Are bikes ‘made’ by Cotic that consist of frames built in Taiwan actually British products? That’s the question that Cy at Cotic is grappling with right now (as well as many other British based manufacturers) and until that question is answered Cotic have suspended orders destined for EU customers.
The tricky situation comes down to the detail of the trade deal between the UK and the EU. The UK has a trade deal that allows British products to be be exported to the EU tariff and tax free. However, that requires a legal definition of what constitutes a British product. Within the detail of the trade deal that has been defined as a product that consists of at least 70% British sourced components, materials or the ephemeral term of ‘added British value’. It sounds complicated (and it is) but you can also see the point.
A made up example
Here’s an example we just made up..
If a British company were to import cheap toasters from a country that does not have a trade deal with the EU and then simply added a made in the UK badge before selling them tariff free to EU customers then that would be a loophole. That’s why there are now rules about what constitutes ‘British’ when it comes to manufactured products. In a nutshell (and I’ll come back to nuts later) simply adding a ‘Made in UK’ badge does not constitute enough ‘added value’ to allow it to be defined as a British product.
The nuts and bolts of it all mean that if Cotic import their Taiwan made frames to their HQ and then build them up to sell them, even though the frame has been designed by Cotic as far as the EU is concerned that may not add enough ‘British value’ to the product to make it actually a British product. That means there is a big question hanging over the export status of bikes built up from frames and components sourced from outside the UK as to whether an EU customer would be faced with an import duty charge on delivery. In order to not land their EU customers with unexpected bills on delivery Cotic have decided to halt deliveries to EU customers until they get it all sorted out.
Here’s what Cy Turner, owner of Cotic, sent to their customers via their mailing list yesterday..
| EU Exports |
| Despite the trade deal having been signed between the UK and the EU, there is still some lack of clarity on the charging of import duty for certain Cotic product lines. However, some things we know: At the moment we are clear that UK made frames (so that is currently RocketMAX and Rocket) attract Zero duty when shipped to the EU. All purchases made by EU customers are now charged without 20% UK VAT, and they will attract VAT in the country of delivery which will be payable by the customer to the courier when it arrives. This will apply even if you ordered before 31st December 2020 and paid a deposit. Don’t worry, deposits don’t attract VAT, so you won’t end up over paying any taxes if you have a deposit with us. If you paid in full, this also leaves you unaffected because completed transactions made prior to 31st December 2020 are to remain under the previous rules. This situation will persist for 6 months whilst the new EU/UK VAT collection system is put in place. The unclear situation is with Taiwan produced frames, and possibly complete bikes using Taiwan made frames. The Zero duty situation is for goods that are “UK Origin” or have a significant proportion of UK ‘value add’. For the UK made frames they easily meet these requirements because they are more than 70% UK made or processed by value. What we are currently trying to ascertain is whether our EU customers who have bought Taiwan produced frames or bikes assembled using the majority of Taiwan sourced parts might need to pay some import duty. This is because the rules regarding items being of “UK origin” are a bit unclear, and the ‘value add’ by Cotic possibly doesn’t add up to a significant enough percentage of the value of the end product supplied to qualify for zero rating. I am currently going through the full trade agreement to try and figure it out, and we are in touch with our industry body to get to the bottom of this. The upshot of all this is that for this week at least and maybe longer, and until we know exactly what the duty situation is, we are not shipping anything to customers in the EU. We want to give ourselves time to understand and apply the new rules correctly, and then be able to explain them to customers. There will be increases in shipping prices as well due to the couriers having to clear products through customs now, so once we have all the costs understood, we will be in touch to agree any cost increases with you. If you have an order placed already, but don’t wish to pay the extra fees, then we will cancel and refund. No problem at all. At the very least, we will do everything we can to look after you whether you want to complete the order or not. What I really want to stress is that as soon as we have a firm operating procedure and pricing for our friends in the EU, we will start shipping again, but in the meantime you are more than welcome to place provisional orders with us so you can make sure you have a place in the queue for our upcoming deliveries. |
The situation for trading with the rest of the world remains unchanged but if you think the way bike sales are affected is complicated you should check out what it means for the food export industry when it comes to processed ingredients. Importing nuts in shells and then removing the shells in the UK before using them as ingredients in food products apparently does not add enough ‘British value’ to warrant the final product being permitted to be exported to the EU tariff free.
We are now outside of the EU but what is becoming clear is that there are uncertain times ahead of us before everything settles down to the new normal. Although, if anyone can predict what the new normal will look like we can add your addendum to our Predictions for 2021 story.
Brexit isn’t all bad, is it?
Finally, Brexit has happened – there’s no changing that now. We have been criticised over recent months for being overly negative about the transition. While it’s true that we don’t think it was a good decision and we’d have preferred a different result that’s now in the past. We will report stories objectively about Brexit and its effects on the bike industry but that doesn’t mean we will only publish the negative stories. We are actively looking for the good news stories too and if you have any to share with us then we’d be happy to hear them. Send your good news Brexit stories to us at newsdesk@singletrackworld.com or post them below.
Here’s are links to all the good news brexit stories for your perusal. You’re welcome.
Yup, I predicted that in the Bikes forum when the decision on origin of car parts was made. I’m assuming other industries read that into the announcement…
On the note on British product/frame/bike.
