The cost of importing dresses could fall by up to 12% and leather handbags by up to 3% if the UK can secure new deals with countries such as China, new research from the British Retail Consortium (BRC) has found.
However, the organisation argued that ensuring the continuation of the European Union’s Generalised Scheme of Preferences (GSP) with countries such as India and Vietnam was a more pressing priority than securing new deals in the upcoming Brexit negotiations – particularly for fashion retailers.
Where UK non-food exports come from
GSP countries account for 38% of total general merchandise imports into the UK, of which clothing and footwear makes up 96%.
The EU accounts for just 12% of total general merchandise imports, of which clothing is just more than half (54%).
Countries such as China are classed as most favoured nation (MFN) states with which the UK has no current trade agreement beyond the World Trade Organisation (WTO) rules. MFN countries account for 49% of total general merchandise imports, of which clothing and footwear makes up 61%, the research said.
Julie Brown, chief operating and financial officer of Burberry, last week said post-Brexit tariffs were a key concern for the luxury brand.
Revealing that she sits on a business advisory committee to the Treasury, Brown explained: “We’re looking to try and get trade deals, rather than WTO [tariffs]. That is something we don’t want.”
Tony Evans, sales director at Jacobson Group, which owns footwear brands including Gola and Lotus, added that duty rates on clothing and footwear are already high compared with other product categories.
“It’s not helpful,” he said. “When we start to negotiate trade deals with EU countries, I hope a level of sensibility comes out. But as an industry, whatever comes, we need to react accordingly. We’ll all be on a level playing field, so we’ll just have to deal with whatever comes in.”
Meanwhile, retailers of all sizes have argued the case for political stability and business rates reform, following last week’s announcement of a snap election on 8 June.
The BRC called for a business tax environment “fit for purpose in the 21st century”, while the British Independent Retailers Association encouraged all political parties to allow the Low Pay Commission to lead an independent process of setting wage rates so that businesses can continue to provide jobs.
Opportunites and risks for UK trade with the world
The BRC’s Brexit tariff roadmap estimates that retailers directly import around £26bn of general merchandise products and around £100bn indirectly from around the world.
The EU does not currently have a trade deal in place with China. As a result, if the UK does not strike a deal with China we will be no worse off – but there are opportunities to bring down tarrifs if we do.
Current tariffs on imports to the EU from China:
- Dresses: 12%
- Handbags: 3%
The tariffs on imports from some countries, such as India and Vietnam, could either rise or fall.
- Current tariffs on dresses imported from India: 9.6% (If the UK fails to strike a new deal this would rise to 12%)
- Current tariffs on trainers imported from Vietnam: 4.5% (Could rise to 8%)
As a member of the EU, the UK does not currently pay tariffs on imports from certain countries. The BRC gave the following examples of new tariffs UK importers might have to pay if we fail to strike our own deal:
- Swimshorts from Morocco: 12%
- Handbags from Vietnam: 3%
- Handbags from Italy: 3%
*Figures supplied by the British Retail Consortium’s Tariff Roadmap