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Brexit Planning


#62

Sounds like Project Fear if the article gives no supporting reasons.


#63

I don’t want to search for the article again and I expect we will find out in due course anyway…


#64

Sad that this is just one tangible thing we are going to make more expensive and more complicated for ourselves. hopefully I can drink my blue passport and dream of sunlit uplands


#65

Its not tangible, though. The EU protects its winemakers (and others) with high tariffs to keep out foreign competition. The EU has signalled it wants a trade agreement with Mercosur that may reduce the tariffs on South American wine.

The only South American countries that are substantial exporters to the UK are Argentina and Chile, and Chile is only a ‘associate’ member of Mercosur, so will their wine be treated the same.

Doesn’t matter, the EU reducing tariffs does not automatically mean the price rises in the UK. The UK is free come November to import without those punitive EU tariffs, and to negotiate its own trade agreement.

As @Andy999 says, we will find out in due course, and we don’t have to accept unsubstantiated doom and gloom.


#66

If we reduce tariffs to zero, doesn’t really give you much of a negotiating position to get a free trade deal…

Also its not unsubstantiated, in fact its quite the opposite. Every single credible economist predicts negative effects, and by the very nature of the plummeting pound, things will get more and more expensive. Thats before tariffs and the extra admin etc of importing goods to this country.


#67

Yes this is true for the economy as a whole. However we are not discussing the overall impact of Brexit on the economy here. We are only looking at the impact on wine. Now alcohol products are really very different to pretty much any other food products imported from Europe in that we apply an excise duty to them which most other EU countries (but not all) do not. So, even though we currently enjoy a ‘free trade’ arrangement with Europe as fellow members of the EU, this is NOT really the case for wine and other alcoholic products which are subject to our excise duty (I’ve always wondered why the EU let us get away with this!).

There are no plans for this excise duty to change (other than in the normal government budget processes) so that won’t be affected by Brexit. Any tariffs that Britain might choose to impose on European wine are unlikely to be significant, probably no more than around 10p on a bottle. Anything more would signal the start of a trade war with Europe which is highly unlikely (though who knows with Boris at the helm). So Brexit is unlikely to have a significant impact on the price of European wine bought in the UK.

We are also highly unlikely to impose bigger tariffs on wine from outside Europe than are already imposed under our current EU membership. So it is unlikely that those products will increase in cost either. Though, of course, we will no longer benefit from any other deals in this respect that the EU might negotiate, although we may be able to negotiate our own similar deals.

It is possible that higher admin costs might have an impact on EU imports but this is again unlikely to be significant on a per bottle level.

It is possible that further falls in the value of sterling may have an impact, however I believe that, as the worst case scenario now seems the most likely, the recent fall was the market factoring that worse case scenario in. Further large falls are, I believe, less likely now (I think it VERY unlikely that the currency traders still expect Brexit with a deal). However in my opinion falls in the pound are the one factor that might significantly affect our wine prices.


#68

The EU has had a free trade arrangement with Chile since 2003. The temporary tariffs published by the government appear to include Chile on a similar basis to the EU so I assume that once the final WTO schedule is agreed (it is published but has been oobjected to by quite a few countries) then there will be no change in the net cost of importing Chilean wines, all other things being equal.

The Mercosur/EU FTA has been agreed and is awaiting signature and ratification. I don’t know when that is expected. When it happens, I assume that imports of wine from Argentina will become cheaper. But if we leave before then, then we may benefit from cheaper Argentinian wine prices temporarily if we do indeed go to zero-rate tariffs on wine. However the WTO tariff schedule envisages that we shall eventually move to a tariff identical to that levied by the EU. So from that point we shall go back to the current situation, unless of course we sign our own FTA with Mercosur.

I don’t really agree that the EU tariff on wines is high - the highest rate is on sparkling wines, and that is 32€/hl (i.e. about 22p per bottle). Less for still wines. Frankly, financial tariffs aren’t worth working up a head of steam over, wherever you stand on Brexit.

On the other hand, perhaps we should be exercising ourselves on other matters. As @winelad says, if we charge zero tariffs, then there is no point in anyone signing a trade deal, on financial grounds at least. We should hope that the government is smart enough to hold the threat of looming tariffs over the heads of potential counterparties as a bargaining chip. Meanwhile, spare a thought for businesses who will have to export. That is worth some of your consideration.


