Britain’s lead on cleantech could be pegged back by Green Referendum

By Nicholas Booth - Just Trade News Editor

As Boris Johnson announced his 10-point plan for a Green Revolution which could lead the UK’s cleantech sector into export wins, a new Britain Means Business campaign could actually have the opposite effect.

The campaign, led by Nigel Farage argues that the Net Zero target is a £1.3 billion delusion that will slow the economy which is already straining under the weight of the Covid crisis and rising energy bills.

It could affect the growth of Wimbledon-based Offshore Design Engineering Ltd (ODE) whose exports have thrived due to the renewables boom. ODE has just won a major contract to design an offshore wind farm in Poland, backed by €900,000 finance from HSBC UK that was guaranteed by UK Export Finance (UKEF).

ODE’s business has boomed thanks to the renewable energy sector, which brings in most of its work these days. The loan gave ODE maximum working capital, allowing it to grow its multi-million-pound export pipeline and supply one of Poland’s biggest offshore wind farms, which will provide clean electricity to one million Polish households.

“The UKEF support allows us to expand our resources and move into different markets at the same time,” said Andrew Baker, ODE’s MD, “it gives us the ability to take what we’ve learned in the offshore industry in the UK and help other countries to do that.”

ODE’s engineers and project managers help design the wind farms and then assist in their development, from conception to commissioning. Its core export markets are Taiwan, Japan, South Korea, Germany, France, the USA, Poland and Vietnam.

For one major overseas project, the Baltic Power offshore wind farm to the north of Poland’s coastline, ODE had to provide a performance bond to a deadline - which had cashflow impacts for the growing business. With the backing of HSBC and UKEF, ODE secured the contract and got the financing it needed under UKEF’s General Export Facility (GEF). ODE is now established in Poland with more commissions running.

The business now has a multi-million pound funding pipeline, with the flexibility provided by the GEF allowing ODE to pitch for larger contracts both in Poland and in new markets around the world.

“ODE is a prime example of UK expertise in the green energy transition around the world as we take forward the recommendations made at COP26,” said Richard Armstrong, export finance manager at UK Export Finance.

Belgian Ministry of Finance promises to solve your EU trade problems.

Flanders Investment and Trade (FIT) has assembled a special Just Trade - friendly panel of experts on How to Turn Brexit into an Opportunity for a webinar on Tuesday 15 March. Click here for the chance to quiz Jeroen Sarrazyn, Brexit Coordinator and Attaché, Belgian Ministry of Finance about solving your EU trade problems.

Also on call will be Daan De Vlieger, director of the Global Trade Advisory at Deloitte and Bart Apers, managing partner at global advisory Crowe Spark. Discussion topics are listed online but why not ask the questions you want to resolve?

Ahead of the webinar, Astrid Geeraerts, head of investment at Flanders Investment & Trade (FIT), answered our questions. Such as: what makes Flanders a friendlier gateway to Europe for UK traders?

The UK is an important market to FIT so we offer a simple and very accessible route for UK SMEs to access the EU, says Geeraerts. Our ports are also used by the rest of the EU in its trade with the UK. It is the perfect gateway for companies who need to access the EU.

What have you done for small-biz UK?

If you source from the Far East, import to the UK and then to the EU, you can save money importing directly into the EU via Flanders. FIT has helped UK traders into the EU for 15 years. We’ve built a mountain of knowledge and forged the finest relationships in order to support your expansion plans. It’s got more complex after Brexit so our support is more vital. We show UK traders how to clarify agreements with clients, transporters, customs agents and their logistics player in the UK and the EU for every step of the process. We check who is responsible for which element of the process. We double-check everything.

Do Belgians still want British goods?

The UK is the 7th largest importer of goods from Flanders and the fourth best exporter to us. Brexit has not influenced this much. There are four major pitfalls: New customs controls on product certification and health certificates; Changes to transport, logistics and fulfilment; sales tax changes; and changes to duty and eligibility for preferential rates.

Can you anticipate some of these problems going away?

All these problems are inherent in the UK leaving the customs union. The issues and costs will not go away as the UK will now have to trade with the EU as a foreign country. We hope that, going forward, the different customs departments in the EU and the UK will digitise more of the customs processes to make it easier for companies both sides of the channel. In Flanders a number of ports (Port of Zeebrugge and Port of Antwerp) have worked hard at digitising parts of the declaration processes when goods pass through their ports. There is no wiggle room in customs legislation.

Do your customs officers take a more helpful interpretation of documentation?

The Belgian customs department is very supportive, open and contactable for importers and exporters. They have set up a specific help desk to support companies. There is also a very good relationship between the UK and BE customs departments.

Many UK hauliers say that customs regulations are interpreted differently in different ports.

The customs legislation is the same within Europe and is not to be interpreted differently.

Have customs hold ups - caused by Brexit - been a distraction for customs officers who have other priorities such as fighting drug smugglers and people traffickers?

This is a question for our politicians. I am unable to answer. It is true that the new customs formalities are requiring more staff to do the checking of goods. However, Belgium has recruited extra staff to deal with the higher volumes of goods (to be checked) going via our.

