Trade Alert

BCC tells Boris Johnson it can help dismantle UK-EU trade barriers

The British Chambers of Commerce (BCC) offered the government a practical action plan to tackle five major trade barriers that emerged after Brexit.

William Bain, the BCC’s Head of Trade Policy, said the biggest issue at the port of Dover is food exports. Like many problems it is caused by a differing interpretation of post EU trade arrangements. Inconsistent application of the rules is a major problem. French customs require a wet signature on paperwork for exports of animal and plant products, but this causes hold-ups for those with digital documents.

“This is just the latest of a string of issues with the trade deal,” said Bain, “all are part of a wider problem of interpretation, inconsistent application and glaring gaps in the trade deal’s coverage. The way the trade agreement is interpreted in 27 different EU countries is a major headache for UK business – especially smaller firms without the cash reserves to set up new EU based arrangements.”

“It doesn’t have to be this way,” said Bain. “The UK and EU could take a pragmatic approach and reach new understandings on a consistent interpretation of the rules.”

BCC has identified the five worst categories of problem: Export Health certificates, Multiple VAT registration, CE marks, Business Travel and the backlog of Deferred Import Customs declarations. In its new white paper, Trade and Cooperation Agreement One Year On, it offers a solution to each. 

Export health certificates cost SME food exporters endless time and money so BCC has proposed ways to either discount, ditch or simplify them.

VAT registration has become an ordeal requiring an individual application for every EU nation UK businesses trade with. There is no practical reason for this, says BCC which is calling for the same deal as Norway, whose smallest firms don’t need to invest in multiple fiscal representatives.

The Conformitè Europëenne (CE) Mark is another emerging trade barrier. Industrial and electrical products goods with this mandatory conformity marking - used to regulate goods sold within the European Economic Area (EEA) - will not be permitted for sale on the market in Great Britain from January 2023/4. Neither will components and spares. The BCC says the Government must help businesses with these timelines. 

Business travel and work activities in the EU are now limited for UK firms. The government needs to make deals with the EU and member states to boost access in this area, as a priority for 2022, says BCC.

Import customs declarations were deferred last year but now traders are being chased for them. BCC says a pragmatic enforcement will help companies recover from the pandemic. But they could face heavy-handed HMRC treatment, with demands for instant payments and import paperwork.

Freeing up the flow of goods and services into the EU, our largest and nearest overseas market, will go a long way to realising that goal, and it is possible, said Bain.

Government wants your input on Israel trade deal in eight-week consultation

The government is running an eight-week consultation to find out what traders need from a trade deal with Israel. 

International Trade Secretary Anne-Marie Trevelyan’s quest for a new UK-Israel trade deal began on Feb 2nd with a three-day visit to Israel and the Occupied Palestinian Territories.

Plans are afoot for a spring UK-Israel Innovation Summit, with the Israeli PM and a trade delegation set to attend. Trevelyan has met with Israel Minister of Economy Orna Barbivai kickstart preparations to deepen our economic ties.

The UK is Israel’s third largest trading partner, with £2.7 billion worth of British exports 2020 and imports of £2.1 billion. Last year, Israelis invested £200 million into the UK. Both countries are tech superpowers, so digital services and life sciences will feature highly in trade talks. Services account for 70 per cent of both economies but only 35 per cent of our bilateral trade. An updated trade agreement could cut red tape, revamp the provisions on services and improve upon the current agreement inherited from the EU.

Trevelyan will meet key Israeli investors in the UK, host a reception of leading technology businesses and visit Tel Aviv’s new light rail metro project to identify opportunities for UK firms to get involved. She will also visit the Hebrew University of Jerusalem, where she will discuss UK and Israeli agri-tech expertise.

The anticipated new opportunities for UK businesses are in areas like education, healthcare, and food and drink exports. Lower tariffs and better market access could be arranged with a country that has a high regard for British products and expertise.

The Secretary of State will also travel to Ramallah to meet with PNA Minister of National Economy Khalid Osaily and visit the UK-Palestinian Tech Hub to strengthen links between UK and Palestinian tech enterprises.

“We’re using our independence to revitalise old agreements we inherited from the EU,” said Trevelyan. “Now we can work with friends and allies like Israel to strike deals that are truly tailored to our strengths in areas like digital trade, services and life sciences.”

Chris Southworth, Secretary-General of the International Chambers of Commerce, said it is really important that Just Trade readers give input into the consultation. “This is vital if we are to get the kind of agreement that is optimal for trading businesses.”

UK Export Finance invested £500 million on boom economies of West Africa

UK Export Finance (UKEF) has tripled its financial commitment to Africa to £2.3 billion because the booming economies of the sleeping giant represent a critical opportunity. West Africa’s markets in particular have surged with the collective GDP rising from US$105bn to $659bn in twenty years.

West Africa accounts a quarter of Africa’s GDP says UK Export Finance (UKEF), which spent £500m supporting British run projects in West Africa in 2021.

Boris Johnson told 3000 delegates at a recent Africa Investment Conference that the UK is determined to ensure that Africa prospers from the green industrial revolution.

Investment minister Gerry Grimstone will be encouraging more of the type of projects supported in Ghana and The Ivory Coast last year. 

In Ghana UKEF spent £120 million modernising West Africa’s largest market, The Kumasi, which attracts 800,000 people every day. This clinched a contract for Gloucester’s Mabey Bridge to solve the region’s flooding crisis by building and exporting 87 emergency bridges to affected areas. With UKEF’s support, Leicester’s Quarry Manufacturing & Supplies company won a £1.5 million road construction contract in North Tema, Southern Ghana. Northern Ireland’s Tesab Engineering is supplying manufacturing and industrial equipment for the construction projects in a £1 million project.