#69

On exchange rates a number of the larger banks are predicting that, in the event of a no deal Brexit, the GBP could go as low as parity with the USD (currently 1.20 or so) and below parity with the Euro (currently 1.08 or so). The recent falls in the value of Sterling represent the increased likelihood of no deal.


#70

That is where my company is going to hurt and, as we don’t actually do much exporting, we may simply have to consider ceasing all exports. Thus removing a huge potential market :frowning:

However that is way beyond the scope of a wine forum and risks drifting into the dangerous realm of politics!

I know that is what they are saying which is why I consider this to be the only realistic cause of significantly increased prices post Brexit. But at the same time I doubt any currency dealer still holds out financial hope for a deal. And if they do I wouldn’t trust their judgement!


#71

Interestingly the betting odds still have a lower probability of No Deal than the other options (delay, referendum, deal agreed).


#72

OK. But betting odds predicted Remain in the referendum…


#73

Interesting, maybe I should go and place a bet!

However don’t forget that the betting odds are not set based on considered and informed opinion but, as I understand it, they are based on the bets being placed and the betting companies adjusting the odds to ensure they still make money whichever way it goes. In other words all that represents to me is that the majority of the UK betting public still have their heads firmly buried in the sand!

But I’ll say no more on this unless it is directly pertaining to wine! :wink:


#74

Agreed. I spend too much time worrying about it in my day job, and not enough time drinking wine.


#75

Excise duty is nothing to do with import taxes - it is on any good in that category sold in a country including those made in your own country. Other categories are Tobacco, petroleum products and energy

The EU doesn’t “allow us to get away with it” we are one of 13 countries that apply excise duty on still wine and one of 19 that apply them on sparkling wines (admittedly we have the 3 and 2 highest rates respectively…only Ireland has higher and their VAT is higher too at 23%). It is however, one of the few products to have a minimum level set (by the EU) at zero euros / hL

We will have, under WTO regulations, to impose tariffs on wine from outside Europe until we have negotiated a trade deal with that country / block. So, sorry, those prices will increase but by circulation 8ppl

The falling value of sterling has probably had more of an impact however


#76

If you don’t mind me asking, what do you export and what paperwork do you do currently ?

there probably won’t be much of a difference just the tariffs and those will be paid through an HMRC account anyway

can DM me if you don’t wish it to be public


#77

We process schools photography for independent photographers and we have several in Europe so it gets really complicated because we sell the photographers’ products (photos etc) using our website, but technically we are just the agent, the sale is actually our client photographer’s sale, however we are the ones that dispatch it and then pass the money taken to the photographer and invoice them separately for our services. Doing things this slightly complicated way means there are no issues between us being VAT registered and most of our client photographers not being VAT registered, allowing the sale to be made VAT free.

As this is all within Europe there is very little paper work required currently. After Brexit literally no one in HMRC can tell us who will be responsible for making the necessary customs declarations (over and above the declaration on the package) for the stuff we ship out and we’ll certainly have to make some sort of declarations for the services we ‘export’ to the European photographers (Irish and Spanish). At the moment it’s all pretty much transparent effectively no different to dealing with British photographers. That will not be the case soon. The only advice HMRC will give us is to employ a custom’s agent which would certainly negate the small margin we make on this business.


#78

One aspect of the falling pound is all those pensioners living in Spain. They are receiving a lower income because their pensions are in Sterling. This could in time mean they all have to move back to England . I am very aware of this because i have a close friend who receives a pension in euros. Since the referendum her pension has risen by £150 a month because of the fall in the pound.


#79

probably a bigger issue is their reciprocal healthcare all be withdrawn and they will have to take citizenship or buy insurance

ps - do you mean “her pension has fallen” ?


#80

No her pension has gone up because its paid in euros because she worked for many years in another EU country. Its in Euros and converted to sterling thus making a lot on the exchange rate.
The people living in Spain have their pension paid in Sterling which is then converted into euros . So their pensions are decreasing in value. Before the referendum the pound was worth 140 to the euro now its less than 1.10.
The UK and Spain have come to an agreement whereby the Spanish Health service will provide free health care and claim it back from the british.


#81

Are you absolutely sure? I mean that’s a sensible arrangement and I don’t think I’ve seen sensible from our government in at least three years now! :wink: :smiley: