Anyone trading with or from Northern Ireland since Brexit will be aware of the increased difficulties and effective border down the Irish Sea. It’s an issue which has been a constant bone of contention, especially with Northern Ireland politicians, leading to the collapse of the Stormont Assembly after the DUP withdrew.
Rishi Sunak, the UK Prime Minister and Ursula von der Leyen, President of the European Commission announced the so-called Windsor Framework on 27th February, hailed as the solution to the issues and a victory for common sense. But what does it mean for international trade? Will it actually improve the situation for UK-NI traders without closing the border between NI and the EU?
One of the key wins is the Green Lane/Red Lane idea where goods from the rest of the UK destined for Northern Ireland will follow a Green Lane, with a separate Red Lane for goods destined for or at risk of ending up in the EU. It has been publicised as if the Green Lane will have virtually no paperwork and movement of goods to NI will be like before Brexit.
As ever the devil is in the detail. There will in fact still be paperwork requirements for traders, albeit at a significantly reduced level. There will still be around 25 datapoints required. This is not being called a Customs Declaration, but some would argue in effect that is what it will be. Goods in the Green Lane will not be subject to systematic checks, though the facility for spot checks is there.
Parcels will not be subject to full customs declarations but from 2024 the parcel operators will be required to share data with the EU to manage smuggling risks.
Current bans on certain products like chilled sausages entering Northern Ireland as a result of EU law will be lifted, meaning anything available in UK supermarkets will once again be available in Northern Ireland. New labelling arrangements will come into force for some goods. UK VAT and Excise Duties will once again apply in Northern Ireland for alcoholic drinks for immediate consumption.
Northern Ireland retailers will have to qualify as trusted traders to benefit from the reduced paperwork, however. Rishi Sunak explains:
“It means food retailers like supermarkets, restaurants and wholesalers will no longer need hundreds of certificates for every lorry,” Sunak said. “If food is available on supermarket shelves in Great Britain, then it will be available on supermarket shelves in Northern Ireland.”
Personal, online shopping and business-to-business parcels sent from Britain into Northern Ireland “will have to complete no customs paperwork”, he said.
Download now: Checklist for exporting from the EU to the UK post-Brexit
Bans on seed potatoes and 11 types of native UK trees will also be lifted. Medicines approved in the UK will automatically be available in Northern Ireland. This is a major boost for pharmaceutical companies in the UK and the NHS.
Goods moving from NI to the rest of the UK will not require paperwork.
On the face of it, this is a good agreement for Northern Ireland, keeping its foot in both the UK and EU with it seems the minimum of bureaucracy. Yet could all be about to implode?
A key element of the framework is the so-called Stormont Break, designed to give the Northern Ireland Assembly a say on how EU laws are applied in Northern Ireland. It can effectively put a brake on new laws being implemented.
Read more: New Northern Ireland framework could unlock US trade deal
The DUP has indicated that it will oppose this element of the framework in a House of Commons vote on 22nd March 2023. If they do, then the future of the overall agreement could be in doubt. The bill will still pass on Wednesday as it has Labour support, but ultimately the DUP must be convinced in order to restart the power-sharing executive in Northern Ireland which has failed to sit for over a year.
Watch this space!
UK Prime Minister Rishi Sunak and President of the European Commission Ursula von der Leyen displayed what has become an increasingly uncommon showing of UK/EU cooperation and agreement late last month with the announcement of the breakthrough Windsor Framework.
The new deal for Northern Ireland fixes many of the problems that the previous protocol had thrown up for both businesses and individuals.
If agreed upon and enacted into law, some of the key takeaways for UK firms include:
- Green and red lanes for trade, with green lane goods destined for NI requiring significantly fewer checks and less paperwork, whilst red lane goods at risk of moving into the EU requiring normal checks
- New data sharing and labelling arrangements (TBC)
- Goods moving from NI to GB will not require export declarations
- Specific GB products like potato seeds and sausages will once again be sold in NI
- Updated rules on pets, parcels and medicines too
Breakthrough could reignite US trade deal talks
Both Trump and Biden have been outspoken in their ‘disappointment’ at the state in which Northern Ireland was left as a result of the old protocol… and that disappointment actively put a blocker on talks towards a mega trade deal between the two nations.
The announcement of the Windsor Framework was greeted warmly by the current President who noted its importance in upholding the Good Friday Agreement.
A White House source then hinted towards wider benefits, noting that: “We believe that this will help improve the prosperity of both the EU and the UK, and will open up all kinds of new avenues for trade that were somewhat at risk.”
