A Short Guide To The Impact of Brexit on Fashion

In the early hours of January 1, 2021, the UK left the European Union. After five years of watching Theresa May then Boris Johnson scrabble for an exit strategy with Brussels, we were out with the last-minute deal of the kind many Remainers had feared. 'Brexit Regret' rose up in the ranks of the Leavers; no tax-free shopping for tourists? I might need a visa for my annual European getaway? Businesses brought to their knees? We had no idea! Calls for a second referendum and a People's Vote gained traction in 2019 alongside a petition to revoke Article 50. Fashion, however, was anti-Brexit from the get-go. The industry's leading think tank Fashion Roundtable wrote the only policy paper for fashion on Brexit in 2018, and today, they release the follow up, Brexit: The Impact on the Fashion Industry.

The paper will prove a useful tool for many. It includes an appendix of terms; breaking down the political language which can often feel so foreign, this is a great place to turn to when in doubt. Confused over what exactly are Union Goods? What the UK Global Tariff actually means? Fashion Roundtable has you covered. There is also a guide to importing from and re-exporting union goods to the EU, a vital tool for business owners and designers, who can follow the instructions on the chart to find out whether they can pay less import duty and VAT when re-importing goods to the UK.

Worker's rights, immigration, education, the VAT retail export scheme and intellectual property as the key areas Fashion Roundtable has identified as concerning post-Brexit, which are all addressed in depth in the paper. Below, we include excerpts from each section, together with the think tank's recommendations for the UK government moving forwards.

Key areas of concern:

• Freedom For Movement of Goods:

'The single market is founded on the ‘‘4 freedoms principle’’, including free movement of goods, enabling the EU to operate logistically as one territory, without any internal borders or other regulatory obstacles to the free movement of goods and services. Until the withdrawal from the European Union, UK retailers, brands and designers have enjoyed unrestricted access to European markets. In the face of Brexit, the fashion and textiles industry is facing costly regulations which are increasing costs for both businesses and consumers...Goods entering the EU must now satisfy rules of origin requirements, proving to be a significant challenge for UK businesses...Rules of origin, which stipulate that tariff-free access to the EU is only granted to UK firms that can prove their goods were made in the UK and vice versa, have complicated matters for firms that make products containing many parts made abroad.'

• Immigration:

'The single market is founded on the principle of free movement which has meant the unrestricted movement of people and labor force for people within the EU. Post-Brexit, the restriction of free movement is another issue that has affected the industry, which often relies on Eastern European workers. Many EU workers in the sector, such as garment workers, would be denied a UK visa under the UK’s new points-based immigration system, which is aimed at retaining only ‘‘high-skilled’’ jobs...The UK’s post-Brexit immigration system will affect access to creative talent and models – all essential to retain the UK’s position as a leading fashion nation and London as a global creative capital.'

'Adding garment workers to the SOL (Shortage Occupation List)...is a simple step that would support onshoring and business growth, while also mitigating against the possibilities of further escalated garment worker exploitation issues in the UK.'

• Workers' Rights:

'To guarantee a strong legal framework to support the fight against modern slavery and other forms of labour exploitation, the UK should maintain and strengthen EU legal protections that guard against workers' exploitation. Such devices are of paramount importance in the context of the COVID-19 pandemic and the Government's onshoring agenda that must be done the right way - workers' rights must be put at the centre of the UK’s efforts to build back better.'

'Fashion Roundtable's recommendations to government include introducing 'a new "failure to prevent" law that imposes legal liability on businesses which fail to prevent human and labour rights abuses occurring within their operations. This should be coupled with mandatory human rights due diligence requirements to improve corporate action.'

• Education:

'STEM Education has always been a highlight of the Government’s education strategy. At the same time, the Cultural Learning Statistics for GCSE show that between 2010-2019 in England there was a decline of -38% in the number of arts (Art and Design, Dance, Design and Technology, Drama, Media/Film/ TV Studies, Music and Performing/expressive arts) GCSE entries, from 673,739 in 2010 to 419,664 in 2019. While the new T-levels course had brought much hope to the fashion and textiles industry, the Craft & Design T-Level - the most relevant course to the fashion industry - is not due to start until September 2023 T-Level courses take two years to complete, meaning these workers will not be able to join the workforce until late in 2025 at the earliest.'

• VAT retail export scheme:

'A controversial decision to end VAT-free shopping for international visitors remains a key concern for luxury fashion retailers and others in the fashion industry. 48% of our survey respondents said they were concerned about the Government decision to end the VAT Retail Export Scheme from the 1st January 2021.'

• Intellectual Property:

'The UK fashion industry is recognised internationally as a critical sector, representative of UK creativity, innovation, and design. However, counterfeit products’ proliferation is a significant issue both within the UK and more broadly in international fashion industries. According to the IP Crime and Enforcement Report for 2019–2020, clothing is the second most-counterfeited product after cigarettes and tobacco.'

Fashion Roundtable's key recommendations are as follows:

1. Add garment workers to the Shortage Occupation List for Visas
   
2. Reinstate the VAT Retail Export Scheme and extend to EU visitors
   
3. Reconsider visa requirements for fashion creatives
   
4. Close the gap on problems surrounding the rules of origin
   
5. Subsidise or scrap ATA carnets for travelling creative
   
6. Begin the Craft and Design T-Level course in September 2021
   
7. Establish clarity on the issue of unregistered design rights
   
8. Build a robust IP framework into all trade deals
   
9. Secure a cabotage exemption for the creative and cultural sector – similar to the one that enables the
   Formula 1 industry to move large amounts of equipment across borders easily
   
10. Equal support for the fashion industry for exports to the EU as enjoyed by the fishing industry with their
    £23m package for a 12,000 workforce generating £1.4bn GVA, versus £2,000 grants available for all of
    the UK’s 617,600 SMEs;
    
11. Incentivise on-shoring with tax relief for brands who manufacture in the UK, as the UK film industry
    currently enjoys.