Meanwhile in the Cote D’Ivoire, UKEF supported the construction of six new hospitals across the country with £236 million. Another £105 million financed the rebuilding of two existing roads and building four new bridges to reconnect the country with its neighbours in Ghana, Guinea, Liberia and Burkina Faso. This will revitalise trade links in the process and stimulate greater economic activity. Some of which will involve Dints International, which scooped a contract worth £8 million to supply the equipment needed for the construction of five high priority road networks in the Côte d’Ivoire.

“We want more British firms to sell to the world,” said Grimstone.

World’s supply chains are broken – it’s the traders who rebuild quickest that will win

If a supply chain falls, and it wasn’t because of Brexit, did it really happen? That is the philosophical question raised in a study by Zachary Rogers, assistant professor of operations and supply chain management at Colorado State University. 

Rogers has examined the two underlying major factors behind the world’s clogged ports: a record increase in consumer spending and a burgeoning e-commerce industry. They could account for some of the problems UK traders are experiencing, such as the downturn in car production. Analyst Hargreaves Lansdown noted that 860,000 car models rolled off production lines, which was the lowest output in 65 years for the motor manufacturing industry. 

This was attributed to a seemingly UK-specific supply chain crisis that is holding back British manufacturing growth but the problem is not confined to the UK, says risk management specialist Russell Group. Port congestion at Shanghai in China is costing an estimated $4.5 billion a week in lost trade, opening the door to creatives who set up alternative trade routes.

More than $559 million dollars’ worth of ICBs that are normally imported into Shanghai are being delayed too. The reality is that travel restrictions and shipping bottlenecks have disrupted ‘just in time’ supply chains designed to keep company inventories to a minimum.

“We’re not actually seeing supply chains failing,” Rogers said, “in many ways, we are seeing a heroic effort in the face of this unprecedented demand that we are dealing with right now.”

UK-Australia deal might provoke restrictions by EU says British Vet Association

The EU could place even more restrictions on UK produce following the Australia Free Trade Agreement (FTA) says the British Veterinary Association (BVA).

In its evidence to an Environment, Food and Rural Affairs (EFRA) inquiry, the BVA warned that: “Australian products would become indistinguishable from UK produce, jeopardising the ability of exporters to trade using the good reputation of the UK as a high animal health and welfare producer.”

The anxiety over animal welfare stems from Australia’s use of antibiotic growth promoters which the EU outlawed in 2006. In January this year the trade block banned any meat, dairy, fish and eggs produced using such promoters. Now BVA says an Australian trade deal would lead to ‘additional risk-based checks’ being placed on ‘British goods entering the EU Single Market, and potentially Northern Ireland’ which would cause significant delays for those wishing to sell to the EU.

James Russell, senior VP of the BVA said that it was critical that UK production values were not undermined by the Australian free trade agreement, which would put even more pressure on UK farmers. “Australian production methods are not the same as ours and could therefore require additional export certification. This would be an additional burden on the SPS Certification Working Group which is seeking to help UK farmers,” said Russell. 

The National Beef Association is also dismayed over Australian practices, calling for a system of checks to be adopted to ‘police’ health and welfare within production processes.

“It is imperative that there be an addition to allow inspections and this should be reciprocal. We must also include the right to periodically test beef for hormones and antibiotics without prior notice,” it said in a statement.

Face-to-face meetings between the farming industry and the EFRA committee are due this week.

German study says confusion killed UK trade – could Brexit Freedoms bill restore it?

As the UK unveiled plans for a new Brexit Freedoms bill, German research has found that the UK’s trade with Europe has declined over the past four years. But there is a surprising twist. 

As Boris Johnson promised to “unleash the benefits of Brexit” the figures suggest that the process of investing, innovating and creating jobs in Britain has its work cut out.

The German ifo Institute says the UK’s share of EU27 goods exports fell from 6.2 percent in 2019 to 5.2 percent in 2021, while its share of EU27 goods imports fell from 3.9 percent to 2.6 percent over the same period.

However, some of Brexit’s negative impact on economic performance and trade took place before the UK left the EU in 2020 said Lisandra Flach, Director of the ifo Center for International Economics. Increased uncertainty for companies and adapting to the new environment had an impact as early as 2016.

The UK’s share of EU27 goods exports had already fallen from 7.1 percent in 2015 to 6.2 percent in 2019. Its share of EU27 imports fell from 4.4 percent to 3.9 percent over the same period. More trade was then diverted away from the United Kingdom as the pandemic progressed, added the institute. The uncertainty killed trade but confidence could be restored.

Although the Trade and Cooperation Agreement did manage to avoid higher tariffs, since January 2021 most products have had to overcome at least one new barrier before they can cross the UK-EU border. The new barriers include inspection certificates and other documents that make the border crossing more time-consuming, complicated and expensive.

The UK government says reforms will cut £1 billion of red tape for UK businesses, ease regulatory burdens and contribute to the government’s mission to unite and level up the country. “Our new Brexit Freedoms Bill will end the special status of EU law in our legal framework and ensure that we can more easily amend or remove outdated EU law in future,” said a spokesman.

Under current rules, reforming and repealing this pipeline of outdated EU law would take several years because of the need for primary legislation for many changes, even if minor and technical. The new legislation will ensure that changes can be made more easily, so that the UK can capitalise on Brexit freedoms more quickly, the government claims.

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