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23rd September 2016, UK

Clothing suppliers who benefit from duty-free access to the UK could lose out as a result of Brexit

Unless special terms of access are negotiated, Britain’s withdrawal from the EU could have major consequences for suppliers given the size of the UK market. Suppliers in several major clothing exporting countries could lose their preferential access to the UK market if and when Britain leaves the EU, according to a new report from the global business information company Textiles Intelligence –  Brexit means Brexit: impact on the textile and clothing industry.

Unless special terms of access are negotiated, Britain’s withdrawal from the EU – a process commonly known as Brexit – could have major consequences for such suppliers given the size of the UK market. In 2015 the UK was the EU’s second largest clothing import market in value terms, after Germany, with a 17.7% share of EU clothing imports into all member states. And in volume terms, it was the largest market with a 22.1% share.

Because the UK is a member of the EU, exporters in many developing countries – including Bangladesh, Cambodia, Myanmar, Pakistan and Peru – enjoy duty-free access to the UK textile and clothing market under arrangements which form part of the EU’s Generalised Scheme of Preferences (GSP). At the same time, imports from Turkey are allowed to enter the UK duty-free and quota-free under the Customs Union between Turkey and the EU.

In addition, while the UK remains a member of the EU, exporters in Vietnam stand to gain from improved access to the UK import market when the EU-Vietnam free trade agreement comes into force.

But if and when the UK leaves the EU, imports into the UK from poorer countries such as Bangladesh and Cambodia will, by default, be subject to a common external tariff as declared to the World Trade Organization (WTO) -- unless special trade agreements are put in place to provide these countries with preferential access to the UK market in particular. While referring to the WTO, it is worth noting that, technically, the UK would have to join the WTO on its own account if and when it left the EU, and UK membership of the WTO would require the approval of all of the WTO’s member states.

Trade agreements could take years to negotiate and, under WTO rules, the UK is not permitted to carry out its own trade negotiations with non-EU parties while it remains within the EU. Besides, the UK has not had to conduct its own trade negotiations for decades and therefore lacks people who are skilled in this field.

The decision to leave the EU was taken by the UK government following a referendum on June 23, 2016. In the referendum, 52% of the 30 million people who voted expressed a preference to leave the EU and hence end 43 years of EU membership -- although, technically, the results are not legally binding.

Brexit will be triggered when the UK government invokes Article 50 of the Treaty of Lisbon. This will start a two-year period of preparations and negotiations accompanied by much uncertainty as to the outcome.

Brexit means Brexit: impact on the textile and clothing industry was published by the global business information company Textiles Intelligence and can be purchased by following the link below:

Brexit means Brexit: impact on the textile and clothing industry

Other recently published reports from Textiles Intelligence include:

Profile of Polygiene: a leader in odour control technology

Tanzania: opportunities for the textile and clothing industry

Trends in EU textile and clothing imports, August 2016

Product developments and innovations in textiles and apparel, August 2016

 

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