Trade News - Wednesday 5th April 2022

By Nicholas Booth 

Will Trudeau’s Canada lock UK from CPTPP over hormonal beef?

Britain may be forced to eat another metaphorical bowl of ‘chicken chlorinate’ in its desperation to win a North American trade deal. This time, the food in question is hormonally treated beef and the exporter is Canada, a founder member of the strategically critical Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Canada has said it will push with “vigour and conviction” for Britain to accept imports of hormone-treated beef in the trade deal the two countries are currently negotiating. Canadian high commissioner to the UK Ralph Goodale said that improved market access for the treated meat was “legitimate and appropriate and should be forthcoming” in Canada-UK trade talks.

The UK has kept the EU’s ban on hormone beef imports on its statute after Brexit and is not expected to compromise on the issue. It may be a bargaining chip speculated Politico, which was told by Goodale that all Canadian meats and food products are among the highest quality and safest anywhere in the world. The hormone issue is exaggerated, said Goodale.

The UK and Canada talks replace the EU-Canada deal that was rolled over after Brexit. With Britain now negotiating alone, the Canadians might roll back some of the measures in the current trading arrangements. In 2021 the UK government asked UK traders what they wanted from a deal with Canada and the results indicated that exporters wanted the same reduced tariff regime that’s in the current UK-Canada trade agreement.

Traders complain that Canadian tariffs across a few key sectors are high, including dairy products and want these lowered. However, Canada has strictly controlled the production of milk, butter and cheese through supply management, using production controls and tariffs to keep domestic prices stable. Imported products, like American cheese, are slapped with a 300% levy.

The US trade representative, Katherine Tai threatened to sue Canada over this and won, but Goodale said Britain would not be so fortunate and would have to battle Brussels to get its portion of the EU quota on cheese.

Though Canada announced plans in 2021 to allow some imports without hefty tariffs, it is still using its complex system of licences and tariffs to favour Canadian producers. Many of the farmers who benefit from the program are in the province of Quebec, a key electoral battleground for under fire Prime Minister Justin Trudeau.

Canada may be open to visa arrangements with the UK provided an agreement was reciprocal. International trade minister Anne-Marie Trevelyan has met her counterpart Mary Ng in recent weeks to formally launch trade talks and said she hopes for a ‘Canada 2.0’ trade deal.

UK traders fear the dreaded knock from HMRC’s customs auditors

Just over a quarter of UK traders have said they would not feel prepared for a customs audit if HMRC were to impose one on their business tomorrow, a new poll has found. The maximum penalty for non-compliance is a fine of up to £2,500.

On March 30 the Institute of Export and International Trade (IOE&IT) held a seminar on the Customs Compliance requirements following the submission of a declaration. It asked delegates to declare what sort of state of readiness they were in. A significant minority, 23 per cent of attendees, said they were ‘not very prepared’ and a further 3 per cent felt they were ‘not at all prepared’ for an official visit by Her Majesty’s Revenue and Customs inspectors.

However, that suggests that the other 74 per cent are in a good place over compliance. Just under a third (31 per cent) of businesses on the webinar said they were either ‘not very aware’ or ‘not at all aware’ of their post-declaration compliance requirements. The majority (62 per cent) said they were aware of their obligations.

“We’ve seen in the 18 few months a lot of communications about new customs processes and opportunities to streamline these processes, following the departure from the EU,” said IOE&IT customs and trade specialist Rob Booth on the webinar, “firms now need to embrace these new compliance obligations.”

Although firms are already required to complete customs declarations for imports and exports, many are only now learning that they have further obligations. They must keep evidence relating to their goods movements for several years after they’ve taken place.

For zero rating VAT on exports, firms must provide evidence that the goods actually left the UK and these must be kept for a period of up to six years. For imports, evidence is needed to show that the right amount of duty has been calculated and paid. If claiming a preferential duty-rate they must prove the origin of the goods.

Then there are the documentary requirements around licences and certificates and additional compliance obligations if firms use customs special procedures to streamline their processes at the point at which goods cross the border. Records related to these procedures must be kept for at least four years.

The IOE&IT is hosting a follow-up to yesterday’s webinar on 25 April addressing how firms can prepare for a customs audit. This webinar will c over: The documentary evidence you must keep, what HMRC looks for in an audit, what happens after one and how to prepare.

PM Johnson accused of Brexit-blindness over ‘UK is still a global trader’ claim

The prime minister’s claim that he wants to see more companies exporting and championing Britain has been met with universal derision by members of the IOT&IT.

Answering questions from a Parliamentary Liaison Committee, Boris Johnson rejected the suggestion that Brexit had made Britain a more closed economy. By contrast, Johnson said, the UK was a global trading nation and he wanted to see much more of an export drive.

