A FMCG crisis is a real possibility for UK firms, says legal expert
Businesses across Coventry and Warwickshire are at real risk of seeing immediate disruption to their imports and exports in the event of a no-deal Brexit, according to one of the region’s legal experts.
Prime Minister Boris Johnson has stated that if a deal can’t be struck with the EU by Thursday, October 31, then the UK will be leaving the European Union without one – and Phil Costigan, Partner at Coventry-based solicitors Band Hatton Button, is warning of the overnight implications of the UK switching to World Trade Organisation (WTO) rules.
The WTO is made up of 164 countries, and their rules regulate the basis of trading between two countries if they have not already negotiated their own free-trade agreement.
Phil said: “It is perfectly legal for another country to insist on enhanced border checks straight after a no deal Brexit when receiving imported goods, however unnecessary it may be, and these delays could cause major problems – particularly for perishable goods, or “just-in-time” production lines.
“This enhanced checking may relate to product standards, as well as increased bureaucracy relating to potential tariffs. Whilst part of the EU, the UK is bound to common product standards and safety regulations, but once the UK leaves the standards may gradually diverge and another EU country may feel the need to inspect goods more closely.
“While the UK’s divergence from the common product standards upheld by the EU may happen over a longer period of time, there is nothing legally stopping other EU countries from immediately adding additional bureaucracy to border checks – so businesses really do need to prepare now for the worst case scenario.
“The introduction of tariffs on goods to EU countries such as cars (10%), dairy products (35%) and livestock (40%) will be of immediate concern for a lot of businesses, but it’s also important that they are alert to potential major problems that could be caused at the border – and sooner than they think.
“Some businesses are stockpiling products on both sides of the English Channel to combat this in the short-term, but I’d urge anyone concerned about the impact on their business to seek professional advice to fully understand the full, long-term repercussions for their business.”