Just Trade Newsletter May 3rd 2022

By Nicholas Booth

UK ports could sue after government it delivered white elephants

British ports want a refund from the government for the time and money wasted building a digital infrastructure for import controls which won’t be implemented until 2024.

They began consulting lawyers, say media reports, after Brexit opportunities minister Jacob Rees-Mogg admitted that import controls on EU goods won’t be imposed until ‘at least the end of 2023’.

Meanwhile the government will expedite the ‘digitisation’ of border procedures so that, eventually, physical border checks won’t delay imports. The performance of government appointed IT firms is coming under increasing scrutiny however, in the wake of a string of high profile failures, notably the Horizon scandal.

Meanwhile, furious operators are exploring legal options to recover their investment if the government doesn’t reimburse them, said The Times.

Since October 2020, when the government launched the £200 million port infrastructure fund to help to meet the cost of a new Border Operating Model. Port operators spent at least £100m of their own money on facilities, said Tim Morris chief executive of the UK Major Ports Group.

“This now looks like wasted time, effort and money to develop what we fear will be highly bespoke white elephants,” Morris said. The Government must engage urgently with ports over how their substantial investments can be recovered.”

The ports rushed to get infrastructure ready on time only to be let down by a major policy change, said Richard Ballantyne, the British Ports Association CEO. “The facilities will become white elephants, wasting millions of pounds of public and private funding.”

Government’s ‘vacillation programme’ exposes UK to pestilence and plague

The National Farmers Union (NFU) and the British Veterinary Association (BVA) are reportedly “astounded” at the government’s border force irresolution that exposes the UK to disease. It left UK farmers fuming at the advantage that EU exporters enjoy when selling competitive produce into the UK.

Without Sanitary and Phytosanitary (SPS) checks Britain is exposed to massive biosecurity, animal health and food safety risks, NFU president Minette Batters told Farmers Weekly.

The three delays to their introduction were bad enough but to then scrap them, in favour of another unknown system, is “unacceptable,” said Batters.

The UK pulled itself out of integrated and responsive EU surveillance systems, said the British Vet’s Association’s SVP James Russell. “We warned that delaying veterinary checks further could weaken vital lines of defence against future incursions,” said Russell.

While the EU introduced checks on goods arriving from Great Britain on 1st January 2021, the UK adopted a phased approach for imports from the EU.

Checks on meat imports were due to start on 1st July and on dairy on 1st September, then fish and composite foods from 1st November. Live animals imported have yet to be agreed on.

Meanwhile, the government said there is no need for physical, documentary and identity checks on SPS imports, nor ENS (safety and security) declarations. This means chilled meats can enter without checks and there’s no need for Health Certificates for animal-origin products or phytosanitary certificates for plants.

A government IT-speak statement said it was “accelerating our transformative programme to digitise Britain’s borders” to reduce friction and costs for businesses and consumers.

Sunil Makim, a customs advisor said his employer spent £100,000 on training and development of systems for custom declaration service (CDS) as well as the ENS, IPAFFS and GVMS systems. Without a refund many in the industry will be forced to cut back or shut down services, Makim warned.

Steven A. Botham a member of the IOT&IT, questioned the wider implications of the government’s actions. “How does the suspension of inspections on imports relate to products landing in the EU from other third countries, such as China?” Botham asked.

“Will those goods be subject the checks if coming through, say, Dover? Would it be a different answer if the movement is under transit rules? Why can’t non-EU countries use the relaxed import regime under WTO terms,” asked Botham. “Is there an argument that the current mess on imports from the EU is part of the Comprehensive Trade Agreement between the EU and the UK?”

Watch this space. Just Trade will investigate.

Midlands firms top Queens Awards for Enterprise in International Trade

Britain’s industrial heartlands continue to lead the way in creating solutions to our trade deficit, scooping the vast majority of the accolades in the recently announced Queens Awards for Enterprise in International Trade.

The two regions in joint top place were the East and West Midlands, each of which produced seven companies that were listed by the London Gazette as award winning entrepreneurs. Yorkshire and Humber came a close third, with six nominations. They tied with the South West, also with six companies mentioned in despatches. The South East and North West produced five outstanding exporters. At the bottom end of the table, Scotland and the North East’s two nominations each makes these regions look slightly moribund, while Wales had only one. Oddly, no companies in Northern Ireland received an award, even though this is a well-known hot bed of creativity. Perhaps they are all too busy making money.

One of the winners, Towcester-based Diamond Hard, won the Queen’s Award for International Trade for Outstanding Short Term Growth in overseas sales over the last three years. It has invented high endurance applications of a unique diamond material which lasts longer in high temperature, chemically aggressive and abrasive environments. It works directly with blue chip businesses in 22 countries around the globe in the Electronics, Energy, Aerospace and Chemical processing sectors. Overseas sales grew by almost 200 per cent in the three-year period with top markets including the United States, Israel, France, South Korea and Sweden. Sadly, the pandemic had a significant impact on the business, but it has maintained business continuity and met its customers’ needs.

Meanwhile, up the road in Nottingham, contract researcher Cellomatics has had a good Covid campaign, since it provides pre-clinical in-vitro testing services for biotechnology and pharmaceutical clients as part of new development programmes. Cellomatic has supported 160 projects for 55 clients in 17 countries and overseas sales have grown by 207 per cent with over 50 per cent of all sales exported. Another East Midlands bio-medicine exporter Apetronic puts more intelligible sounds into the ears of people with hearing loss, by improving the quality of installed hearing access equipment. It won the Queen’s Award for International Trade in 2014 and the company wins the Queen’s Award for International Trade for Outstanding Continuous Growth in overseas sales over the last six years

One company even managed an award for food related exports! While food imports and exports have been stymied, Flexeserve is a world expert in hot-holding, advancing how global food operators serve hot food. For over 25 years, it has been manufacturing game changing hot-holding units and this is a hard won and exemplary award, according to the Queen.

