Just read this and it looks like bikes now must have 50% EU or UK-sourced parts to qualify for tariff free export to the EU from the UK.
https://cyclingindustry.news/bicycle-association-summarises-new-post-brexit-rules-and-regs/
First though that came to mind for companies like Bird, Cotic, Stanton etc was that this might lead to more bikes/parts being used on 'UK Made' bikes to allow export tariff free to the EU? Bikes now must have 50% EU or UK-sourced parts to qualify for tariff free export to the EU. I assume companies like Orange and Hope will be relatively unaffected. Will it push Cotic to use Five Land bikes for more manufacturing now?
Also I assume the same applies in reverse i.e. if you buy an Canyon I can't imagine much of that is made in the EU.
I don’t believe the tariffs are high enough to make up for the greater costs (production capacity, labour and supply chain) here. Although if GBP collapsed vs USD then that may change.
Who will make the suspension forks, and shocks? Drivetrain, shifters, derailleurs, tyres, rims...?
I would like to know what comprises 50% of the bike, is that 50% of its value. Would a frame made in the UK be enough. What makes it made in the UK. You could buy in a frame from the Far East, stick a sticker on it and would that make it a UK frame.
These sort of rules are where the details get lost.
You can assemble stuff and then claim its made in the UK at the moment I believe.
You mention Bird. I'm a Bird owner, I love mine. It's a 'British Bike' but it's not really 'UK Made', in fact there's no really about it.
It's a UK designed, Asian manufactured Frame, built up with parts mostly from one of SRAMs sub-brands, Fox or Shimano.
I think even Orange would struggle to reach 50% with a Hope build, and how is the 50% calculated, weight, value, size?
No it wont.
This has all been discussed on the front page
It gets confusing half way down as the page formatting is ballsed up.
I can't afford a bike that was fully manufactured in Britain. Wages for most people correlate to the prices of mass produced products from the other side of the planet. I couldn't go fully British unless I had a mega pay rise to match.
My next bike was going to be a Canyon or Commencal but I'll be scrapping that idea if the prices shoot up.
Same as sharkattack - I'll just be buying fewer or no bikes unless absolutely necessary. Although that was going to be the case given how things are VFM wise these days.
Who will make the suspension forks, and shocks? Drivetrain, shifters, derailleurs, tyres, rims…?
It only has to be 50% European. If near 100% can be reached by the European Bike Project then surely 50% isn't too much of a stretch? Might not be cheap mind!
Perhaps you have a better idea of how much cost the frame constitutes in a complete bike though?
Even if wages were the same, costs will never be... specialism and economies of scale mean that producing just for you own market will always cost more than the difference in tariffs. I'd really like there to be someone producing suspension forks here, but even if they paid their staff literally nothing, the still wouldn't be able to match the costs of the big brands making forks for sale all around the world. From here on... everything costs more for UK buyers, and UK exporters are less competitive and hampered by red tape... we just have to suck it up. Depressing. And all for what...?
kelvin
Depressing. And all for what…?
Blue passports and happy racists, mainly.
how does "adding value" work in terms of wheels? hand built in the uk from non eu parts? but then I guess you could apply the same thing to bird and cotic* and stanton assembling in the uk...
*for most of their frames
I said this in the Brexit 2020 post:
Rules of Origin is a great example of a Non-Tariff Barrier (NTB).
Let’s look at two bikes from one company for example:
Cotic Jeht 1
1st gen model with the frame assembled & painted in Scotland from tubing produced in Birmingham and running Hope wheels, brakes and assorted brackets. The drivetrain and suspension are imported along with other components.Cotic Jeht 2
1st gen model with the frame assembled & painted in Scotland from tubing produced in Birmingham and running imported wheels, brakes, drivetrain, suspension and other components.Because Cotic offer a custom build then each bike they export into the EU will have different custom codes, depending on the build. They’ll though need to document each and every part etc and present them at the importation customs These are NTB’s.
Also in my example I’d guess that Jeht 1 would be free of tariffs, but Jeht 2 would have tariffs added. And correspondingly different tariffs added (from zero to ?) depending on what the various costs of various components are and where they came from.
This is why they and other companies have paused their ‘exports’ to end-customers while they work out the actual costs, implications and get the paper work sorted.
This is why the vast majority of business folk dealing in cross-border trade supported the SM & CU. And for those of us old enough to remember it before, or who’ve dealt in non-EU / ‘WTO’ regimes, why we warned continually how it would add costs & complexity (for zero gain).
Bikes now must have 50% EU or UK-sourced parts to qualify for tariff free export to the EU.
55% UK made for non-E bikes. E-bikes are 50%. As a % of ex-works value.
As OP said though, EU parts can count towards the 'UK made' percentage under the reciprocal agreement.
