Australia trade deal should be bonzer and could be CPTPP bonanza
The ¬trade deal with Australia could create £10.4 billion more trade by eliminating all tariffs on UK exports, Gov.UK claims. The deal is tailored to play to our strengths, in markets where the UK leads such as digital technology.
It will be easier for Australians to buy from the UK’s ‘powerhouse’ service sectors too. UK firms are guaranteed access to bid for an additional £10 billion worth of Australian public sector contracts per year. New visa conditions allow young Brits to work and travel in Australia for three years at a time. For the first time UK service suppliers such as architects, scientists, researchers, lawyers and accountants can work in Australia without being hostage to its changing skilled occupation list. This is more than Australia has ever offered any other country in a free trade agreement.
The deal removes tariffs on all UK exports, so ‘iconic UK brands’ of cars, whisky and fashion have more bargaining power. Meanwhile imports of fine Australian wines and Tim Tams will get snapped up by homesick aussies and British consumers.
The deal is also a gateway into the fast-growing Indo-Pacific region and will edge the UK closer to the world’s biggest free trade area, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) which comprises 11 Pacific nations, from Australia to Mexico, and has a cash flow of £8.4 trillion. “This agreement furthers the UK objective to join the CPTPP,” said Nicola Watkinson, MD of international trade and investment at industry body TheCityUK. “As the UK’s largest exporter of services, the financial services industry welcomes this agreement.”
There is a huge opportunity here for green technology inventors, according to RenewableUK’s CEO Dan McGrail. Australia could satisfy all its electricity by harnessing one per cent of its offshore wind potential, said McGrail, “this free trade agreement will make it easier for UK and Australian companies,” said McGrail.
Britain’s manufacturers will instantly benefit from tariff free access on goods sold and mobility between the two countries, said Stephen Phipson, CEO of Make UK, the manufacturers’ organisation. The UK’s medical device manufacturing sector in particular could thrive.
The UK’s trade deficit with China has trebled over the last year
Data from the Department for International Trade (DIT) shows that the UK imported £40.5bn more from China than it exported to the country in the year up to June 2021 - a 240 per cent rise in 12 months.
The surge was caused by a Covid-struck moribund UK industry exporting 34 per cent less, whilst locked-in UK consumers spent 38 per cent more on Chinese goods. Some fear that the UK is too dependent on Chinese goods just as the British government aims to make a stand on human rights, which could involve bans on any goods that are the product of forced labour.
“The government is taking us on a very worrying journey of becoming heavily dependent on China for trade in goods, and moving away from our nearest market in Europe,” Lib-Dem trade speaker Lord Purvis said in January.
Responding, the China British Business Council (CBBC) said the last 10 years have been a success for British businesses exporting into China, with exports tripling to £30bn. China is now the UK’s third-largest trading partner.
In order to help UK traders to connect with the Chinese public, the CBBC has created a new guide to hiring an influencer in China. Online influencers are already highly influential but, in a new development, they are being replaced by virtual influencers who are less likely to be judged controversial by the government. The virtual influencer market is projected to expand to £39.5 billion by 2023 says the report on the CBBC site.
UK launches India negotiations to kick off 5-star year of trade
The UK’s international trade secretary Anne-Marie Trevelyan met Indian minister of commerce and industry Piyush Goyal in New Delhi in January, aiming for a deal that could potentially double UK exports to India, which is growing so fast it’s destined to be the world’s third biggest economy, says DIT, with a population bigger than the US and EU combined.
A deal could boost total UK trade by £28 billion a year by 2035, raising wages across the UK by £3 billion. Investment from Indian companies already supports 95,000 jobs across the UK.
The UK wants to remove the barriers to doing business and trading with India’s £2 trillion economy and market of 1.4 billion consumers. If a trade agreement with India removes duties alone that would increase exports to India by up to £6.8 billion, supporting tens of thousands of jobs across the UK. Scotch whisky and cars currently face duties of 125 to 150 per cent. A DIT study found that 30,000 people in the West Midlands alone are employed via Indian investment in 2019. Just that one region could earn £300m through opportunities for manufacturers of motor vehicles and parts. As with the Australian trade deal, the UK’s green industries could benefit. The Indian government plans to install 175 GW of renewable energy capacity by 2022 and the UK’s renewables industry could benefit immediately from any deal that slashes import tariffs, which are currently 15 per cent on wind turbine parts from the UK.
“Indians are increasingly demanding personal mobility and, in the long term, will transition to electric vehicles. This presents major opportunities for UK automotive companies,” said Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders. “Our competitiveness, diversity and expertise already attract Indian investment. The key to any future trading relationship will be the removal of tariffs and some highly complex, burdensome barriers.” A deal with India also takes Britain one major step closer to the CPTPP.
IOE&IT opening Kenya as vitality African trade hub
The Institute of Export & International Trade (IOE&IT) is opening its first oversees office and its choice of venue speaks volumes about the importance of new trade routes.
The new IOE&IT office in Kenya is a “sign of how important we believe our work in Africa is,” said director general Marco Forgione.
In January UK trade secretary Anne-Marie Trevelyan noted the continent's ‘huge economic potential’ in a speech to the Africa Investment Conference.
The virtual event focused on sustainable investment into Africa to support the transition to clean growth. The DIT’s export credit agency, UK Export Finance (UKEF) provided a record £2.3bn to strengthen UK-Africa business relationships in 2020-21. UKEF has increased support from approximately £600 million in 2018-19, covering a range of infrastructure projects in countries from Côte d’Ivoire to Uganda.