UK exports to Flanders are showing signs of recovery

Since Brexit the Flanders region of Belgium, which houses the super port of Antwerp, has become a major gateway to Europe, partly because it built an infrastructure of EU compliance experts with inside knowledge of the customs of Brussels.

Flanders Investment & Trade (FIT), the official government body for the Flanders region, has published its full-year trade figures for 2021, which report that UK exports to the region increased by a significant 18 per cent in 2021 to a total value of €14.4 billion. However, it says the outlook for 2022 looks more uncertain as UK businesses navigate new and far-reaching post-Brexit measures and global geo-political uncertainty.

Many UK sectors, including precious stones and metals and jewellery (up by 169 per cent) and plastics and plastic items (up 71 per cent) have seen exports to Flanders grow during 2021. In the food and drink sector, while meat and fish have seen a decline in exports, milk and dairy products have seen a 20 per cent increase.

In January 2021, record levels of investment from UK companies were made in the region and there was a 63 per cent increase in British companies investing in Flanders in 2021 vs 2020, the fourth consecutive annual increase. Flanders is a strategic single-entry point to export to other EU countries, partly because of its good transport connections, partly because of its location in the heart of Europe’s commercial and industrial centres – and partly because it’s a lot less dangerous and strike-bound than Calais. “Flanders is one of the most open economies in the world,” said FIT CEO Claire Tillekaerts.

However, the automotive sector saw exports falls 11 per cent and Textiles, clothing and accessories fell 41 per cent.

“While Brexit immediately disrupted business, entrepreneurship has won out and exports to Flanders are recovering,” said Astrid Geeraerts, Head of Investment at FIT, which says it is actively supporting UK businesses with its partners in Flanders and the UK, to navigate the changes.

Whisky exporter Chivas to spend £88m to meet ‘accelerating global demand’

Pernod Ricard’s Scotch whisky arm Chivas Brothers is investing £88 million to boost production at its single malt distilleries as sales rose by 23 per cent in the first half of the 2022 fiscal year, led by a new whisky range. The Scotch sector has seen ‘growing global demand’ with market gains in Latin America, the Middle East, Africa and Asia, the company said.

The ‘significant’ expansion will also increase Chivas Brothers’ total production by 14m litres of alcohol every year. Both sites are expected to be operating at full production capacity by mid-2025.

The move will help expedite the company’s aim of reaching carbon neutral distillation by 2026 through the installation of new bio plants with high-efficiency mechanical vapour recompression (MVR) fan technology for pot still distillation across both sites. Carbon neutrality helps export sales.

Last year, the company said it planned to roll out MVR technology across all viable distilleries by 2026, after a ground-breaking pilot project at its Glentauchers distillery led to energy reductions of 90 per cent on a single pot still.

The Aberlour distillery will see its production capacity double to 7.8m litres of alcohol annually. This will help it to meet ‘accelerating global demand’ for the brand, described as the best-selling single malt in France. It had also made significant gains across Asia.

The Aberlour site will also benefit from an upgraded visitor centre and a new still house with large windows. “Scotch has demonstrated its resilience as a category over the past few challenging years and in the process has opened new avenues for growth,” said Jean-Etienne Gourgues, chairman and CEO of Chivas Brothers, “this expansion will allow us to increase our volume to capitalise on the increased demand and interest in Scotch and bring in new consumers to the category. We’re betting big on the sustainable future of Scotch.”

Ukraine could boost agricultural exports to Britain

The United Kingdom's decision to lift all tariffs and quotas on goods from Ukraine will allow Ukrainian agricultural enterprises to increase deliveries of poultry, walnut, honey, cranberry, blueberry and pea to the UK market.

The UK government cut all tariffs on Ukraine goods to zero on 26th April. There is a growing movement in the UK to express sympathy by buying Ukranian goods and services.

This list of high-margin agricultural products that Ukraine could export to the UK was published on the website of the Ukrainian Agribusiness Club Association on Wednesday evening.

Agricultural products worth $553 million were exported from Ukraine to the UK in 2021, it said. They include sunflower seed oil (31 per cent of export revenue), rapeseed (28 per cent) and corn (24 per cent).

In particular, Ukrainian agricultural companies may focus their export efforts on poultry deliveries to the UK. This export stood at 2,600 tonnes in 2021. Ukraine accounts for 1 per cent of the UK's poultry imports. Its key rivals are the Netherlands, Poland and Belgium.

Shelled walnut exports stood at 700 tonnes in 2021 and Ukraine wants to improve its share, currently 6 per cent, of the UK's walnut imports. Ukraine's main rivals here are the United States, Germany and China.

Ukrainian agricultural enterprises can also increase honey exports to the UK (800 tonnes in 2021). Ukraine accounts for 1% of the UK's honey imports. Its key rivals are China, Poland and Mexico.

Cranberry and blueberry exports from Ukraine are also promising (200 tonnes in 2021). Ukraine accounts for 0.3 per cent of the UK's cranberry and blueberry imports. Ukraine's main rivals are Spain, Peru and Chili.

Ukraine's pea exports to the UK totalled 4,900 tonnes in 2021, accounting for 12 per cent of the UK’s pea imports that year. In this market niche, Ukraine faces competition mainly from Russia, but the economic sanctions imposed on Russia may give Ukraine an extra competitive edge.

Having visited Ukraine, Just Trade can recommend its triple distilled horilka. Someone needs to import this.

Country Guide updates

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