South African importers, exporters and logistics companies should make the most of the inevitable Brexit transition period to conduct a macro review of their businesses, including an audit of existing and anticipated future contracts, and review opportunities and potential markets in the EU and in a post-Brexit UK.
This was the advice of Garlicke & Bousfield consultant and international lawyer, Richard Cookson, who is also a director of Cape International, a global business advisory firm that specialises in international business and finance.
“Brexit is fluid, it’s happening, it’s changing. Businesses are going to be impacted and the problem is there is very little guidance and the only way to be able to understand and to guide businesses is to be on top of this fluid situation,” Cookson said.
Cookson said Brexit issues and positions changed almost daily and negotiations between the UK and the EU were almost like two ships passing in the night.
He pointed out however that it appears there is going to be a transition period which would give SA businesses the time they need to adjust and prepare.
Cookson said firms would have to assess international contracts, the country law governing business relationships, taxation, currency of payments, and accept that they may have to renegotiate some deals.
He said companies would also have to consider the impact of competition and intellectual property laws.
“As an example, a winery that ships wine to the UK in bulk, has it bottled there and from there sells bottled wine to continental Europe, all of a sudden is going to find more regulation in getting the wine to the EU,” Cookson said.
“UK corporate tax is not that high, so if you set up in the UK to service the whole of the EU and (postBrexit) you have to go and set up another office, say in Amsterdam or Paris which has higher corporate tax, you are going to get higher costs of overall operations,” he explained.
“We have some highly talented companies in this country and they need to look where the vibrant business is in the UK and also where are areas in the UK that have been neglected because of the EU,” Cookson said.
He advised SA companies to explore opportunities in UK business fields that are making great strides, such as in the fields of biotechnology, smart energy, and machine manufacturing, adding that there could also be “great growth opportunities” for agricultural products, like apples, to be sold at lower cost in the UK.
However, companies would have to review how different rules and regulations – such as product labelling conformity – will apply in a postBrexit scenario. “We have a lot of logistics companies and they will need to analyse how they are handling logistics between the EU and the UK,” Cookson said.
Cookson added that it was important for the Department of Trade and Industry to play a strong role in researching Brexit and to advise companies how to prepare for post-Brexit trade.