Download now: Post-Brexit planning checklist
The government had been hoping for a swift trade deal to be agreed upon with its largest ally in the wake of the Brexit vote and has since opted instead to pursue economic arrangements with individual States.
New developments could mean a more comprehensive agreement is back on the table, whilst talks for the UK to gain access to the CPTPP could also be reignited.
The Trade and Co-operation Agreement (TCA) between the UK and EU in the wake of Brexit is delivering more headaches than benefits for the majority of exporting SMEs.
That’s according to data collected in December last year by the British Chambers of Commerce from almost 1,200 surveyed businesses.
The survey found that almost eight in 10 firms had found the Brexit deal was not helpful in their drive to increase sales or grow their business overall, whilst more than half continue to face difficulties adapting to the new rules for trading goods.
Download now: 7 key changes to UK-EU trade post-Brexit
Meanwhile, 45% of service businesses said they’re still trying to adapt, whilst over four in 10 said they’re finding it difficult to obtain visas for new staff.
These difficulties are directly translating into business performance too.
The survey also found that 80% of firms are seeing the cost of importing increase, whilst more than half have seen their margins cut. Three-quarters of manufacturers also said they’d had issues with shortages too.
One manufacturer commented on their experience that: “Brexit has been the biggest ever imposition of bureaucracy on business.
“Simple importing of parts to fix broken machines or raw materials from the EU have become a major time-consuming nightmare for small businesses, and Brexit-related logistics delays are a massive cost when machines are stood waiting for parts. We used to export lesser amounts to the EU, but the bureaucracy makes it no longer worthwhile.”
To help alleviate some of the issues UK businesses are facing, the British Chamber suggested five fixes that the government should look to introduce:
- Create a supplementary deal with the EU that either eliminates or reduces the complexity of exporting food for SMEs.
- Establish a supplementary deal, like Norway’s, that exempts smaller firms from the requirement to have a fiscal representative for VAT in the EU
- Allow CE-marked goods and components to continue to be used in Great Britain after 2024.
- Make side deals with the EU and member states to allow UK firms to travel for longer and work in Europe.
- Reach an agreement on the future of the Protocol on Ireland/Northern Ireland with the European Commission in the early months of 2023, to stabilise our trading relationship.
If your business is suffering as a result of Brexit, combined with current global economic headwinds, then Go Exporting can help.
Our international trade consultancy helps businesses of all sizes to expand into new markets, from research and strategy to full export implementation and sales generation.
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New data has highlighted how a range of global economic factors are hampering growth efforts for small and medium-sized exporters.
Data from more than 2,300 UK SMEs as part of the British Chamber of Commerce’s quarterly Trade Confidence Outlook for Q4 found that just one in four had seen international sales growth at the backend of 2022, with a further 47% saying sales had stagnated if not fallen.
The picture for 2023 looks equally stagnant too with 28% expecting a sales slump against 24% saying they could see an increase in demand.
Total revenues are expected to rise though as cost pressures and shrinking margins mean 64% of respondents are planning to increase pricing over the coming months.
Difficult business environment
Consumers and businesses alike have struggled in the post-pandemic era to really kick on once more with the cost of living, inflation and economic headwinds driven by the war in Ukraine contributing to a trading environment some are finding more difficult than during the lockdowns.
Additional factors such as Brexit have made it tougher, and more expensive, for UK firms in particular to access the EU market.
Respondents to the BCC survey noted that energy (72%), labour (67%) and raw materials (61%) were the biggest cost pressures being faced – three critical areas that it’s hard to mitigate against.
Head of policy at the Chamber, Willian Bain, said of the survey results that: “Last autumn the World Trade Organisation forecast global trade growth of just 1% in 2023, down from 3% in 2022. This is creating huge headwinds for smaller UK firms battered by the pandemic, Brexit and energy price shocks.
“Against this background, it could be some time before the global shipping and trading systems return to anything approaching normality.
“The UK government cannot afford to sit idly by as we head into such uncertain trading conditions. It must throw a lifeline to our struggling exporters who are desperately trying to keep their heads above water.”
Download now: 7 key changes to UK-EU trade post-Brexit
Bain continued: “Outside of the EU, the US is our biggest trading partner, and the one that BCC members are most interested in, yet progress on free trade talks are stalled. As the Good Friday Agreement anniversary looms the UK has a golden opportunity to transform our trading relationship with our two biggest export markets in one fell swoop.
“Other measures Government should consider include providing effective end-to-end trade finance and setting up a trade accelerator – by working alongside our global network to help firms enter new markets and maximise sales.”