“There is no natural impediment to our exports, it is just will and energy and ambition,” Johnson. However, Peter W. Hogarth, international trade specialist at Innovas was no t impressed. “When I was a Regional Director for UKTI (now DIT) helping companies to start exporting or to grow their exports, the initial recommendation was usually to go to the easier markets of the EU,” responded Hogarth, “So what did those helpful people in government do? Brexit!! Where are those easier markets now? Goodness knows how long it will take to recover to the level of exports we had before Brexit.”

Hogarth said that all the work from the great campaigns that UKTI undertook for several years have been undone. UKTI operated from hubs around the UK offering a range of well received services including a trade fair support programme and Passport to Export which included training. Export Champions have been tried one way or another more than once and never worked well. “When will DIT learn from past experience and show more imagination, with more resources so it really makes an impact?” said Hogarth.

“What an absolute joke!” said a speaker for Think Ambient, which exports lighting equipment. “We were happily exporting successfully for the past 15 years and Brexit has decimated our exports and made trading in Europe very, very difficult,” said the speaker, “It takes more than will and energy and ambition to trade competitively. The increased paperwork, cost and bureaucracy are impossible to cope with.”

Finally, a speaker from Equilibrium Products Limited asked Boris Johnson for some insight into their challenges. “We are attending a show in Germany next week and I wish that Boris and his team were here to witness the hurdles that we are now faced with,” said the spokesperson. “None of it is impossible but it would be easier not to go and I fear that many others will shy away from such activity.”

The Office for Budget Responsibility’s latest forecast that UK international trade will continue to be 15 per cent smaller than if the country had remained within the EU.

The government has launched a 12-point plan to almost double the value of exports from £600bn to £1 trillion by 2030.

Government pledges £35 million in trade support for the African Continental Free Trade Area (AfCFTA)

The UK government has announced a £35 million commitment to support the African Continental Free Trade Area (AfCFTA) and promote mutual understanding between the UK and the world’s biggest trading block.

The cash will facilitate trades and policy support to the AfCFTA Secretariat and Member States through local bodies such as TradeMark East Africa (TMEA), the Overseas Development Institute (ODI) and other regional partners.

The investment aims to lift 30 million people out of extreme poverty, create jobs and provide commercial opportunities across Africa and the UK. AfCFTA is the world’s biggest free trade area, connecting 1.3 billion people across 54 countries with a combined GP of $3.4 trillion.

The announcement was timed for a visit to London by AfCFTA Secretariat Secretary General Wamkele Mene to discuss the UK’s work as a strategic partner of the trading block.

The aim of the African free trade area is to encourage intra-Africa trade, which could bring 30 million Africans out of extreme poverty and raise the incomes of 68 million others who live on less than $5.50 per day.

For UK businesses, the trade area helps remove market access barriers by creating a single continental market, making it easier and more cost-effective for UK businesses to export goods and services across the 54 AfCFTA member states.

In January the Institute of Export & International Trade (IOE&IT) opened its first African office in Kenya, following on from a launch, in August 2021, of a qualification in Nigeria that encourages more local businesses to export and trade internationally. It was run with the Nigerian Export Promotion Council (NEPC) and the International Trade Centre (ITC), a WTO and UN-backed trade agency.

The UK government’s £35 million investment builds on existing work from the Foreign, Commonwealth & Development Office (FCDO) and the Department for International Trade’s development unit to strengthen partnerships and resilience in Africa.

Under the UK’s G7 presidency last year, the British Investment International group pledged to work with other G7 Development Finance Institutions (DFIs) to invest at least $80 billion in the African private sector by 2027.

AfCFTA's ambition is to see commercially meaningful trading in Made in the AfCFTA products taking place across the length and breadth of the continent, said Wamkele Mene.

Traders warned that Customs Declaration Service switchover will be punishing

International traders have no idea how difficult the transition to the new Customs Declaration Service will be and they need to prepare, according to the British International Freight Association (BIFA).

The warning came at the end of March as traders reported problems with using government computer systems, notably the Goods Vehicle Movement Service and the New Computerised Transit System . At the time of publishing the Gov.uk web site is being updated and messages are being issued to the trade and carriers.

One problem was that NCTS submissions were queuing, so traders got no response to their submissions. HMRC said it’s making every effort to ensure services are restored. HMRC’s creatively named ‘live proving’ (AKA testing) of its IT activities took place at the end of last year in advance of the changes for the 1st January 2022 and now more ‘live proving’ will pre-empt another major landmark on 1st July 2022. On this date it will be mandatory to submit Safety and Security (S&S) declarations on all imports, including European Union (EU) to Great Britain (GB) movements. This live proving activity is to support readiness of those organisations who are not already submitting Entry Summary Declaration (ENS) in the GB S&S system.

