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How Will Brexit Impact China Toy Industry?

At 7 am Beijing time on February 1st, Britain announced its formal withdrawal from the European , ending its 47-year EU membership. From January 31 to December 31, 2020, the United Kingdom will be in a transition period, during which the UK will continue to implement the rules of the European , but at the same time, the UK and the EU will negotiate on new trade agreements. As for toy companies and baby products companies in China, how will this situation impact the foreign trade business with the UK or EU?

Toys and Furniture from China Account for 13.7% of British Imports

In recent years, China-UK economic and trade cooperation has continued to deepen. Britain is China's third largest trading partner in the European . In 2018, Sino-British trade in goods reached US $ 80.4 billion, an increase of 1.8% year-on-year. According to the statistics of the UK Department of Taxation and Customs, in the whole year of 2018, furniture and toy products from China were among the top three categories of goods imported by the UK from China and the value was around US $ 7.58 billion, accounting for 14.1% of UK’s total imports from China.

From January to June 2019, Britain imported goods worth US $ 26.13 billion from China, accounting for 8.1% of UK's total imports. By June, China was UK's fourth largest source of imports. In the first half of 2019, furniture and toy products were also included in the top three categories of goods imported by UK from China, with a total import value of US $ 3.59 billion, accounting for 13.7% of the total imports from China by the United Kingdom.

It can be seen that "Brexit" will definitely have certain impact on China's toys and baby products industry and it is necessary for relevant companies to make preparations in advance.

The impact of Brexit on foreign trade between China and the UK or EU

1. CE related product certification may become invalid

CE marking is a certification mark that indicates conformity with health, safety, and environmental protection standards for products sold within the European Economic Area (EEA). The CE marking is also found on products sold outside the EEA that have been manufactured to EEA standards.

According to the relevant legal requirements of the CE mark, the conformity certification process of certain products needs to be carried out by a notified body designated in the EU member states, and a CE mark certificate shall be issued. Once the “Brexit” transition period ends, 168 notified bodies located within the UK may lose their certification qualifications, and the CE mark issued by them may become invalid as a result. Then manufacturers cannot rely on these certificates to sell their products in the European Economic Area.

2. The customs clearance of goods entering and leaving the EU and the UK becomes complicated
Previously, under the EU's unified customs system, goods entering and leaving the EU do not need to undergo repeated customs clearance and tax procedures. After "Brexit", independent customs operation systems will be applied by UK and the European . The original EU unified HS system will inevitably be changed, and the customs clearance procedures for goods entering and leaving the two sides will be much more complicated than before.
After "Brexit", Britain will follow the EU Customs 24-hour advance manifest system (EU24HR) just like any other non-EU country. EU24HR rules require shipping companies to submit an entry summary declaration (ENS) to the relevant customs for all cargo loaded on ships calling at one or more EU ports. That is to say, all goods that are transferred to or from EU countries or call ports in the EU must submit complete and accurate ENS information to the customs of the first EU country before the ship arrives at the port of departure.
3. The original EU EORI number will expire in the UK
The EORI number is a necessary registration number for companies with economic activities, especially import and export business, in the EU countries. It is used to identify each import and export trade declared by an enterprise, trader or individual. As long as the number is registered with the customs of the country where the enterprise belongs, it is valid throughout the EU.
After "Brexit", the EU EORI number will no longer apply in UK, and an EORI number starting with GB is required in order to ship the goods   or out of the UK.

(1)If your company already has an EORI number that starts with GB, you can continue to use it. It will be 12 digits. If your company has registered for VAT, the VAT registration number will be included.

(2) If your company only ships goods between Northern Ireland and Ireland, you do not need the EORI number. If your company exports and sells goods within the EU, you need an EU EORI number, which can be obtained from the customs authorities of any EU country.
It is worth noting that, during the remaining 10 months of 2020, business will continue as usual, and the British EORI may still be used to clear customs in other EU countries, valid until December 31, 2020.

4. Mutual recognition of AEO between Chinese customs and the UK is affected

After "Brexit", even if the UK prolongs the AEO mutual recognition between the European and China, the two countries still have to sign a separate mutual recognition contract, which is the most ideal result. If there is a difference between the British Customs and the Chinese Customs, the two sides will have to restart negotiations, causing the previous customs bonus to expire.