LONDON – Business groups need more time to adapt to Britain’s new trade agreement with the European Union. According to them, the new rules, which will enter into force next week, could disrupt more than $590 billion in annual trade in goods previously traded freely.
Britain and the EU announced on Thursday that they had signed an agreement on their future relations, sealing Britain’s decision to leave the Union after the 2016 referendum. This relieved companies who feared that four years of politically tense negotiations would end without a trade pact, resulting in tariffs on goods for both parties.
But despite this delay, for the first time in almost half a century food, vehicles and other goods transported between the EU and the UK will be subject to a new EU-wide ban from 1 January. The months of January are subject to customs controls and must comply with separate standards and regulations.
The British government estimates that there will be 215 million additional customs declarations per year, or almost 600,000 per day, which companies believe will take time and money to organise. Some companies have to pay inspection costs, apply for import permits and determine how to account for VAT. British exports of food and animals to the EU will be controlled on arrival, while certain professional qualifications will no longer be automatically recognised. Some companies say that they do not yet know how they will react fully because they have not yet seen the details of the trade agreement.
Business groups predict long queues at UK and EU ports and a lot of new red tape, and are now calling on the UK and the EU to help businesses cope with the changes and minimise new trade friction by giving businesses time to adapt to the new rules.
With such a late date, it is important that both parties take immediate steps to continue trade, said Tony Danker, Director General of the Confederation of British Industry. The corporate lobby group wants a deferral period of six months to allow companies to adapt to the new rules without penalty.
Companies face a huge challenge to adapt to the new agreements a week before they come into force, says Adam Marshall, Chief Executive of the UK Chambers of Commerce and Industry. He said that many companies are already struggling to cope with the pandemic and are leaving during the Christmas holidays with their staff and called for a gradual implementation of the new rules.
The US Chamber of Commerce in the EU has also called for a gradual phasing-in of the new rules, with members concerned about the speed with which they will have to adapt. Asked about a possible exemption for companies, an EU official told a briefing on Thursday that the EU-US agreement does not provide for a grace period. We believe that companies have had sufficient time to prepare for this.
A spokesman for the British government said that it is preparing for the changes ahead, including investment in jobs, technology and infrastructure at the border. He also stated that border control will be carried out in phases.
Thursday’s agreement does not fully affect service sectors, such as the huge UK financial sector, which will be fully taxed from 1 January. January loses its automatic access to EU markets.
For fear of unnecessary red tape and disruptions in transport, pharmaceutical companies such as
PLC already has medicines in stock, with automakers such as
Inventory manufacturer and airline
Suppliers have asked for additional components to be kept in stock.
Airbus said on Thursday that it was happy that it had been able to avoid a possible no-action scenario, but that it still had to analyze the impact of the agreement on its operations.
Although the FTA is a great relief, it is still much more difficult to do business in Europe than when we were in the EU, he said.
Managing Director of the Scottish cashmere clothing manufacturer Johnstons of Elgin Ltd. He cited other documents on various subjects, including how customers in the EU would apply for tax refunds.
The law firm Clifford Chance estimates that the extra bureaucracy could cost British companies around £17 billion, which equates to around $23 billion a year, and European companies around £14 billion.
For example, meat exporters in the EU and the UK now require a veterinarian-controlled certificate that each package they sell meets the hygiene standards of another producer. British exporters say there aren’t enough veterinarians for this certification.
An employee completes the meat at Selfridges in London.
Kirsty O’Connor/Zuma Press
Pending delays at the border, the Delamere dairy has been storing packaging and ingredients at its plant in the north of England since November.
We are worried about possible disturbances in the ports. You don’t want your bags in a seven-mile line when you need them to pack your products, says Ed Salt, Delamere’s Managing Director. Although the company is mainly sold in the United Kingdom, it sends goat’s milk to Germany for packing before returning to the United Kingdom.
The company must also heat-treat the pallets it uses to ship its products in order to comply with European regulations for pallets coming from outside the block.
EU companies sell more goods and services to the UK than the UK sells to Europe. But the UK’s share of EU GDP, at around 13 per cent, is greater than its trade with Europe, which accounts for almost 3 per cent of GDP.
However, some parts of the block are particularly affected by trade with the United Kingdom.
A freight train is unloaded in the city. Cuxhaven, Northern Germany.
patrick stollars/agency France-Presse/Getty Images
According to the Organisation for Economic Cooperation and Development, the United Kingdom accounts for 10.5% of Irish exports and 27% of imports, while Germany has a trade surplus of £29 billion with the United Kingdom, largely due to the nearly 600,000 cars it sells to the British every year.
Few industries are likely to feel the disruption to the more than $88 billion two-way trade in cars between the UK and the EU.
The United Kingdom is the second largest car market in Europe and the number one in the country -.
Ford Motor Co.
-assembly of their cars mainly in the EU.
Last year, around 13% of cars produced in Germany went to the United Kingdom, while the United Kingdom is Ford’s third largest market in the world and accounts for around 30% of sales in Europe.
Meanwhile, parts made in the UK, including engines for Ford cars, are exported to European factories producing cars for sale all over the world.
The European Automobile Manufacturers Association said it could not provide a full assessment of the trade agreement before all details had been made public, but the main issues remained unresolved.
The movement of goods will be significantly affected by trade barriers in the form of new customs procedures, he said.
In anticipation of possible bottlenecks, the Japanese car manufacturer
Honda Motor Co.
a car plant in England was closed at the beginning of December after a shortage of important parts. She attributed this to congestion in British ports, which are under pressure from the Brexit and Christmas supplies and the disruption caused by the pandemic.
There are queues of lorries queuing to cross the Channel for Britain’s planned exit from the EU internal market. (Originally published on 15 December 2020)
Some car manufacturers, such as Aston Martin Lagonda Holdings PLC, said they could send spare parts to Britain by air to avoid future disruptions. The manufacturer of the fictitious British spy car James Bond supplies 50% of the parts from abroad.
Analysts are particularly concerned about manufacturers like Ford,
Toyota Motor Co.
Use just-in-time supply chains, with the arrival of the parts closely coordinated with the assembly.
Toyota, for example, typically spent only four hours on the assembly line of its British car plant. In 2015, a three-week strike by French ferry workers led to the suspension of work for two months.
Incredibly complex supply chains are a problem if you run your installations on one market concept for two decades, he said.
self-analyst at GlobalData.
Mail Alistair MacDonald to [email protected]
Copyright ©2020 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8