Since the UK voted to leave the European Union in June 2016, there has been a great deal of uncertainly around how the withdrawal process would unfold. With the extended withdrawal date of 31 October 2019 looming, there is still no deal agreed upon between the UK and the EU.
The likelyhood of a No Deal Brexit still remains a possibility, which could have significant implications for the UK and the EU, as well as businesses exporting to and operating in the UK and EU from countries such as Australia.
In relation to wine, the UK relies almost solely upon imports. Despite a growing local wine industry, 99% of wine consumed in the UK is imported. Australia is the second largest source of wine imports into the UK by volume, the third largest by value and the UK is Australia’s largest export market by volume.
It is hoped that there will not be significant changes in practice for Australia wine exporters following the UK departure from the single market customs union. According to Wine Australia, the UK is expected to apply the same tariff to imported Australian wine as it did when a member of the EU, and the labelling and wine production rules will remain unchanged. There may however, be labelling implications as it will become necessary to include a UK importer name and address.
The WSTA (The Wine and Spirit Trade Association) has reported that many businesses have already been affected by Brexit, whether it is through the falling pound, contingency planning or general uncertainty surrounding trade. In response, they have been campaigning to prevent a No Deal exit and are engaging with the UK Government to minimise the impact of Brexit from a policy perspective, as well keeping their member organisations informed.
Australian Government ministers and representatives from the Department of Foreign Affairs and Trade regularly meet and liaise with their UK and EU counterparts to ensure the arrangements Australian business rely on in the UK can continue or transition without disruption, that any risks posed by Brexit are addressed, and any opportunities to enhance our relationships with the UK and EU are identified.
As a result of businesses being encouraged to plan for the worst-case scenario, there has actually been an increase in Australian exports, particularly in unpackaged wine, as companies and brand owners seek to ensure that stock will be available across Europe.
While all existing trading arrangements between the UK, the EU, and the rest of the world have remained unchanged throughout the negotiation period, it is important to remain aware of further changes as negations progress.
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