If a part has been imported into the EU, and duty paid on it at component level, does it become an EU / UK part at that point?
happy racists,
Yep, got to keep the racists happy. And make sure you don't mention they are racist as that makes them unhappy.
As for buying a UK made bike, you would need to go back 50 years to do that which is also exactly what the Brexit voters wanted. Buying British made stuff is typically not for the British person of average wealth.
Because of the way it works we'll probably be offering fixed spec duty free bikes alongside full customs which incur duty. The customer can choose which suits them.
Building a 0% tariff compliant bike isn't looking impossible even with frames (mostly) made overseas.
If a part has been imported into the EU, and duty paid on it at component level, does it become an EU / UK part at that point?
No. But for countries where there is a trade partnership agreement with the third country (or its customs union), a set percentage of the final product can be made up of said parts for RoO purposes. It’s all quite straight forward (joke).
http://www.bobjacksoncycles.co.uk/
Tells you everything you need to know about UK bike manufacturing.
Building a 0% tariff compliant bike isn’t looking impossible even with frames (mostly) made overseas.
With suspension forks, shock, drivetrain, gears, rims, spokes, tyres…? At what price point? Probably not impossible, but I’d to see an example specced out.
Because Cotic offer a custom build then each bike they export into the EU will have different custom codes, depending on the build.
Perhaps I misunderstand what you mean by customs codes but the tariff codes that define duty are for categorising as either e-bikes, bikes or parts, each would be duty-free to EU if they meet the criteria, duty-payable if not. The tariff code for bikes applies the same duty whatever parts are on it. There can be some further variation based on certain exporter nation's GSP rates but that's not relevant to this point about UK-made, GSP doesn't apply to UK or EU.
So a bike with a UK-made frame, Hope parts and some other EU-made parts might make it to the 'UK made' percentage and get duty-free export to EU as you say, and a Taiwan import frame built up here won't.
Custom builds may need individual parts listing, tbh IDK, but the rates only change if the UK made % is above or below the threshold. Working that out for each build could be a pita.. though you'd probably just classify build specs in groups with prices / rates to match.
I'm not saying it's simple, it's a bit simpler than the example you give though.
I would have thought over time it would mean less as UK bike manufacturers lose sales and profits due to the stupid brexit rules
If a part has been imported into the EU, and duty paid on it at component level, does it become an EU / UK part at that point?
No, not as in 'made in' or from a further duty POV. On the duty side it did but we're out of the single market now, that's the whole problem. Now both EU and UK want the duty if it moves between - if duty is applicable on the way into UK or EU then it's not a product that qualifies for free trade now. To move between the two w/o duty it has to classed as 'made in'.
Building a 0% tariff compliant bike isn’t looking impossible even with frames (mostly) made overseas.
That is promising! I look forward to seeing the spec too.
Just totting up - as a European, over the last ten years or so, I've bought one full Cotic bike, two Cotic frames, a Fearless frame, and three Geometron frames (two secondhand, admittedly) all from the UK. I guess I'm big fan of UK bikes, hope it can continue.
Probably not impossible, but I’d to see an example specced put.
I think a lot of companies would too, it's prob what they're working through now ; )
With suspension forks, shock, drivetrain, gears, rims, spokes, tyres…? At what price point? Probably not impossible, but I’d to see an example specced put.
There's plenty of EU & UK parts you can use that are decent OE pricing. DT Swiss wheels? Polish. SRAM Chains? Portuguese. Headsets, seat clamps, axles, linkages and other CNC frame parts? UK. Bearings even? Sweden. As long as you're not trying for low end there's plenty of EU options that would leave not a huge amount left over price wise, and when you consider that you can import them free for the build, and re-export them free to the customer then your equivalent Taiwan part bike doesn't actually look so great value wise any more. Welding and painting the tubes in Taiwan represents a relatively modest percentage of the total cost on a decent mid-high end bike.
I’m not saying it’s simple, it’s a bit simpler than the example you give though.
Which is why Ben said "Because of the way it works we’ll probably be offering fixed spec duty free bikes alongside full customs which incur duty. The customer can choose which suits them."
I’d still like to see the spec of a full suspension mountain bike with 55%+ eligible parts. I’ve been trying to spec one myself… it’s non-trivial. Especially with a Taiwan welded frame, but even with a UK built one.
@intheborders Yes, I also said "you’d probably just classify build specs in groups with prices / rates to match." - same thing?
Potentially a situation where one build option is duty free, a different spec option item tips it over the threshold and you then pay 14% on the whole bike value. Will make quite a VFM difference so I'd expect some of that will be done by build classes or pick-from lists rather than full individual part options.
I built up a mainly UK made SS MTB a good few years back just for the hell of it. Lots of Hope (as that was UK back then), Middleburn cranks, USE post etc,. Things like rims and tyres were a challenge but the bike was around 85% UK.
