International courier ParcelHero warns that if Britain exits the European Union (EU) there will be an immediate and significant decline in trade with its most important trading partner.
Based on its experience of shipping to non-EU countries on the continent and beyond, ParcelHero warns there will be an average 5-9% added to the price of an item in duties, and VAT of around 20% to pay (only reclaimable for those who are VAT registered). Additionally, it warns there will be increased transport costs, as the UK becomes a less competitive market for international couriers, and new ‘customs clearance’ charges from global carriers: typically around £15 (US$22).
ParcelHero claims in a new report Delivering Brexit: The True Cost of Leaving the EU that a typical £150 purchase from the EU would cost Brits around £195 (US$280): an increase of £45 (US$65), or 30%.
David Jinks, head of consumer research for ParcelHero, said, “It’s not just consumers who will suffer businesses will too. Our report reveals that the typical SME engaged in importing from the EU will be spending around £163,000 (US$235,000) extra annually, including duties and taxes, if we leave the Union.”
The report warns that UK exporters will face a mass of new red tape shipping to the EU. Customs forms with proof of origin for every shipment will be required; and the resulting duties payable by receivers mean EU businesses will be three times more likely to prefer to trade elsewhere within the union than with the UK.
“The cost of consumer goods could rise by around 32% if the UK follows the model European non-EU member Norway; and 58% if it follows the favored Swiss model,” added Jinks.
“A typical pair of branded jeans that costs £56 (US$80) in the UK costs £71 (US$100) in Norway and over £80 (US$115) in Switzerland. That difference is not just down to increased duties and transport costs, but they certainly don’t help.”
Once outside the EU, the UK is unlikely to qualify for the many favorable trade agreements negotiated by the union with key countries and markets around the world. Significantly, it would be unlikely to be included in the planned Transatlantic Trade and Investment Partnership (TTIP) between the USA and the EU, aimed at removing most customs duties. This would mean, for example, British cars exported to the USA would still face a 2.5% tariff that will no longer apply to EU cars. And, unless the UK were to react unilaterally, import duties of 10% on imported American cars would remain in Britain, but be abolished in the EU. It is also likely that many other British exports, such as fuel and chocolate, could also be at a disadvantage if TTIP abolishes tariffs on those products.
“If we were to plough our own furrow completely, leaving the common market and setting our own tariffs, that would also mean moving outside the EU’s Common External Tariff and setting new duties on 19,000 individual tariff codes: a guaranteed recipe for increase red tape and delays,” said Jinks.
The report also disproves the claim that the UK’s SME businesses can simply switch from the EU, our main trading partner, to, for example, the BRIC nations. Typical ParcelHero SME business users shipped more items to the Republic of Ireland alone last year than the whole of Brazil, Russia, India and China combined. Small wonder when, for example, British completely knocked down (CKD) car part sets attract duties of 125% in India.
“The message is clear, when faced with new duties and red tape on UK goods, EU-businesses will stick with their union partners at the expense of a go-it-alone Britain,” concluded Jinks.
Read the full Delivering Brexit report by clicking here.
April 19, 2016
