Brexit Challenges for Online Traders
As we adjust to the new reality of Brexit, we are beginning to see the impact it has on our everyday lives; this is particularly true when it comes to shopping online. And for online traders, it hasn’t been a pretty picture – whether they are importing products or raw materials from the UK or exporting products to consumers within the UK, the rules of play have changed and it’s been a bit of a struggle for many.
So, what’s going wrong for Irish Online Traders?
The Trade and Co-operation Agreement signed between the UK and the EU which took effect from January 1 has left traders struggling to navigate a sea of red tape. Two of the main areas where we are seeing major issues are:
- Rules of Origin
As part of the agreement, it was decided that goods traded between the EU and UK avoid tariffs and quotas only where they originate from whichever side exported them. The purpose of this is to avoid situations where goods that have been imported into the UK from a third-party nation cannot then be resold from the UK into the EU Tariff Free.
The difficulty is, especially for processed agricultural or industrial goods, they typically include components from around the world. There are allowances for products that have been adequately processed in the non-origin country and different products are also subject to different minimum percentages, while some processes incur exclusions, others do not. In practice, this part of the legislation is a bit of a nightmare to work through.
The main issue that arises in this context is the mountains of paperwork required for every shipment in order to be compliant – so much so that some feel accepting tariffs may be easier than even attempting to comply. While accepting Tariffs may be a short-term solution to getting business moving it will ultimately impact ROI and some businesses – including many of our own customers – are rethinking the practicality of trading with the UK at all.
Traders and freight couriers previously enjoyed a smooth crossing thanks to the EU customs union. That is no longer the case. As the UK and the EU are no longer in a customs union, customs checks, and other formalities now apply. What this means is that traders and freight couriers now must undergo a time-consuming and burdensome process while crossing borders.
The frustration has been doubled in many cases, as businesses thought the right paperwork was complete and they waited the necessary queue’s etc., only to have shipments turned away due to errors in the paperwork. Which unfortunately seems to be the common experience as we have seen in the first few months of this new arrangement.
Guidance to businesses and consumers shopping online
The Competition and Consumer Protection Commission (CCPC) has primary responsibility to enforce competition and consumer protection law in Ireland. The CCPC provides guidance to businesses and consumers which is very relevant in the current trading environment. The guidance published on 28 January will assist businesses in understanding their obligations to consumers under the Consumer Rights Directive when they sell online to consumers.
- “Selling online; What you need to know”, guidance from the CCPC available through this link; Guide for Traders Who Sell Online or Off-premises | Competition and Consumer Protection Commission (ccpc.ie)
- Guidance from the EU Commission when buying online from UK websites; https://ec.europa.eu/taxation_customs/sites/taxation/files/e-commerce-uk-factsheet.pdf
- The Statutory Instrument that gives effect to the Consumer Rights Directive in Ireland containing the relevant information in relation to consumer rights and trader obligations when contracting online; http://www.irishstatutebook.ie/eli/2013/si/484/made/en/print
- Guidance as to information requirements for distance contracts that businesses must provide to consumers before the consumer is bound by the contract: https://www.ccpc.ie/business/ccpc-publishes-brexit-guidance-to-help-businesses-amidst-challenges/
Looking to the Future
While the rules of play have certainly changed, it’s safe but sad to say they won’t be changing back any time soon. It’s no surprise that there would be a teething stage, although perhaps its worse than we might have expected. But of course it’s in our best interests to learn to work with this new system, and the sooner the teething problems are sorted, the better.
We can also look at this as an opportunity to look further afield for customers and suppliers to reduce our dependence on the UK. A great way to break into a new market is through Digital Marketing. Remote working offers us the opportunity to enter new markets without any office infrastructure and digital marketing is a hugely cost-effective route to market. Inspiration has worked with B2C and B2B customers to drive lead generation and sales overseas with targeted marketing and in some cases, localised sites. Customers who have done this successfully range from make-up specialists https://stralabeauty.com/ through to global retail refrigeration specialist https://novum.ie/
We’ve seen first-hand how Irish businesses are using this period in time to explore new exporting opportunities and there’s plenty of government supports to assist you in this process.