Business brace for disruption despite post-Brexit trade deal

Trade groups are calling for more time to adjust Britain’s new trade agreement with the London-European Union, saying it will implement new rules that disrupt annual trade of more than $ 590 billion in goods next week Which previously flowed freely.

The UK and the European Union said on Thursday they had signed an agreement on their future relations, which sealed the 2016 British referendum decision. It was a relief for businesses that feared four years of politically charged negotiations could end without a trade agreement, resulting in tariffs on goods for both parties.

But despite the counter-revolution, in nearly half a century, food, motor vehicles and other goods moving between the European Union and Britain will arrive from 1 January. There is a need to examine customs and meet different sets of standards and regulations.

The British government estimates that 215 million additional customs duties will be announced in a year, around 600,000 a day, which businesses say will take time and cost money to organize. Some companies will need to pay inspection fees, get import licenses and find out how to account for the value-added tax. British food and animal exports to the European Union will be checked upon arrival, while some professional qualifications will no longer be automatically recognized. Some businesses say they do not yet know fully how they will respond as they have yet to see the details of the trade agreement.

With long lines forecasting at British and European ports, and scope for new paperwork, trade groups are now calling on both the UK and the European Union to help companies navigate the changes and firms to adjust to new regulations Any new friction for the business can be reduced, including giving time to.

“It is important to come so late in the day that both sides take immediate steps to keep the business running,” said Tony Dunker, director general of the Confederation of British Industry. “The business lobby group wants companies to be allowed to adjust without penalizing the new rules for a six-month grace period.

British Chamber of Commerce Director General Adam Marshall said, “The proud job of adopting new arrangements a week before it takes effect.” Many companies are already battling the epidemic and have laid off employees for the Christmas holidays, he said, requesting new regulations.

The European Union’s Chamber of Commerce also called for the new rules to be phased in, saying members were concerned about how quickly they would need to adapt. Asked at a briefing on Thursday about the possible route for companies, an EU official said “there is no grace period in the deal … we think there is plenty of time for companies to prepare for it” . “

A UK government spokesman said it was preparing for the upcoming changes, including investment in jobs, technology and infrastructure at the border. He also said that border control would be implemented in phases.

Thursday’s deal does not comprehensively address large-scale service industries such as Britain’s vast financial sector, which will lose automatic access to EU markets on 1 January.

Fearing additional paperwork and transportation disruption, pharmaceutical companies such as Pfizer Inc.

And GlaxoSmithKline plc had already stocked drug makers, car makers including BMW AG

Manufactured goods and aircraft manufacturer Airbus SE asked suppliers to keep additional components on hand.

On Thursday, Airbus said it was pleased that the potential disruption of a deal scenario was avoided but it still needed to analyze the results of the agreement on its business.

“While a free trade deal is a big relief, it is still a lot more complicated to do business in Europe than when we were in the European Union,” said Simon Cotton, chief executive officer of Scottish cashmere textile manufacturer Johnson of Elgin Ltd. . He cited additional paperwork on various issues, including how EU customers would reclaim taxes.

According to estimates by law firm Clifford Chance, additional red tape could cost British businesses around £ 17 billion, around $ 23 billion a year for a year, and EU-based £ 14 billion.

For example, EU and UK-based meat exporters will now have to verify the certificate by a veterinarian – showing that each package they adhere to conforms to the health standards of the other. British exporters say that there are not enough veterinarians for this certification.

A staff member restores the meat counter at the Selfridges department store in London.


Kirsty O’Connor / Zuma Press

Given delays at the border, Dallmeyer Dairy has been stocking packaging and materials at its site in the north of England since November.

“We are concerned about the potential disruption at the ports, you don’t want your packages to sit in a seven-mile queue to pack products,” said Del Salt’s managing director Ed Salt. Even though it sells mostly in the UK, the company sends goats to Germany to pack milk before returning to the UK

For pallets coming from outside the block, it will also have to perform heat-treatment to use the ship’s products to comply with EU regulations.

European Union-based companies sell more goods and services in the UK than in the UK. But Britain’s trade in goods with the European Union is a large percentage of GDP, around 13%, compared to around 3% of Europe’s UK GDP.

However, parts of the bloc have been particularly exposed to doing business with the UK.

A cargo train is unloaded in Kückschwen, northern Germany.


Patrik Stollers / Agence France-Presse / Getty Images

According to the Organization for Economic Cooperation and Development, the UK is responsible for 10.5% of Ireland’s exports and 27% of its imports, while Germany has a trade surplus of £ 29 billion in goods with the UK, leading to around 600,000 cars. Is sold. Every year to Britain.

Some industries will likely feel more disruption from the $ 88 billion two-way trade in cars between Britain and the European Union.

The UK is Europe’s second largest market for cars and the country’s largest seller – Ford Motor Co.

, BMW, Volkswagen AG

And daimler AG

-Mainly collect their vehicles in the European Union.

Last year, about 13% of cars produced in Germany went to the UK, while the UK is Ford’s third largest market worldwide, with about 30% of its sales in Europe.

Meanwhile, British manufactured components, including engines for Ford vehicles, are exported to European factories that produce vehicles sold worldwide.

The European Automobile Manufacturers Association said it could not fully assess the trade deal until all the details were made public, but still, “major challenges are still ahead”.

“Barriers to trade in goods as new customs procedures will be heavily impacted,” it said.

Potential bottlenecks, Japanese carmaker Honda Motor Co.

A car factory in England was already closed in December. This crowd gathered at British ports due to Brexit and Christmas-related stockpiling as well as disruption caused by the epidemic.

Queues of trucks to cross the English Channel before the UK’s scheduled departure from the EU single market. (Originally published December 15, 2020)

Some car companies, such as Aston Martin Lagonda Holdings plc, have said they could blow parts in the UK to achieve future disruption. Fantasy British detective James Bond’s car is owned by 50% of its components overseas.

Analysts are particularly concerned about volume producers like Ford, Toyota Motor Co.

And France’s PSA Group,

Which deploy just-in-time supply chains, where the arrival of parts is coordinated with the assembly.

For example, Toyota has held only four hours on the production line at its UK car plant. In 2015, a three-week strike by French ferry crews disrupted their operations for two months.

“Incredibly complex supply chains are the issue when you’ve been operating your plants for two decades on the perception of a single market,” said Callum McRae, an auto analyst at GlobalData.

Write Alistair MacDonald at [email protected]

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