Fast, cheap rail freight no longer an option for Euro-Asian supply chain through Russia

Container lines such as Maersk and Ceva Logistics have been offering rail services as an alternative to ocean transport to Asia. Not anymore. Maersk has temporarily suspended new intercontinental rail bookings ‘without exception’ both east and westbound between Asia and Europe until further notice. It said it will do its utmost to deliver cargo that was already in transit or booked for shipment. This loss of rail is a major blow to Far Eastern manufacturers who needed a route to Western Europe. Rail has played an increasing role in multimodal transport modes in the last two years as an alternative to Covid-clogged sea container routes that have delayed the supply chain and led to accusations of market rigging. While rail can move relatively small volumes, it’s much faster than sea transport and cheaper than air, so it’s ideal for big shipments that need urgent delivery. Though rail shipment volumes from Asia to Europe are estimated at a relatively tiny figure, at 1 million twenty-foot units (teu) per year, the current restraints on ocean capacity make it a painful loss, according to shipping intelligence from Lloyd’s List. Some sectors, such as car makers, are big users of rail freight services and there’s speculation that production could be affected if ocean freight substitute capacity cannot be found. German container line Hapag-Lloyd said it is preparing to support its automotive customers in keeping their supply chains running. “We remain in constant exchange with our customers from this sector. We will offer them the best solutions possible, if and when needed,” a spokesman told Lloyds List.

Airfreight options are closing too. In February global freight specialist Kuehne + Nagel said the closure of Russian airspace will add extra time and cost to Asia-Europe airfreight and cut capacity. Maersk is not accepting air bookings to or from Russia and warned that there was a risk that, while the cost of air transport is airspace restricted, flights will be affected by rising fuel and insurance costs.

Meanwhile, many members of the British International Freight Association (BIFA) have complained about significant changes within the maritime market, including high freight rates, surcharges and new business practices by the lines, which limit market access for forwarders. “Substantive evidence will be required for the Competition and Markets Authority (CMA) to consider a review of the maritime supply chain, including shipping line practices that may be distorting the operations of the free market to the detriment of international trade,” said BIFA Director General, Robert Keen. BIFA is to survey its members in order to support a submission to the CMA. “Hopefully the results of the survey will deliver some objective evidence regarding the current state of the deep-sea container market,” said Keen.

National Farmers Union unpacks New Zealand trade deal and says it's rotten

The implications of the Free Trade Agreement (FTA) with New Zealand are beginning to unfold since Trade Secretary Anne-Marie Trevelyan signed the deal on Feb 28th. The gains for exports are that New Zealand’s 5 million consumers will enjoy tariff-free imports of British fashion and footwear, buses and ships. By return, New Zealand farmers can export even cheaper wine, honey, dairy, lamb and beef.

The DIT said it could stimulate a 60 per cent rise in bilateral trade and an economic boost of £800 million for the British economy within ten years. However, the DIT’s own modelling quantified this as a rise of just 0.02 per cent GDP by 2035. It also admitted the deal could damage the UK’s farming and food processing industries.

National Farmers Union’s (NFU) president Minette Batters said there is “extremely little in this New Zealand trade deal to benefit British farmers who face much higher costs of production, slim margins and rising energy, labour and input costs.

“The Government is now asking British farmers to go toe-to-toe with some of the most export-oriented farmers in the world, without the serious, long-term and investment UK needs” said Batters.

Though the DIT called the agreement ‘one of its greenest ever’, its excitement over the Paris Agreement and distant 2050 net-zero was not shared by some. “This deal opens the door to food produced in ways that harm nature and fuel the climate crisis, undermining the UK’s own transition to more sustainable farming,” said the World Wildlife Fund’s Kate White. However, both nations excel in creating low-carbon technology and services and the free movement of talent could benefit the cleantech industry. What Britain gains on exports of electric vehicle and wind turbine parts it will lose on its Carbon Halo, the impressiveness of which is critical in clinching deals, according to cleantech vendors. The WWF has produced a report Thriving Within Our Planetary Means that tarnishes that image by claiming that Britain needs to reduce its footprint by 75 per cent.

City lost just 7,500 financial services jobs, but Fintech created better jobs

London’s financial district ‘only’ lost 7,500 financial services jobs as a result of Brexit, according to City of London mayor Vincent Keaveny in The Irish Times. At the height of the Brexit debate, pessimists said London’s financial services sector would lose 80,000 jobs as firms re-organised their logistics and trading desks started to operate outside the UK.

Half a million people were employed in the City of London alone. There were 211,000 people in Manchester whose jobs were threatened, 100,000 jobs in Leeds and the valuable financial services hubs in Birmingham, Bristol, Edinburgh and Liverpool looked vulnerable.

In the end only a “very small number,” of jobs went, Mr Keaveny said, “We’ve also seen tens of thousands of jobs being created on the fintech side of the City which has made any job losses or job relocations on the Brexit side relatively insignificant in the overall scheme of things.”

Mr Keaveny, the first Irish citizen to be appointed to the City of London’s mayoral role, was speaking in Dublin, meeting with business groups, academics and Eire’s Minister for Foreign Affairs Simon Coveney as part of a financial services dialogue event.

There is a trade lesson to be learned from the low City-based job losses stemming from Brexit, according to Keaveny. The UK banks created procedures and workarounds which let them continue to support major operations from London despite the loss of passporting rights, the ability to sell financial services across the EU.

While the EU-UK’s free trade deal does not cover financial services, there is a memorandum of understanding on them. If implemented it could provide a formal framework for dialogue, which would be in “everybody’s interest”, said Keaveny. However, contention over the Northern Ireland protocol is delaying its implementation.

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