50 retailers facing tariffs despite Brexit trade deal

Will Green is news editor of Supply Management
8 January 2021

Retailers say they face tariffs moving goods between the UK and EU despite the free trade agreement brokered on Christmas Eve.

The British Retail Consortium (BRC) said rules of origin terms in the agreement meant at least 50 retailers were looking at tariffs on goods shipped to stores in the EU.

Steve Rowe, Marks and Spencer chief executive, told reporters rules of origin affected around a third of its food products, including Percy Pigs.

“The best example I can give you of that is Percy Pig,” he said, according to the BBC.

“Percy Pig is actually manufactured in Germany. If it comes to the UK and we then send it to Ireland, in theory it would have some tax on it.”

M&S, in its Christmas trading statement, said: “The free trade agreement with the EU means we will not incur tariffs on our core UK sales.

“However potential tariffs on part of our range exported to the EU, together with very complex administrative processes, will significantly impact our businesses in Ireland, the Czech Republic and our franchise business in France which we are actively working to mitigate.”

The BRC said goods such as clothing imported for UK stores and then distributed to branches in EU could fall foul of rules of origin regulations and be subject to tariffs. A similar situation could apply to ingredients imported to the UK and used in products for export.

William Bain, trade policy adviser at the BRC, said: “As the commercial impact of the Trade and Co-operation Agreement (TCA) has sunk in for retailers since Christmas Eve, at least fifty of our members face potential tariffs for re-exporting goods to the EU.

“We appreciate that the rules of origin in the TCA were designed to be facilitative on trade in goods, but we need a solution which genuinely reflects the needs of UK-EU supply and distribution chains for goods.

“We are working with members on short-term options and are seeking dialogue with the government and the EU on longer-term solutions to mitigate the effects of new tariffs.”

Meanwhile, fines totalling £32,000 have been handed to lorry drivers for entering Kent without a Kent Access Permit – dubbed a “Kermit” – since the Brexit transition period ended.

Traffic levels at the Dover crossing are currently low but are expected to increase in coming weeks.

Food supplies to Northern Ireland have been hit since the end of the transition period, with GB suppliers deciding not to supply the region because border red tape makes it “too much hassle”.

Tom Fairbairn, distinguished engineer at supply chain software firm Solace, said: “Any disruption is like a drop in the pond: the effects ripple out far and wide beyond the initial source of disruption. Unmanaged, the disruption has spread far and wide, fundamentally causing the supply chain to break. It is not so much about stopping the effects, but being able to mitigate and adapt to them.”

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