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20/01/2020

Brexit: how can French winegrowers prepare themselves?

Brexit: how can French winegrowers prepare themselves?
The effective date of exit of the United Kingdom from the European Union is 31 January 2020. It will usher in a transition period until 31 December 2020, after which new rules for operation, movement and trade will be required. What consequences can be anticipated for the wine trade? How can French winegrowers prepare themselves? Should they worry?

Changes from when? 

If the exit date of the United Kingdom from the European Union is set at 31 January 2020, a transition period until 31 December 2020 will leave the system intact. During these eleven months, the UK will comply with European regulations and will participate financially in its operation. The current common agreements will be maintained. Goods and persons will move freely between the Community and the United Kingdom.

It should be noted that the European Community has warned that this transition will be extremely short because of the very many points to be negotiated. If Boris Johnson, the present Prime Minister of the United Kingdom, objects, the agreement provides for the possibility of extending the transition by one or two years. Nothing has yet been decided on this subject; negotiations between the British and European partners will determine whether it is useful or not (the request for an extension must be made before 30 June 2020).

To facilitate the transition, the British government has put forward the idea of suspending the obligation of administrative formalities for the import of European wines for nine months following Brexit. Today, this governmental text is awaiting validation by the British Parliament. If confirmed, French wines will be exempted from administrative formalities for 9 months after Brexit.

Changes on which issues for the wine world?

Without extension, the date of re-establishment of customs borders will be effective on 1 January 2021. A free trade agreement could be concluded between the United Kingdom and the European Union, as is already the case between the EU and Norway or Switzerland. However, there would still be an obligation to make a customs declaration on the exit and entry of goods into and out of British and European territories.

When the United Kingdom leaves the EU, it will become a third country: exchanging products with this country will become an import and export operation which will require a new management of trade and therefore, of the associated administrative documents.

The formalities today

French winegrowers who trade with the United Kingdom must already have a transport ticket certifying that excise duties (taxes) are either paid (under cover of a DSA - Document Simplifié d'Accompagnement, drawn up by the consignor) or suspended (under cover of the DAE). This document, the DAE (Document d'Accompagnement Électronique) is currently dedicated to intra-community movement. It is the winegrower who takes care of it, via the GAMMA teleservice.

In the case of a shipment to private individuals, he must call upon a tax representation service.

The formalities tomorrow

Tomorrow, the DAE will be an export DAE, which will be cleared by export customs, on leaving French territory. Established by the exporting company (the winegrower), this DAE will cover the movement of products from the loading point (vineyard estate) to the border point (exit office).

Customs formalities in France will be carried out by means of an export declaration (DAU) issued by the carrier or customs agent chosen by the winegrower.

Uncertainties

At this stage of the negotiations, it is not yet clear whether or not there will be a trade agreement between the United Kingdom and the European Union. For French winegrowers who have a market in the United Kingdom, the questions mainly concern the amount of customs duties, which will impact the profitability of exports.

Other subjects raise questions: exchange rate evolution and devaluation of the pound sterling, fluidity of transport potentially slowed down by customs formalities... Certain sales outlets and restaurants in the United Kingdom are already building up stocks to prevent a possible shortage; a predisposition which may have boosted sales over a given period but which heralds greater difficulty in forecasting export volumes.

How to prepare?

Although the formalities will not be fundamentally very different, French winegrowers can already prepare for Brexit by anticipating their wishes and their organization. The French Ministry of Action and Public Accounts has drawn up a customs guide to preparing for Brexit, which is available on the portal of the Directorate General of Customs and Indirect Taxes :

It identifies some useful questions to anticipate changes:

  • I get an EORI number
  • I decide who will fill out my customs declarations
  • I consult the applicable duties and taxes
  • I make sure that my property is not subject to any special regulations.
  • I decide who will transport my products.
  • I make my export customs clearance more reliable
  • I'm preparing my import clearance.
  • Benchmarks

Today, 55% of wine consumed in the UK is European. The UK is the 2nd largest wine importing country in the world and the 6th largest wine consuming country in the world. Each year, France exports more than 1.10 billion euros worth of goods to the UK*.

To sum-up :

  • Transition: January 31, 2020 to December 31, 2020, unless extended.
  • Awaiting validation: exemption from administrative formalities for importers of European wines for 9 months after Brexit
  • The formalities: from an intra-community movement AAD to an export AAD + an export declaration made by your customs agent
  • Awaiting clarification: the amount of customs duty
  • Prepare well by choosing your partners

 * Source: https://www.vinsocialclub.fr/magazine-vin/actualite-du-vin/consequences-du-brexit-pour-les-producteurs-de-vin/

Photo credit : © Ilshat - stock.adobe.com / Arzel Création

Editorial staff: La Petite Maison à Plumes

27/01/2019

Exporting wine to the U.S.: what the Trump Tax changes for French winemakers

Following the authorization granted to the United States by the World Trade Organization to apply overtaxed customs duties, for aircraft and for industrial and agricultural products imported from the European Union, including French wine, new taxes came into force on October 18. Which wines are affected? What are the consequences for French winegrowers?
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