Some of Cotic’s frames are built in UK. As is some other brands. The frames are built in the UK are more desirable than the Taiwan ones. As does Stanton bikes and other small brands.
Even if the frame is made in the UK most of the components aren’t from UK and aren’t, British!
So what makes it British? Or a British brand?
The design of it for sure, ideally build in the UK and with UK products.
But does that make it ride better?
But it’s all about the design, ethos and passion all done in the UK.
That’s British!
If the EU classified Cotic bikes (complete bikes or frames) as British before Brexit. Then what’s changed? Has the EU decided to change their own classification?
Good job they’re not made of cheese….
Before Brexit Cotic would have paid the import duty on the frames they brought in from Taiwan just like any other EU member. Once that’s done and the goods are within the EU market then there’s no more to pay.
However, now the import duty gets paid by Cotic on orders from Taiwan as before BUT Cotic now has to EXPORT the finished product out of one market (UK) and into another (EU) and so more import duty is now payable.
@craig5 – what’s changed is that we’re now operating under a shonky “Free Trade Agreement” rather than the rules of the Customs Union and Single Market. This was Britain’s (well… England’s) choice.
Think of it this way.. Brexit now means there is a border that Cotics’ bikes now have to cross to reach the EU that didn’t exist before. The border is a trade border and where there is a trade border there are taxes and duty to be paid, unless a deal is done to not have them. In this case the deal has been done to not have those duties but only in the case of products that are deemed to be of British origin. Cotic’s Taiwan sourced bikes are deemed to be not of British origin when judged by the agreement both the EU and the UK agreed to.
Even if the frame was made in the UK. What about the components?
Can you say made in the UK. But if most of it (wheels/suspension/dropper) comes from Asia or wherever is it British?
Then where is the raw material is from?
Yes you need to draw the line somewhere.
Is the queen British?
A large percentage Is German some hungarian and French and of course the home nations. But definitely designed in the UK 😉
Always good to see a note to confirm that the good and bad stories will be shared and told. In this case, however, it is also sad to see that the note also comes with a request for any good stories as for now, there aren’t any…
I suspect this has already been asked but apart from rear mech and shifter, I think we do have UK manufacturing on everything else (actually do we have rims and tyres?), so potentially there is the possibility of an almost entirely UK-made bike. Suspect the demand for that would be incredibly low though (and unlikely to be priced to entice most people to buy).
What makes something ‘made in Britain’ ? You basically have to look at what British work (employing people in Britain and paying British taxes) went in.
Forming and bending tubes.
Welding.
Painting.
Smelting iron ore or bauxite and forming sheets of steel or Alu. Etc.
Re-badging Taiwanese or Chinese frames and parts with a union jack style badge is not British manufacture. That’s clear. But its what many (but not all) British companies have been misleading people with for 30 years.
I’d consider my Orange 5 frame to have been ‘made in Halifax’, Britain’ due to the amount of workmanship done there in bending and forming and machining and welding.
My Brompton frame similar for East Laaardan.
But the Kona hardtail I have is no more Canadian than it is British. Its Taiwanese. And is labelled as such. As is the Specialized bike – it’s not American. Its a Taiwanese frame with mainly Japanese parts. And a smattering of Swiss bits.
Really so if the frame is made in Britain the bike is British?
But what about the rest of it?
Comes from all over the world right!!
This is what the car industry is facing. Silly to think bikes would avoid it.
Orange and Brompton are an interesting example… given they both spring to mind in terms of brands perceived to be ‘expensive’ or ‘poorer’ value. And i’m pretty sure various threads on here have given Stanton a fair bit of grief for how much the UK welded frames cost. I think the point is not about the ethics of various ‘made in britain’ labels or whatever. Its that we have chosen to make things just a bit harder for a significant swathe of companies for what? And currently i’m not sure harder is a good thing!
Isn’t the solution to import Taiwanese bikes into an EU member state for assembly and distribution within the EU27 and also import Taiwanese bikes into the UK for UK distribution?
The problem of cross border duties between UK and EU only arises because the product is imported from Taiwan and then exported with little / no real value add in between. Aside from anything importing to one market only to export to another increases inventory, working capital (stock in transit) and environmental costs.
There is luckily solid guidance from the EU on what constitutes UK origin goods (with laughably little from the UK side), and depending on where you source parts a bike built in the UK from mostly Taiwanese parts (including the frame) could still qualify – the bike being built here is enough as long as you have sufficient value in the bike coming from the EU/or big enough mark up. However that does require some paperwork hoops to jump through in order to certify the origin.
Yeah, well done brexit voters
” the bike being built here is enough as long as you have sufficient value in the bike coming from the EU/or big enough mark up”
The mark up doesn’t count from what I’ve seen. If it did you could sell anything tarif free if you charged enough for it. You need to evalute the value of the British content in the total value.
If you can demonstrate that the British materials and labour amount to 70% of the value you can sell it. You can’t buy a Taiwanese frame then add a 200% mark up and claim the product is 70% British.
Typo – add a 220% mark up
This has been the biggest problem for the consumer in Britain, finding any product that is genuine British made.
Maybe its because a lot of companies have decided to stop production here, employing and paying British craftsman and taken production to the far east where wages are a lot lower so that they can make more profit.
I would rather pay extra for a British made product, knowing that I am not only supporting that company but also its employees and their families.
Bring back the “BUY BRITISH” campaign.