Removing de minimis exemption could raise prices, harm SMEs: BCC

The government is considering the move after the United States removed its de minimis exemption. The European Union (EU) has also said it will do the same and introduce new handling charges for cheaper packages.

The word of caution comes as new research by BCC’s insight unit of 608 businesses—30 per cent of which are goods importers—found 52 per cent of UK goods importers say that if their import costs increased by 5-10 per cent on small shipments, they would need to pass this on to consumers. Only a fifth said they could absorb them.

Almost two thirds of businesses were not aware about the planned change to UK de minimis or were unsure if they would be affected.

Close to a quarter of UK goods exporters said an increase in costs of 10-15 per cent due to the removal of other countries’ de minimis would put more than half of their overseas sales at risk.

As well as raising prices or absorbing the costs, 21 per cent of firms said they would switch suppliers and 20 per cent would consolidate shipments to reduce duty impact. A further 12 per cent would scale down activity, pointing to reduced trade volumes.

A government consultation into the plans closed on March 6 and the BCC has submitted a response. "While the UK must respond to action by the US and EU, to avoid unfair competition from cheaper goods flooding our domestic market, any reforms must be proportionate," BCC said in its press release.

They also need to align with the international response and focus on enforcement rather than blunt cost increases.

BCC is particularly concerned about proposals to introduce charges per item or consignment including that the fees would be inflationary, distort business behaviour and disproportionately affect small and medium enterprises and customers who use e-commerce for single-item deliveries.

“The government should also retain VAT [value-added tax] being charged at point of sale on transactions for these purchases—a practice followed by many countries in global trade. Its retention would avoid unnecessary complications and additional friction on cross-border e-commerce sales,” William Bain, BCCs’ head of trade policy, noted.

Fibre2Fashion News Desk (DS)