How Datapath customers might be affected
The future trade relationship between the UK and EU depends on the outcome of current negotiations between the two parties. While nothing will change until the post-Brexit transition period ends on December 31 2020, there are currently two likely scenarios that UK-EU trade will be conducted under from
January 1 2021:
• WTO terms: If an FTA cannot be agreed by the end of the transition period, the UK and the EU will trade on World Trade Organisation (WTO) terms. Shipments will be subject to customs clearance and inspections, while tariffs are expected to be imposed on selected goods that the UK sends to EU countries and on selected goods EU countries send to the UK.
• A Free Trade Agreement (FTA): The UK and EU are aiming to conclude an FTA by the end of the transition period. The details of this are still unknown but it is likely that an FTA would mean, broadly, that tariffs and quotas would not be applied on the majority of goods traded between the UK and EU. There could be some exemptions to this, however, and an FTA is unlikely to eliminate all customs checks so additional paperwork and other formalities could still be required.
Implications with EU customers
The current Bound and Applied tariff, for the HS code Datapath products fall within, attract zero tariff under WTO terms. Therefore, trading with the EU should not apply any tariff on Datapath imported products.
There will be additional customs checks and additional paperwork. Datapath exports to 60 countries currently so is well prepared, along with its shipping partners, to cope with the changes in paperwork. However, we do anticipate delays at ports between EU and UK after 1 January 2020 for a period of weeks while new processes are implemented.
To mitigate these delays, Datapath holds typically 3 months stock of products so delays to goods Datapath imports from EU, or rest of world, should not cause any supply side issues during these weeks of delays.
To minimize delays in exporting goods, we will work with our customers and shipping partners to seek the most efficient shipping method. If possible, goods due the first week of January 2021 should be ordered as early as possible to allow shipping in advance. This will allow the worst of the disruption at the ports to subside.
Given the zero tariff on WTO it is not possible that an FTA would introduce a tariff on our products.
Any FTA would have significantly reduced paperwork than the WTO above, but more than the current requirements. We therefore anticipate delays at ports but for a shorter period than in WTO above.
2 Brexit | How Datapath customers might be affected
Implications with Non EU customers
Any country that does not currently have an FTA with EU and is trading on WTO terms should not notice a difference with Brexit, apart from some indirect delays at ports in the first few weeks (see mitigations under Implications with EU customers section).
Where a country had an FTA with EU, as UK leaves the EU this FTA will cease to apply, unless the country is on the list of signed up UK FTA’s which can be found here https://www.gov.uk/guidance/uktrade-agreements-with-non-eu-countries
For Countries not signed up to a new FTA with the UK the WTO terms will apply (provided the Country is part of the WTO), please note as above the current Bound and Applied WTO tariff for Datapath products supplied under WTO are zero.
If a country is not part of the WTO it is unlikely to be subject to an FTA with EU currently and therefore tariffs should not change.
CE in EU
Datapath certifies CE compliance based upon tests carried out to obtain a CB certificate which is conducted at a test house in Denmark. For this reason, the CE mark will continue to be valid when selling Datapath products within EU.
UKCA in UK
Where we have existing products using the CE mark, we will be able to sell these in the UK until 1 January 2022, using the CE mark.
An FTA is likely to ratify test houses in UK for CE testing and EU test houses for UKCA marks. This would mean we can continue to use the test house in Denmark for both CE and UKCA in future.
If the FTA does not happen Datapath will commit to have products certified to UKCA before 1 January 2022 to comply with the current legislation.
Rest of World
Datapath already complies with various non EU certifications around the world, FCC, CCC, UL etc and these will not change with Brexit.
There is some confusion around certain Incoterms and how this may change with Brexit. Datapath
Incoterms are EXW (Ex works), this will be unaffected by any Brexit changes. The buyer will be responsible for export and import customs clearances which are usually handled by the shipping partner and Datapath’s admin team who provide the required documentation.