LONDON, United Kingdom — The UK and European Union have agreed a new Brexit deal, but the drama's only just beginning in what could be the final push to resolve uncertainties that have bedevilled the UK's fashion sector for three years.
British Prime Minister Boris Johnson on Thursday agreed to a managed transition out of the EU over the course of 2020 that guarantees the rights of UK citizens living abroad in the EU, and EU citizens living in the UK. The main changes from previous rejected deals relate to controversial rules governing Northern Ireland’s customs status.
Johnson will now have to present the terms of the deal to Parliament in a critical session this weekend, which will have significant ramifications for the fashion industry.
The 11th-hour agreement just weeks away from the current October 31 Brexit deadline represents just the latest twist in a tortured three-year saga that has left businesses operating in the UK in a limbo of uncertainty. Leaving the European Union has implications for import and export duties and processes, visa requirements, as well as other complications. The issues are particularly relevant for fashion, which has thrived off the free movement of people, goods and ideas.
Even now, there is no certainty that the deal on the table will secure parliament’s backing.
“Our advice to the luxury sector is that they remain on high alert because the situation is still critical,” said Helen Brocklebank, chief executive of luxury industry lobby group Walpole. “The challenge we face is, again, all about the parliamentary arithmetic.”
The latest deal doesn't have crucial support from Northern Ireland's Democratic Unionist Party, on the grounds that it does not respect the contentious issue of a border on the island of Ireland. Furthermore, Johnson's government no longer has a majority in parliament after one Conservative MP defected to the Liberal Democrat party, and 21 more were booted from the party in September 2019 after not voting in line with the government.
The British parliament defeated similar deals struck by Johnson’s predecessor, Theresa May, three times, forcing an extension from the original deadline of March 31.
This time around, some in the European Union are playing hardball. European Commission’s President Jean-Claude Juncker said he was ruling out another extension. His statement is far from a credible threat though, as the decision to permit an extension lies not with him but with the EU’s 27 member states.
For the fashion industry, a no-deal Brexit is a worst-case scenario many had hoped to avoid. If the UK crashes out of the European Union on October 31 the country’s trading relationships would immediately shift to being governed by costly World Trade Organisation rules on imports and exports and there would be no transition to cushion changes to rules governing the movement of people or goods.
According to the British Fashion Council, a no-deal Brexit could cost the industry nearly £1 billion ($1.28 billion) because of tariffs. Other expenses could raise that figure even higher.
“If we get a no deal, every single import point in and out of this country or another EU country will be completely jam packed, and we don’t even know if we’ll be able to get goods to people on time,” said Amy Powney, creative director at London-based brand Mother of Pearl. “We don’t even know if we can ship within deadlines, and if we don’t ship in deadlines all our stores can cancel orders.” Even worse, unanticipated tariff increases on next season’s collections could be crippling.
Whatever the outcome, the uncertainty has already affected businesses, who have had to contend with currency fluctuations and unanswerable questions over how to manage getting goods in and out of the country when and if Brexit happens.
“The uncertainty has not lessened one iota,” said Walpole’s Brocklebank. “Nobody should stand down on their preparations for a no-deal Brexit.”
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