5 minute read
International Trade
BREAKING DOWN BARRIERS
Critical factors effecting international trade between the UK and the EU and why in-depth analysis of them by firms should be used to support development of their international business strategy.
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Since the UK left the Single Market on 1 January this year exporting (and importing) companies of all sizes and across multiple sectors of the UK economy have struggled with international trade processes to and from the EU. Some common, recurring issues and critical factors which have arisen as a result of the Trade and Co-operation Agreement (TCA) signed with the EU on 24 December 2020 include: Rules of origin, product marking and product standards, customs regulations and VAT, tariffs, adherence to environmental and labour standards, sanitary and phytosanitary (SPS) regulations, exposure to broader EU regulations that apply to third countries and finally tax and VAT rules. A full list of TCA commitments and the effects they will have on exporters can be by scanning the QR code. (Hanske, Mathei and Galiai, London School of Economics: July 2021)
THE IMPLICATIONS FOR UK COMPANIES
UK companies that export (and import) are having to deal with not just one of the above effects but in some cases several of them simultaneously. To date, anecdotally, companies for the most part seem to be managing each of the problems serially on an ad hoc basis as and when they come across them as opposed to setting up longer-term, more robust processes to deal with all the issues as a whole. As we can safely assume the above effects will be in play for some time to come knowing that adjustments to the Trade and Cooperation Agreement (in negotiation with the EU) to improve trading conditions (from a UK perspective) will be slow, now may be the time for businesses to begin to put in place a more robust longer term international business strategy that includes longer-term processes and resolutions to the above issues and/or effects.
THE “NEW” CRITICAL PARTS OF AN INTERNATIONAL STRATEGY FOR EU TRADE
When selling (or importing to the EU), a firm’s international business strategy would normally be based for the most part on its target international markets; is the sector in the target country market rising or falling? What does competitor activity look like and does a PESTEL analysis provide any business environment opportunities or threats the company should be aware of. The process of actually getting goods from A to B and the company’s supply chain process for sales to or imports from the EU was traditionally straightforward and consistent in terms of cost and complexity implications. In order to create a robust and competitive proposition in the long run, any international business strategy for EU trade will now need to incorporate more analysis and development around getting goods and services from A to B in a profitable and timely manner to mitigate against any added costs that could now include:
Increased tariffs (import and export).
Tax and VAT.
SPS and other certification required by the EU.
Costs associated with new border regulations and becoming a Third
Country.
Transport (Road, Rail, Air and Sea).
New operational structure (company set-up in the EU for example).
New Incoterms (and terms of trading).
Cost of professional advice and services – legal, accountancy, certification, quality etc.
Cost of services sales – certification etc. This does not include other costs associated with any delay of products going to or arriving from the EU such as the intangible cost and damage to the brand in front of the dissatisfied customer and market. Reputational as well as client relationship damage can also be an issue if the seller’s prices are increased to cover the increased cost of export to create enough margin to ensure a reasonable profit on the transaction. Over the period the UK has been a part of the Single European Market when the absence of change to any shipping process covering the nuts and bolts of getting goods and services from A to B, shipping and logistics departments of companies have been considered the “Cinderella” service within businesses.
Given the significant change to this status quo, a company’s European markets or suppliers from the EU now have to be protected to ensure their continued loyalty and commitment. To this end, the development of any international business strategy by firms, where trade to and from the EU is concerned and on the assumption that markets in the EU are worth the candle, must now include significant analysis of supply chain, logistics and shipping processes for the longer run if they are to maintain market share, ensure supply chains remain effective and thereby maintain the competitive advantage needed to perform. For further support and guidance on international trade please visit the EU Exit Support Hub here hwchamber.co.uk/ eu-exit-hub or get in touch with the International Trade Team at the Chamber by emailing:
Internationaltrade@hwchamber.co.uk.
INTERNATIONAL TRADE TRAINING SPOTLIGHT
The selected training courses will support companies (importers and exporters) that have struggled with international trade processes to and from the EU and may be of interest to businesses who are experienced importers and exporters or those just beginning to expand internationally. All courses are £75+VAT for Members and £95+VAT for Non-members.
Basic Import Documentation – Monday 13 September 2.00-4.00pm An overview of the inter-connecting elements of importing goods into the UK.
ATA Carnet Procedures – Friday 24 September 10.00am-12.00pm Covers the procedures for the temporary movement of goods, both out of the UK at export and into the UK at import under the ATA Carnet Scheme.
Quick Guide to Origin Rules – Tuesday 14 September 10.00am-12.00pm A guide on the procedures and processes needed to ensure you have correct evidence of origin. Export Customs Declarations – Monday 27 September 10.00am-12.00pm Learn the key points of what export customs entries are, the key pieces of information needed and how customs export entries are made in the UK.
Import Customs Declarations – Wednesday 29 September 10.00am-12.00pm Understanding what import customs are and the key pieces of information needed by businesses for EU arrivals into the UK.
To book your place please contact
