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Beating Brexit with zero Customs duty?

LONDON: May 26, 2017. 'Zero hero' products that attract no Customs could be an invaluable niche in a post-Hard Brexit. David Jinks head of Consumer Research at online international parcel brokers ParcelHero, says in such a world shippers have an obligation to find the best EU duty opportunities:

With the threat of a hard Brexit on the mind of many companies doing business with Europe – not to mention their transport partners – there's a mysterious group of products that look a good bet come what may.

A disparate bunch of products attract absolutely no duties when imported into the EU. And that most likely means they won't attract duties arriving into the UK, or being exported from the UK to the EU, post European divorce.

The mystery of why seemingly random products pay no tariffs at all is an intriguing one. Have you ever wondered why your digital camera only records 30 minutes of video? That's because it must be classified as a digital camera and not a video camera to qualify for duty exemption arriving in the EU. If it can record 31 minutes it's no longer a digital camera but a video camera; and so liable for duties starting at 4.9 percent.

UK-based importers and exporters are going to have to learn HS codes inside out post-Brexit; as are any European shippers planning to export products into the UK. Study your relevant tariff codes – available on the HM Customs website. A digital camera has the code 8525803000 and is duty exempt everywhere in the EU!

Why no duties on digital cameras? Are most customs officials photography enthusiasts? Are most EU treasuries staffed by a budding David Bailey?

It's all to do with that increasingly topical subject, protectionism. Before Trump's election the trend had been for fewer tariffs, with trade agreements encouraging the global supply chain. The complete lack of any duties to be paid between EU countries is a good example, and the Transatlantic Trade Initiative Partnership (TTIP) looked likely to zap such duties between the EU and the USA, until Trump's election effectively knocked the plan on its head.

The EU still protects many of its industries against non-EU countries; but in some areas Europe has more or less thrown in the towel in terms of manufacturing. You won't exactly find the factories of Europe churning out digital cameras.

And the same goes for a bunch of other 'zero heroes:'

  • Computer Software
  • Desktop PCs
  • Laptops
  • Tablets
  • Mobile Phones
  • Video Game Consoles

Yes, you may be misty eyed by the return of the traditional Nokia – but vanishingly few electronic products such as mobiles – even those wearing a European badge -are produced outside Asia; global economics make it entirely uneconomic.

But what will happen post-Brexit? The betting is the UK and EU will continue to avoid charging duties on these products.

Of course, the experts could be wrong! The UK is something of a software specialist, for example. Might the EU get a bit tougher on some of these products if Brexit were to catapult the UK software industry to enormous success; or make the construction of PCs in this country more attractive economically? Maybe; but it seems more likely that the EU and the UK will maintain the same duties to avoid further border complications.

One other product that has no tariffs when entering the EU – including the UK for now - is books. Is this a noble response to a perceived tax on knowledge? Possibly; but more likely the fact that, again, the EU benefits from books printed cheaply in Asia; whereas some EU countries - such as Britain - produce high-end specialist printed books popular in Asia, such as text books. Neither the EU nor many Asian markets would want to see the introduction of duties on books. For this reason the EU dispenses with duties on them, and so do Asian countries such as India under General Exemption 165.

Finally, for transport businesses looking to specialise in profitable areas post-Brexit; the transportation of antiques is promising. There are, again, no duties on antiques over 100 years old. And they have reduced VAT value. Items under tariff heading 97.06 exceeding 100 years are free of duty under the snappily titled 'EU Combined Nomenclature Regulation' – except for items such as pearls and loose gemstones!

Of course, not every transport company wants to get involved in the red tape and insurance issues involved in exporting antiques 'après nous, le déluge'. One way or another, its every shipper's duty to know duties and HS codes transporting beyond the EU – and potentially to the EU, given a bumpy Brexit.

No duties on mobiles, tablets and laptops make them an attractive item to ship post-Brexit, adds Jinks. parcelhero

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