HMRC has appealed to traders to take part and contact the HMRC Live Proving Team by e-mail. No reward for participation is mentioned. Robert Keen, director general of BIFA, welcomed HMRC’s attempt to communicate with traders.

“For several years, BIFA has been highlighting the issues surrounding the impending change from CHIEF, the current system used to process customs declarations to the new Customs Declaration Service,” said Keen. “We welcome the fact that HMRC is ramping up its communication on the subject.”

Meanwhile BIFA has created a DIY training course, the CDS eLearning programme to explain the main differences between the outgoing CHIEF system and the Customs Declaration Service (CDS). It’s only open to BIFA members at the moment. “People involved in international trade still don’t fully appreciate the scale of the change,” Keen said – and they will really need to, he warned.

Wigan curry sauce specialist says exports have rocketed since Brexit

Wigan firm Pasco Spices has claimed its European exports grew by 25 per cent for the year ending 30th Sept 2021, after demands for its authentic Indian products increased.

Now it’s gearing up to see those exports grow according to Maggan Khade, its managing director.

Pasco Foods makes authentic Indian cooking sauces, cooking pastes, pickles and chutneys, developed from ‘closely guarded family recipes’. It was established in 1993 as Pasco herbs and Spices and for many years went under many people’s radars because it mainly catered for the hospitality industry. More recently its brand has become a regular on supermarket shelves too. “The Pasco brand has developed a strong European customer base both pre- and post-Brexit, which has minimised the sales risks Brexit could have brought,” according to Khade.

It has survived market difficulties before and adapted. Unexpected losses on a number of contracts had caused serious problems for the Ince-in-Makerfield-based exporter after it rebranded as Simano Foods. In 2018 administrators Leonard Curtis were called in and only 11 jobs were saved as the company was sold.

The company was responsible for a number of trading names, from their Pasco brand of curry sauces to New York Chilli, The Fancy Snacks Company and Mrs Muamba’s to Nature’s Lean Kitchen and Dewhurst.

Mr Khade, the founder, had previously worked for market leader Patak’s, in Bombay and Wigan, built the company from ‘semi-dereliction’ to a state-of-the-art facility by investing £2.5m. The company’s fortunes turned after it won food prizes, including the Fine Food Guild’s gold award, then branched out to mainland Europe and Australia and chased deals in North America, Kuwait and the Arab Emirates. Khade and his team served a feast for the British Ambassador’s Queen’s Birthday Party in Lisbon.

The company, while flying the flag as part of overseas trade missions, has also promoted its wares in Asda and Sainsbury’s stores.

Media talks up London’s loss of influence in the insurance industry after Airmic study

Brexit is threatening the London Markets influence in the global insurance industry, says Reinsurance News, in response a survey by Airmic, the UK association for risk and insurance professionals.

However, the survey figures are open to interpretation. While 15 per cent of the survey sample said London’s positioned has ‘waned significantly’ and another 15 per cent said it has waned slightly’, against that five per cent said the UKs position has strengthened slightly. These statistically insignificant numbers are massively over shadowed by a significant majority, 65 per cent of the survey sample, who insist that nothing has changed.

The Reinsurance News report concluded that this means London ‘used to be’ the European Union’s hub for financial services but is not any more, since Brexit has led insurers “to shift-decision making powers” back to their headquarters in other countries.

However, the statement from Airmic, in response to its own report, was relatively upbeat and gave no indication of a loss of financial capital from the UK. “Continued focus on regulation, talent, sustainability, and evolving consumer preferences will be crucial to securing the London Market’s global competitiveness,” the Airmic statement said.

Airmic said the London Market urgently needs to maintain the pace of change post-pandemic, in order to sustain its relevance for the future and a majority, 53 per cent, said the necessary momentum for change in the insurance market is being sustained.

Asked whether the London Markets current IT infrastructure system is currently fit for purpose, 33 per cent said no, but 67 voted for the other option ‘No, but that it is gradually improving’. The survey taker did not give an option for Yes.

The survey sample’s strongest complaints were about lack of collaboration between insurers, cited by 70 per cent of interviewees, lack of investment (60 per cent) and a lack of understanding of technology among the market-decision makers (60 per cent).

“Our respondents have sounded a dire warning that the London Market’s legacy systems will doom it to irrelevance,” said Airmic, which called for ‘greater investment and understanding of technology.”

The report finished with a call for more artificial intelligence, this time provided by machines: “The insurance industry needs to shift its focus from protection to prevention with artificial intelligence and machine learning.”

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