Forgione said the IOE&IT aims to help businesses in Africa to make the most of the African Continental Free Trade Area (AfCFTA), the free trade pact covering 54 of the 55 African Union countries.
The IOE&IT has worked with international trade centres, the Ghana Export Promotion Authority and Nigerian Export Promotion Council in delivering qualifications, and developing a Trade and Information Pipeline (TLIP) with Trade Mark East Africa.
Northern Ireland shows how to beat post-Brexit trading rules
Northern Irish traders are getting to grips with the NI Protocol, says a survey by Manufacturing NI.
The number of businesses struggling is down from 40 to 24 per cent in six months. The number of companies reporting negative impacts on sales to Great Britain fell from one-third to one-fifth since July. The number reporting problems with EU suppliers also fell sharply.
Are there still 24 per cent too many companies struggling? Manufacturers might be overcoming issues but there are still problems, said Stephen Kelly, CEO of Manufacturing. Businesses want both sides to make the rules simpler.
Given the region’s unique position straddling the EU and UK, businesses are moving their trade within the UK and EU. The Henderson Group, for example, has avoided the product shortages by sourcing more products locally. “Our local sourcing strategy allowed us to take a strong advantage against the multiples who are suffering with delays and shortages due to the NI Protocol,” said Paddy Doody, Henderson’s sales and marketing director. Over 45,000 businesses have registered with HMRC’s Trader Support Service (TSS), the government’s border solution to keeping goods flowing between GB and NI.
TSS was launched in January 2021 to ease the administrative burden of traders affected by new rules under the NI Protocol. The total number of reported goods movements created by TSS since 1 January was 455,902, involving more than 1,596,804 consignments (as of December 21).
In January Brexit minister Liz Truss met with her counterpart, European Commission VP Maros Sefcovic, for talks on the protocol. Sefcovic later tweeted photos of himself and Truss stressing that his objectives for the talks were "stability, predictability in NI".
“I will not sign up to anything which still sees goods moving within our own country being subject to checks,” said Truss.
One source, Politico, claimed that would-be Prime Minister Truss could have a deal wrapped up before the NI Assembly elections in May.
UK traders are ‘voting with their fleet’
The diversity of interpretation of customs regulations, across EU nations, was the biggest cause of the ‘dogs brexit’ that faced UK traders from January 2021, according to a study by Invest in Flanders.
“At the start of 2021 our EU business nearly vanished. Delivery took four times longer, customers were paying extra VAT and duty rates were uncertain,” said Jon Fry, MD of CVP an exporter of production equipment to Europe’s media and entertainment companies.
In some French ports, it all depended which customs inspector was on your case.
However, Belgium’s official policy is to create accessible ports, as an ‘innovative ecosystem’ for UK companies wanting to trade in Flanders, says Jan Jambon the Minister-President of Flanders. The Belgian begrip has now made Flanders a favoured customs route. Its transport links, location, tax rates, compact network and English proficiency earned customer loyalty.
“Brexit made us re-evaluate our EU business operations. We explored many options and the best was to set up a base in Flanders. It subsequently presented us with an exciting opportunity and the potential to expand our business. Flanders Investment & Trade has been a huge help,” said Fry.
FIT is a Belgian government agency responsible for attracting and supporting foreign investors.
“We are starting to see the British entrepreneurial spirit shine through,” said Astrid Geeraerts, who is head of investment at FIT and works at the Belgian Embassy in London. “I’m proud to say that many of these businesses chose Flanders as their EU base in which to expand their businesses.”
Flanders’ Minister-President Jan Jambon claims there are unprecedented levels of investment from UK companies north Belgium, with two thirds of its incoming investment linked to Britain. Brexit was the decider for 30 of the 49 British companies that invested in the region in 2021, the highest number of UK investments projects in a single year.
Lorry drivers livid as HMRC’s system detains them for days
Lorry drivers have dubbed it the goods vehicle mortification system. Now HMRC has said it’s ‘too busy’ to deal with trucks stuck in customs controls.
A report in The Independent said lorries returning from the EU with goods are regularly getting stuck for up to four days because HMRC’s Goods Vehicle Movement Service (GVMS) doesn’t work and there are no IT support staff interested in helping.
Jon Swallow, of logistics company Jordan Freight, said he had two trucks containing automobile parts stuck at customs controls at Felixstowe for four days, despite getting over the border into the UK. The problem is that many can’t get their reference codes accepted.
Steve Cook, director of customs consultancy firm The Customs House, admitted that it’s not just the IT system: “Not everyone knows exactly what they need for customs declarations and other paperwork.”
“I’m seeing 25 per cent of our trucks sent for extra checks at Calais because of incorrect paperwork. Expect a lot of delays when things get busier in February,” said another driver.
Michael Szydlo said he spends whole days emailing back and forth with HMRC about lorries waiting at ports. “There are many issues showing that GVMS is not yet fully ready. Every importer gets delayed at some point,” said Szydlo.
Rod McKenzie, of the Road Haulage Association, said “teething problems” at the border could soon be fixed as firms adjust to the new requirements. “It’s patchy. If trucks are held up by having the wrong codes it creates a backlog.”
McKenzie blamed the computers. “Whenever there is a new system, we see people struggle with it at first. But then they adjust,” said McKenzie.
At the port of Dover in Kent the port’s chief executive, Doug Bannister, blamed COVID and the shortage of lateral flow tests.
An HMRC spokesperson said the GVMS has been live for 12 months and is “working well” with over 15,000 customers using the IT service: “We recognise that the introduction of full customs controls is a significant change for hauliers and traders, which is why we are providing comprehensive support.”
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