Many businesses that export only to the EU do not have the necessary papers to continue trading after a no-deal Brexit, reports have shown.

According to the Liberal Democrats, statistics showed that no deal would be a “wholly irresponsible political choice,” but the government said that despite only a small number acquired the necessary documentation, these were nonetheless “the firms responsible for the bulk of exports to the EU.”

Once the UK crashes out of the EU, UK firms would require an Economic Operator Registration and Identification (EORI) number to be able to comply with economic operators and customs authorities.

 What is an EORI number?

EORI stands for “Economic Operators Registration and Identification number” and can be used by both business and individuals when trading. The EORI number acts as an identification number in all customs procedures making processes efficient, not only for customs authorities, but also for statistical and security purposes.

The EORI number is made up of two parts. One includes the country code of the issuing Member State and the other a code or number that is unique in the Member State.

According to the European commission, a legal entity such as a company or a natural person can request an EORI. More particularly, “persons established in the customs territory of the Union should request the assignment of the EORI number to the customs authorities of the EU country in which they are established.” Also, “persons not established in the customs territory of the Community should request the assignment of the EORI number to the customs authorities of the EU country responsible for the place where they first lodge a declaration or apply for a decision.”

Exports and imports 

If you are a firm that exports and imports outside the EU, you will have an EORI number, but as The Guardian notes, “registration has become a pressing issue for the 245,000 who trade internationally only within the EU. A no-deal Brexit would be particularly difficult for them because, instead of having current rules apply during a transition, they could find their trading opportunities shut down after 31 October without an EORI number.”

In another article by the Business Insider titled “Just 3 in 10 British firms that export to the EU are prepared for a no-deal Brexit,” it is said that only a 27% of British businesses have secured an EORI number and that there is a growing concern that British businesses will not be prepared for a no-deal exit on 31 October.

Lib Dem MP Chuka Umunna obtained information from the Treasury that shows that many firms are simply unprepared for a no-deal Brexit. The figures also show that if exporters apply for an EORI number at the current rate, all businesses won’t be registered until maybe the start of 2021. Umunna said that the statistics show “an overwhelming majority of UK exporters to the EU are unprepared for a ‘no deal’ Brexit and will not be in a position to deal with the mountain of red tape and bureaucracy it will burden them with on 31 October.”

He added: “Pursuing a ‘no deal’ Brexit is a wholly irresponsible political choice of the new administration for which there is no mandate and which will put businesses and jobs at risk. Any form of Brexit will harm the economy and put obstacles in front of UK firms which is why Liberal Democrats not only want a final say for the people on any deal but are also the only party that can get into Government which is committed to stopping Brexit altogether.”

British small businesses are not prepared for a no-deal Brexit in October, and, as the Business Insider pointed out, are even less prepared than they were back in March. On the other hand, businesses that already spent millions of pounds for a no-deal Brexit in the spring are now less motivated to spend more money in case there are further delays, while others just simply cannot afford it.

Chancellor Sajid Javid’s announcement last week for additional no-deal Brexit funding is not especially encouraging as most of it will be used towards government competencies, and not really towards helping businesses prepare. 

A spokesperson for the HMRC – the department responsible for issuing EORI numbers – said it was doing “everything we can to help businesses get ready for the UK leaving the EU. Businesses who import or export goods need to take action, the first step of which is obtaining an EORI number (if they don’t already have one.) It’s simple and free and can be done online.”

If you are an exporter or importer and you worry about Brexit volatility, getting in touch with your currency exchange specialist will give you some peace of mind. Universal Partners FX are experts in the foreign exchange markets and can assist you when transferring large amounts of money or making regular international transfers. Get in touch with them today to find out how much you can save on your international money transfers.

Post-Brexit trade deals

International Trade Secretary Liam Fox and South Korean counterpart Yoo Myung-hee signed a free trade agreement (FTA) in order to maintain trade arrangements after Brexit, BBC reported.

This is the first post-Brexit trade deal the UK has agreed with an Asian country and is on similar terms as the ones already established through the existing European free trade agreement the UK currently has with Korea.

South Korea is the fourth largest economy in Asia, producing electronics, steel and auto industry. In just 2018, South Korea exported $6.36bn (£5.0bn) worth of goods to the UK.

With the Brexit deadline set for 31 October, and the UK possibly leaving with or without a deal, the UK realises that it needs to provide continuity in its trading relationship with other countries so that businesses in the UK can be prepared, find the necessary support to maintain growth and productivity.

As Mr Fox said: "The value of trade between the UK and Korea has more than doubled since the EU-Korea agreement was applied in 2011. Providing continuity in our trading relationship will allow businesses in the UK and Korea to keep trading without any additional barriers, which will help us further increase trade in the years ahead. As we face growing global economic headwinds, our strong trading relationship will be crucial in driving economic growth and supporting jobs throughout the UK and Korea."

 

Exporting to South Korea

The secured deal covers South Korean exports such as cars and auto parts. It exports cars and ships to the UK and the UK exports to Korea crude oil, cars and whisky.  The deal will be ratified by the end of October and implemented in November.

According to Andrew Walker, BBC World Service economics correspondent, “Tariff-free trade with South Korea is certainly worth preserving. British goods exports to Seoul climbed sharply after the EU's deal with South Korea was implemented in 2011. Last year the UK sold about £6bn worth of goods there.” South Korea is one of the bigger countries that the UK has enjoyed access through an EU trade deal, with UK goods imports from South Korea exceeding £4bn. The UK is South Korea's second largest trading partner from the EU.

The South Korean international trade secretary, Ms Yoo said: "The deal is significant as it eased uncertainties sparked by Brexit, amid the already challenging environment for exports on the escalating trade row between Washington and Beijing.”

 

Brexit and trade

With the Brexit deadline looming, the UK is trying to seal more agreements with trading partners. If it leaves without a deal, the UK would lose many of the existing trade agreements it currently has as a member of the EU, something that will disrupt 11% of the UK’s total trade.

According to the UK government website, the UK has signed continuity trade agreements with non-EU countries so trade is not disrupted after Brexit. The UK has signed trade agreements with Israel, Iceland and Norway, Switzerland and Chile, among others.

 

UK Importing and Exporting

As the UK government is trying to secure more trade agreements with other countries, Brexit will continue to affect the economy and the political landscape. As an international company importing and exporting goods to and from the EU, you most possibly have been using a foreign exchange company to transfer your funds internationally. Universal Partners FX can help you save time and money on imports and exports, especially when you have to do frequent international payments.

 

Get in touch with Universal Partners FX to access the best exchange rates available and over 140 currency pairs. Your foreign exchange specialist will monitor the markets for you and tailor the ideal solution for your business.