brexit and it got me thinking about all these industries that are at a standstill at the moment, in shock over the new red tape.
/1
While it’s true that many industries are at a standstill and are struggling to export now, that’s just the beginning.
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Border issues will eventually get sorted. IT systems will work (more or less) and we’ll get the hang of these new formalities.
And at that point, many companies will realise that the extra red tape and these extra costs are not going away.
/3
Short 🧵on my key point from today's webinar on rules of origin.
Great questions from 1.3k (🤯) ppl in the audience and always such a pleasure to listen to @MichaelGasiorek and @pwrighting share their expertise on trade and origin.
We hear so much about rules of origin but it's important to understand they are not just one thing - rather a set of requirements.
I always talk about them in terms of 3 different layers of origin requirements.
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Layer 1⃣ - product-specific rules.
You need to make sure your product meets rules for that particular product (based on your commodity code) under the specific trade agreement. There are different rules:
✅for different products
✅under each/most agreements.
/3
The new border procedures, including SPS formalities:
1⃣ cause delays both at the premises (before the goods move) and at the border
2⃣ are expensive
3⃣ can make the product unattractive to EU buyers - esp for perishable goods (you want your meat to be fresh)
/1
Customs processes are difficult enough but SPS ones are a pain. Read a couple of examples 👇 (h/t @vivamjm )
"The Eurotunnel needs to process 500 lorries an hour but only has the veterinary capacity for 150 an hour."
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