International companies seeking to access European markets have long realised that Europe is not a single homogenous market. Language, cultural, financial, and infrastructure differences have always existed. While the development of the EU has simplified many elements of trade, companies looking to trade with European customers – particularly since BREXIT – need to solve many supply chain and market access questions.
With that in mind, we have listed a few key issues that we have witnessed companies that are looking to trade with Europe experience. We also give some potential solutions to these issues below.
- With the UK leaving the EU – where should I position international distribution centres?
The expected profile of shipments, split by market and by channel, will determine the optimal location of European distribution centres and whether there is a business case for having more than one site in the region.
- How do they ensure that products are compliant with EU and UK regulations?
In most cases, the UK adopted legacy EU standards when it left the EU, but it has introduced labelling and registration requirements that are independent for the UK market. For example, UKCA marking replaces the CE mark, and the UK has separate REACH requirements for chemical imports into the EU. A bigger challenge will occur as, over time, updates to standards in both jurisdictions occur independently and products will need to meet differing standards.
- What needs to appear on product packaging and product labelling?
The UK has adopted its own independent labelling requirements, which must be used after transitional arrangements. In most cases, a single product label can be developed to meet the needs of both EU and UK requirements, but over time, this may become more difficult.
- How do responsibilities differ for manufacturers, importers, distributors, and logistics providers? How is it different when dealing directly with end consumers vs businesses?
By product category, there are defined requirements for each stakeholder in the supply chain, with more stringent requirements for regulated industries.
- What company presence or representation is needed in the EU and the UK to trade successfully?
In many cases, it is possible to trade with the UK without a presence, but care needs to be taken with IncoTerms, which determine the responsibility for customs and the importer of record. For certain products, including medical and food, there is a requirement to have a representative in the UK for product compliance purposes.
- How do they manage duties and value-added taxes? What paperwork is required to ship goods between the EU and the UK? Is it possible to face double duties when transporting goods between the EU and the UK?
For products of UK or EU customs origin there are reliefs under the Trade and Cooperation Agreement between the EU and the UK. For products of non-EU or EU origin, there is a risk that duties could need to be paid twice if imported first into one jurisdiction and then shipped to the other.
- How do returns get managed?
Returns crossing the border between the EU and the UK also require customs processing and clearance.
- How do they manage packaging waste and compliance with national waste management schemes?
Even before the UK left the EU, many of the waste schemes – such as WEEE – were administered on a national basis, requiring individual country registration and administration – particularly when selling to end users.
- How are requirements changing with increased environmental and sustainability regulations as part of the European Green Deal and circular economy provisions?
Legislation to deal with the topic of climate change is significant in both the UK and the EU, with new legislation planned around circular economy, packaging, producer responsibilities, and measures to require environmental reporting and combat greenwashing. In many cases, national legislation is passed to bring into effect regional directives, which can lead to variations in regulations by country.
Two years after the UK formally left the EU, product continues to flow, albeit with additional process costs and restrictions. Most companies within Europe and the UK have adapted their processes and market focus based on the new trading reality. For companies from outside Europe and the UK, market entry has become more complex, but with the right knowledge and partners in the region, it still presents a significant opportunity.
Contact our supply chain and compliance teams if you would like to explore the specific requirements for your product and market needs.
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