Despite the end of the transition period within a few weeks of the United Kingdom’s withdrawal from the European Union (EU), no clear rules have yet been agreed. This directly affects companies for which the UK is an important export market. Companies for which this country is an important export partner admitted that there are still many unknown things, but in business it is every day.
Great Britain is currently one of Orkla Latvija’s largest export markets, accounting for about 26% of export turnover. Lineta Mikša, the company’s communications director, pointed out that as the UK withdraws from the EU, it will have to face a more complex customs procedure, which will bring additional costs to customers and the company, as well as slightly increasing the price of the product in a given market.
This may be reflected in a slight decline in sales in the first half of next year, but the company is already forecasting small growth in the second half.
“First and foremost, we will pay for customs broker services, which we anticipate will be 60 thousand euros a year, which we will pay extra for processing statements. It will definitely make us rethink the diversity we are ‘ n export it, ”said Mikše.
A company representative explained that additional costs were expected: “Great Britain is an ethnic market for us, because there are many Latvians there, and we export almost all of our variety, and it’s more than 1,800 units of product . If it is also required to identify the distributor on the product label, it will also incur additional costs for us to adhere product packaging. ”
This requirement has not yet been officially accepted, so Orkla Latvija has not planned such costs in 2021, but leaves them as a potential opportunity.
Great Britain’s plywood manufacturer and its “Latvijas finieris” products are also one of the five largest export markets. Mārtiņš Lācis, a board member of the company, mentioned that “Latvijas finieris” has been operating in the British market for 30 years and established a stable customer base, because birch plywood is not manufactured in Great Britain, so they are are forced to import it.
The bear pointed to the additional customs costs, but the company is prepared for it: “Since we sold our products on almost every continent, this is nothing new for us as a company. Another new country is simply coming. And also logistically, as we deliver through ports, ports are much more willing to cooperate with the EU on these customs issues and have more capacity than they would for road transport. “
Jānis Mozga, board chairman of the logistics company “Sonora”, explained that it was a bit strange that
The agreement between the UK and the EU has been postponed and the rules of the game are unclear to entrepreneurs, so difficulties may arise in the early months of next year.
“What will be the fees and what will be the final agreement on how competitive EU products will be. Of course, there will be no interference with the segments produced in the EU and exported to Great Britain. It is very important that for Latvian exporters to consider that
“Brexit is likely to increase transportation and logistics costs and make it more expensive to deliver in the country of delivery,” Mozga said.
On the other hand, the Giraffe 360 technology startup has almost a home market in the UK, with 70% of customers located in that country. Mikus Opelts, Chairman of the Board, said the unknown about Brexit was not a concern, as it is a common thing in business. The Covid-19 crisis also surprised everyone unprepared.
Opelt said: “We always want more clarity and the clearer the rules in the game, the easier it is to plan and execute, but on the other hand, the world is changing very fast. Of course, we wanted more clarity on Brexit, but that is the way it is, and we will act with what is available. There’s nothing to put your head in the sand and live in. ”
The willingness to accept the rules in the game is expressed by many entrepreneurs, for whom Great Britain is an important export market, saying that there is often a lot of uncertainty in business, so we must anticipate and adapt to the situation .
Britain formally left the EU on 31 January 2020, but there is a transitional period until the end of the year, when Britain remains subject to all EU rules.
An EU-UK trade agreement should be reached by the end of 2020. If this fails, both sides will begin trading under World Trade Organization rules, which provide for substantial customs duties on many goods and other trade barriers .
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