Since officially leaving the EU, the UK has seen exports reduce by a quarter, with a total of £2.4 billion in lost sales. Certain countries have seen more of a dip than others. For example, Spain, Germany, and Italy’s imports from Britain are down by 50.6%, 44.5%, and 43.3%, respectively. Even Ireland has seen a significant decline, which is particularly worrying, as it was Britain’s largest country for food exporting.
All of this means a severe impact on Britain’s economy, something which recent data from the ONS has highlighted in stark reality.
Brexit’s impact on food and beverage exports
With Britain no longer working under the EU’s trading policies, trade isn’t as simple. With more barriers in place, there are increased costs, meaning countries in the EU aren’t as willing to import.
The TCA – the EU-UK Trade and Cooperation – was a free trade agreement signed on 30th December 2020, which became into effect on 1st January 2021. This agreement saw the tightening of rules and detailed all the customs requirements and restrictions.
This has particularly affected the food and drink sectors with more red tape increasing costs and causing delays at ports.
Brexit is not entirely at fault, though – the COVID pandemic has also had a significant impact on food and drink exports too.
OBR on the post-Brexit economy
The TCA changed everything in terms of trading between Britain and the EU. Before, it was almost entirely free trade; now, different policies are leading to a reduction in activity. While there was a notable rise in food and drink exports to non-EU countries (11%), that growth did not make up for the loss of trade into the EU.
The OBR stated that Brexit equalled a reduction of 4% of the UK’s potential GPD, which is significant. It also said that the pandemic has had a severe impact and could further that by another 2%.
“The OBR observed that the UK’s goods trade with the rest of the world experienced similarly sharp falls at the start of the pandemic.”
These observations indicate that UK businesses are struggling with exporting, trading, and overall economic growth. It’s affecting everyone, but if you’re a trader, you are likely to be looking for a solution. You can still grow internationally by thinking strategically, adapting your methods, and finding new markets.
Create an export strategy with Go Exporting
Whilst Brexit has hampered trade with the EU, there are opportunities for UK firms to grow through Brexit growing pains by looking further afield.
Our international trade consultancy can help identify new markets to grow into. We have an expert team ready to answer your questions, so don’t hesitate to get in touch.
The majority of exporters in the UK don’t understand the principles behind the government’s future plans to digitise international trade.
According to a poll during an IOE&IT webinar last month, just 13% of participants on the call understood key terms to do with the digitisation strategy, including ‘single trade window’ and ‘ecosystem of trust’, and aren’t currently making preparations surrounding the 2025 Border Strategy.
Deputy director of the IOE&IT Academy, Vicky Payne, said it wasn’t a surprise that such a low number were aware of upcoming changes to UK export rules and procedures, saying that: “They’re new terms for traders and anyone involved in international trade to get used to.
“It is new to people, but you need to start following government updates about programs like the Single Trade Window because it will become more important going forward.”
The digitalisation of trade is expected to add around 1% to UK GDP with over £200 billion in efficiency savings according to the International Chamber of Commerce, but with all the upheaval surrounding Brexit and businesses having to adapt to a new trading environment with the EU, it’s no surprise that exporting firms are yet to look further down to locate new challenges.
Read more: Irish trade re-focuses on EU markets, away from GB
However, both the single trade window, and ecosystem of trust, could really help exporting firms mitigate some of the additional red tape, costs and delays seen in the wake of Brexit by helping to streamline and standardise processes.
Whilst UK trade bodies believe that a potential functional launch date for the scheme of 2027 is doable, 40% of those attending the IOE&IT webinar said that lack of internal IT skills and resources would be a major stumbling block to adopting any new trading system, though over half said it would benefit speed and efficiency of international trading operations.
Data from Dublin Port has shown how trade volume into Great Britain has fallen since Brexit, whilst exports into the EU have grown.
From January to September last year, overall port throughput fell 3.3% compared to the year before, whilst imports saw a small 0.4% rise.
CEO of Dublin Port, Eamonn O’Reilly, noted that there has been a switch in trade activity since Brexit.
He said: “After nine months, the impact of Brexit on the profile of Dublin Ports’ trade has become clear with volumes on unitised services to Great Britain declining by just over one-fifth while volumes on services to Continental Europe increased by more than a more a third.
“Because of this, our unitised volumes are now split 50/50 between GB ports and ports in Continental Europe. Before Brexit, GB ports accounted for almost two-thirds.”
This shift in the direction of trade activity is having a negative impact on the port, with the volume of trailers moving through the port reducing. Almost 60,000 driver-accompanied loads that would have been expected before Brexit are now going through as unaccompanied trailers.
