Brexit Uncertainties Create Potential Legal Nightmare for UK Exporters

By Joe Mayes and | February 11, 2019

Business is brisk at Nim’s Fruit Crisps. Pineapples are imported from Costa Rica, kiwis from Italy and oranges and lemons from Spain. They’re then turned into healthy snacks for export to Israel, South Africa, Hong Kong and elsewhere.

You wouldn’t know that the company in southeast England is already about to head into the post-Brexit world without knowing what it will look like.

Nim’s will ship goods in coming weeks that are due to arrive at their destination after March 29, the date the U.K. plans to leave the European Union. The country still can’t agree on a deal to keep borders open and trade flowing. “We’re just going to wing it really,” founder Nimisha Raja said. “There’s not much more we can do.”

The problem for British exporters is that the U.K. is yet to roll over the majority of the beneficial trade terms around the globe it gets through EU membership. That means goods being readied for dispatch that take as long as six weeks to reach destinations in Asia could end up sat in quarantine or face disputes over who pays any new customs duties.

“The uncertainty is not something that will happen in early April, it is something that is with us” now, Austrian Foreign Minister Karin Kneissl said Sunday on BBC.Deals between the EU and other countries cover more than 11 percent of Britain’s trade. Liam Fox, the minister in charge of international trade, said last month that the major deals would be rolled over before March 29, though others wouldn’t.

“There will be a frantic look at contracts,” said Alex Veitch, a head of policy at the Freight Transport Association. “Changes in duties could increase the cost of a product massively.”

Some companies are trying to speed up delivery times to beat the deadline. Joe & Seph’s, a gourmet popcorn producer in London, has started air freighting its goods to markets such as Hong Kong and Singapore instead of sending them by sea, even though it costs more than double per shipment.

“It’s too big a risk,” said Adam Sopher, the company’s co-founder. “My relationship with my customers is the most important thing. The uncertainty is a nightmare.”

The trade dilemma also applies for imports. Edinburgh-based haggis brand Macsween, which brings in pulses from Canada and onions from India and Egypt, has had more difficulty getting long-term contracts with its suppliers because of uncertainty over Britain’s future trading status.

“It makes it harder to plan our prices,” said James Macsween, managing director of the third-generation family business, which counts Marks & Spencer Group Plc as its biggest customer. “We were led to believe these trade deals would be sorted, but we’re in the unknown.”

That said, U.K. exporters face a potentially significant benefit in a no-deal Brexit scenario if the pound depreciates further, which would make their goods more attractive for foreign buyers, said Sean Ramsden, chief executive of Ramsden International, which wholesales British products worldwide.

“There’s an element of insurance there,” Ramsden said. “While some markets may be slightly more challenging, it could be more than offset by our products being cheaper around the world.”

The U.K.’s Department for International Trade says avoiding disruption to Britain’s global trading relationships is a priority and that it continues to engage with all its trading partners. Britain has signed continuity trade agreements with Chile, the Faroe Islands and eastern and southern Africa. The latest one, announced on Monday, was with Switzerland

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