Wasn't cheap though.
http://www.bobjacksoncycles.co.uk/ < Tells you nothing [s]everything you need to know[/s] about UK bike manufacturing.
FTFY.
Still plenty of bespoke frame builders out there, at the higher levels this will make very little difference, it's the mid range where stuff gets complicated.
As pointed out though, there are plenty of European parts out there and not necessarily ridiculously priced ones at that. Supply chains can change to simplify things (sourcing those parts listed above) and ensure compliance but it's not going to happen overnight.
Lots of Hope (as that was UK back then)
Are they not now?
mainly UK made SS MTB a good few years back just for the hell of it
No suspension forks, shock or gears. I could manage that easily enough. Now try a mainstream full suspension bike.
Who else makes suspension forks in the EU apart from EXT?
Forks and shock by Intend, gearing by Rohloff, tyres and tubes by Continental. Sorted.
[ checks Intend pricing ]
A great example to test would be my HB130. Would this pass the 50% mark? You think its a uk.bike and the frame is 100% UK but I reckon half the cost is from non uk.
Frame. Made in uk
Wheels. Hubs uk made and assembled in uk. Not 100% where rims are made (fortus)
Tyres maxxis. They have a major uk hub, but I think Taiwan made. 130 retail.
Gears/cranks Sram x0 and not made in uk. Over 1k retail.
Brakes. Shimano brakes but hope discs. So main cost not uk 300 retail.
Fork, dropper and shock. Fox so non uk and at least 2k rrp
Bar and stem. Hope so presume all uk.
Saddle. Non uk made.
Anyone know?
there are 2 main elements effecting this, one is origin status which itself is the governed by the "substantial processing" rules, and the “customs status” of goods being either unionised or non-unionised - i.e. released for free circulation in the EU or not. They are both independent of each other, but at the same time can be used together to determine tariffs, if any..
If you have Union goods, purchased and processed, you then have the option what you do with your origin status, you can play around with this until your hearts content, the rules are too vague.
For UK based companies, if you using unionised material in your production, import to the UK, then sell in the EU then you full under the "re-export" rule.
If you feel there were not enough EU sourced material, then as long as the combined material and value you add accounted or more than 50%, then it counts as a UK origin product, and therefore tariff free. However, what is not covered is “simple assembly of parts of products to constitute a complete product;” – i.e. everything was bought both outside of the EU and UK, but just assembled – this would not constitute a unionised or UK origin product. If however those parts were purchased from a country that has tariff free agreements with the eu or uk, then they can be considered to be zero value.
Some companies are making this too hard for themselves, most have left it way to late to understand international trade, so are now panicking because the government won’t, or rather can’t give them any help.
Would this pass the 50% mark?
55% mark.
most have left it way to late to understand international trade
Strange thing to claim. I imagine most UK based bike brands already sell to nonEU countries, and have done for years. What is happening is customers, couriers, and customs handlers across Europe are adapting, at speed, to a new situation signed off on at xmas in the middle of a pandemic.
as long as the combined material and value you add accounted or more than 50%
55% for bikes.
Which is why Ben said “Because of the way it works we’ll probably be offering fixed spec duty free bikes alongside full customs which incur duty. The customer can choose which suits them.”
there is no need to do this - buy the materails (components) from the EU that have already been released under the UCC rules, then ship back under "re-export"..
Sui
there is no need to do this – buy the materails (components) from the EU that have already been released under the UCC rules, then ship back under “re-export”..
And what margin will those suppliers in Europe charge? And are those materials/components exempt from duty?
Some companies are making this too hard for themselves, most have left it way to late to understand international trade, so are now panicking because the government won’t, or rather can’t give them any help.
I think there's some truth to that. I've been working on this in some way for most of 2020. We've been working on more UK made parts, and in the far east moving to more own brand stuff (i.e. bird branded) as that cuts cost on the overseas stuff without needing to cut quality - which reduces the %age of non EU/UK costs you have to overcome. We've been developing and strengthening relationships with EU manufacturers that allow us to get over the line. To be honest I thought it was just going to help me reduce the overall duty burden not expecting to be able to hit a target for a UK bike, but now its looking quite positive that we can do 0% bikes 🙂 Alot of what we're doing has benefits outside of the EU situation, but its not going to be just a happy accident if we can get that over the line too now.
there is no need to do this – buy the materials (components) from the EU that have already been released under the UCC rules, then ship back under “re-export”..
The tariffs are not high enough to warrant the additional cost of getting far east stuff through EU sources, and EU originating parts will be tariff free.
What's the story if I head over to Europe on my summer holiday, pick up say a new Commencal and bring it back- am I, in theory, liable for UK import vat and duty, even if theres no mechanism for reclaiming vat on removing the bike from France ie it's now the same as buying a bike in the US, and bringing it back.