Read more: UK-EU trade flows down a fifth against no-Brexit expectations
O’Reilly commented further: “This is bad news from a port capacity perspective.
“Our interpretation of this is that the average size of a load in a single container or trailer has reduced because operational efficiencies which the Single European Market had facilitated in trade with Britain has been removed because of Brexit.”
Get post-Brexit trade support
If your business is still working to adapt to the post-Brexit trading environment, Go Exporting can help. Our free post-Brexit planning checklist is a great place to start with ensuring you have everything in place to best mitigate – and look to take advantage of – the new trading arrangement.
For strategic support and advice, learn more about our Brexit consultancy services.
A new study has highlighted how UK exports have suffered a big hit in the wake of leaving the EU.
A report from the Economic and Social Research Institute showed a substantial reduction in the number of products traded, with activity between the UK into the EU down 16% against expected levels before Brexit.
Things are even worse in the other direction, with trade from the EU back into the UK down by 20% against a non-Brexit scenario.
However, the report did note that results vary depending on the data source and comparison used, highlighting the difficulty in definitively comparing the trading environment now against how it could have been if the UK had remained with the Single Market.
Trade levels have recovered most of their pre-2021 falls in terms of value, but remain a lot lower than would have been expected compared to the growth that the EU is seeing trading with other nations.
Export volumes from the UK around the world have continued to grow but at a slow rate, potentially as a spill-over effect from Brexit on supply chains.
Business groups have urged the government to do more to help remove barriers to trade that Brexit has created.
Growing through Brexit pains
Businesses around the UK have been struggling to adapt to the new trading environment with the EU, with more checks on goods and delays at borders putting pressure on costs and supply chains.
New data last month showed how almost half of UK exporters say they’re exporting to the EU less, though the situation is gradually improving as businesses adapt.
Issues with new compliance and regulations were cited as the main reason why UK exporters were facing difficulties, with 47% saying that compliance with the new rules was their primary problem, and one in three said new additional costs were hampering export efforts.
If your business has been negatively affected by Brexit and are looking at ways to mitigate any loss of international earnings, Go Exporting can help.
Our internal trade consultancy services have helped businesses of all sizes to expand their horizons and see growth in new international markets, finding where demand is strongest for their products and services, and creating winning launch strategies.
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Port of Dover authorities have warned they’re expecting another summer of disruption once the new EU border system is introduced.
Dough Bannister, CEO of the port, said that the new EU border Entry/Exit System, or EES, that’s set to be introduced in May next year could cause more delays.
Bannister commented that: “We need to see what the technology is going to be like and [we need] a sufficient amount of time to trial, test and train to use that technology before implementation.”
The system, which relates to the movement of people, will see the requirement for biometric checks for all non-EU passport holders (now including British citizens) to be registered the first time they enter an EU member state – including fingertips and photos.
Trials of the technology are taking place this month, though Bannister warned he expected the new procedures from May next year to take five times longer than current procedures – up to 10 minutes per vehicle.
“If the border gets sticky, it backs up very, very quickly.”
The impact of delays will also be felt by exporters shipping goods onto the continent with lorries destined for Europe getting caught up in the delays.
Read more: Almost half of UK exporters say they’re exporting to EU less, but situation improving
The Home Office has noted in response that it is working ‘to make sure passengers are prepared and do not experience unnecessary delays at the border due to new entry and exit system checks being introduced next year’.
Exports from UK businesses into the EU trading bloc are starting to recover following Brexit and the impact of Covid-19, but almost half of firms say total trading volume is still less than it was.
In a webinar hosted by Pail McComb of the Department for International Trade, data shared indicated that exports to the continent have increased 11% in four quarters to 2022, noting that ‘in overall trade we’re definitely seeing an increase, and the trend is in the right direction, but maybe the pace of recovery isn’t quite as quick as we would have wanted’.
Data from delegates on the webinar pointed to 45% saying that their exports to the EU had been negatively impacted, with a quarter saying things were about the same as before Brexit. Just 3% said export volumes have increased over the period.
Watch the webinar in full below:
Issues with new compliance and regulations was cited as the main reason why UK exporters were meeting challenges, with 47% saying that compliance with the new rules was their primary problem, whilst one in three said new additional costs were hampering export efforts.
If your business has faced challenges exporting into the EU following the UK’s departure from the Single Market, then Go Exporting can help.
We have three free resources you can access right now to help check where you are right now, and to plan for the procedural and strategic changes you should be making to ensure your business can look to capitalise on the potential benefits of Brexit, as well as advice for EU firms looking to export into the British Isles.
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