South Africa: What Happens To Your Business If There Is A Hard Brexit?

Last Updated: 14 October 2019
Article by Donald MacKay

Brexit is so often spoken of in general terms, but when Brexit happens (possibly as soon as 3 weeks from now), the specific impact on individual companies is what will matter. This is not an academic exercise only impacting companies on the other side of the world, but a very real action that will send ripples around the globe and some of those ripples will arrive in SA.

The way this is currently being handled is to try to (mostly) inherit the agreement we have with the EU, but this is more difficult than it appears. Minister Patel seems have concluded some sort of agreement with the UK, in the event of Brexit happening, but the details of this agreement are not yet available.

Certain sectors depend on the UK being part of the EU in order to derive benefits under the Economic Partnership Agreement with the EU, with the automotive sector being a good example. In order for a car to be sent to the EU without attracting duty, 60% of its value needs to be created in either the EU (which includes the UK) or in SACU. With the UK leaving, some cars run the risk of dipping below this critical 60% and thus attracting duty (10% into Europe and 25% into SACU).

Other products are also impacted. What happens to the bilateral safeguard duty currently in place on bone-in chicken from the EU? Do we find this duty disappearing as soon as Brexit happens, only to be replaced by the considerably higher normal rate of duty, applicable to non-EU countries?

The UK does not have a negotiated set of protocols for agricultural goods. What will happen to exports to the UK after Brexit? Just the physical constraints at ports, as all goods need to clear Customs and not just non-EU goods, is going to be a consideration.

The DTI is trying to find a way through the morass , but it is not clear if this will be resolved before 31 October (assuming the UK does not come to an agreement with the EU before then – a prospect which remains unlikely despite that political gymnastics happening in the UK).

If the UK has a hard Brexit, either in October, or later, do you understand the impact this will have on your business? Do you know which of the products you export to the EU are impacted by a hard Brexit? Likewise, do you know which of your imported goods potentially face higher duties?

You can use Stratalyze to view any of the tariff codes of the products you trade or are impacted by, to see if you are also impacted by Brexit. If the Brexit Alert icon pops up, you know the tariff code you are viewing will be impacted in some way by Brexit.

stratalyze.com

Of course you can also do a lot more with Stratalyze, such as view the import and export statistics for any tariff code in the tariff book, as well as overlay your own data onto the market data to better benchmark your own performance.

Oct 9, 2019

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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