THE FUTURE FOLLOWING BREXIT

Waving flag of United Kingdon and New Zealand

Companies around the world have been nervously awaiting updates on the Brexit situation unfolding in the United Kingdom. SupermarketNews magazine spoke to Nick Swallow, New Zealand’s trade commissioner for the United Kingdom and Ireland, to discuss how Kiwi businesses should be preparing for various Brexit scenarios and how specific outcomes will affect them.

“The purpose of my role, and my team, is to support New Zealand companies and help them grow bigger, better and faster in the UK and Ireland,” explained Swallow. The trade commissioner expressed his confidence in the UK to maintain positive relations with New Zealand following any Brexit scenario, citing our long history together as trade partners. “New Zealand has had an extensive history of trade with the UK, and they are our fifth largest two-way trade partner,” he offered. “Trade is built on common understanding, and I think that the UK will continue to be a strong market for New Zealand companies. They have weathered many storms in the past, and that common understanding our two countries share is what will help maintain the relationship.”

Despite our strong history, however, Swallow was determined to encourage New Zealand businesses to prepare themselves for various outcomes. “It really depends what industry you’re in as to what the impacts of a deal or no deal Brexit will have. I think the best thing New Zealand companies can do is to look at their operations to understand what effects Brexit could have on them, and put in place sensible contingency planning to hedge themselves against some of these risks.” Swallow elaborated that these plans did not need to be extensive or even particularly time-consuming, it simply involves understanding your movements and exporting processes. “It is just sitting down for a couple of hours and looking at your operations to understand the movement of goods into the UK and then from the UK into Europe. This is to make sure that your minimising your exposure to things like tariffs and customs formalities by either shipping directly into Europe or looking at other options. There are a lot of tools on the NZTE website to point companies in the right direction.”

Tariffs and customs are the two most significant changes that a deal or no deal Brexit could have for New Zealand companies, according to Swallow. “There is currently free movement of goods, people, capital and services throughout the EU. That would stop, which would mean that the UK becomes a third country, to the EU. The difference will be that anyone exporting from the UK to the EU or vice versa will possibly face tariffs and will have to go through customs formalities that they previously didn’t have to.” It is predicted that customs formalities per year will increase for the UK rather significantly, rising from 120 million to approximately 320 million. This would affect New Zealand exporters who have operations in the UK and rely on these to fulfil overseas e-commerce orders. The primary concern for these businesses is a substantial tariff increase, where previously there were none, and delays at the borders which will stop companies from fulfilling contracts or orders on time.

While these trade changes may appear bleak, Swallow expressed that Brexit may also offer some unique opportunities for New Zealand businesses. “Once the UK leaves the customs union it is then allowed to negotiate free trade agreements with other countries,” announced the trade commissioner. “The UK has indicated that it would like to enter negotiations with New Zealand for a free trade agreement, which has gone through public consultations in the UK and New Zealand.” With the UK positioned as one of the countries primary trade partners, a free trade agreement could be a significant step for New Zealand when it comes to increasing our international presence in the marketplace.

Swallow concluded by advising Kiwi’s to await further news and keep on their toes as there is no telling which way this conversation will swing. “I have no idea what way this is going to go, and in the media, you can’t predict what is going to happen even day to day, there always seems to be more surprises in store for all of us.”