Government urged to work collaboratively with the EU to ease trading difficulties

Posted on 1 Jul 2021 by The Manufacturer

Britain’s manufacturers are calling on the Government to help them ease continued difficulties with the new trading environment, according to the following Make UK research.

The current environment for UK manufacturers is fraught with difficulties such as ramped up costs, import and export delays and is hampering smooth trading processes as many companies struggle to recover from the COVID 19 pandemic.

Make UK research has revealed:

  • 96% of companies have faced challenges since the start of the year with new trading environment.
  • Nearly half (47%) had difficulty with customs processes initially. This has eased as companies’ understanding of the new rules improved.
  • But over a third (36%) – mainly small and medium sized companies – are still struggling with the new customs procedures and paperwork.
  • More than a quarter (29%) say demonstrating the origin of their products is a challenge.
  • Business travel remains almost completely untested as international travel beings to reopen for business bringing with it critical risk for companies who still do not understand the business travel rules for the different EU member states.
  • 86% of manufacturers want Government to work with the EU to ease the difficulties around export processes and customs formalities.
  • Regulation key to manufacturers is now solely in the control of UK legislators. The UK Government must decide how this sovereignty is used to benefit manufacturers in the UK; the majority of manufacturers favour cooperation with the EU.

The  research showed that just over a third of small and medium sized companies are still reporting ongoing challenges with customs paperwork and processes, with clearance across customs borders posing the greatest difficulty.

World flags World Trade International America European Union Exports Imports Supply Chain Stock - image courtesy of Depositphotos.

New rules to prove the origin of a product were one of the last elements of the trade deal to become known, leaving manufacturers little time to prepare or understand the detail. Almost two in five manufacturers see Rules of Origin as a key priority for further discussion with the EU, particularly looking to find a solution to the issue of goods which cross the UK/EU border multiple times during production as part of an integrated supply chain process.

The UK has taken back control over legislation including employment regulation, environment and climate change and critically, product legislation and rules. This is a growing concern for manufacturers who have already seen regulation around medical devices change in the EU in May, but UK law has not kept up, leaving UK companies at risk of not being compliant. Companies fear this “divergence by inertia” will spread, and it is likely EU rule changes will also impact machinery and chemicals as time goes on.

With business travel starting to unlock post COVID, a ticking time bomb awaits as mobility between the UK and EU remains largely untested. A third of manufacturers surveyed said the Government should look to improve mobility between the UK and EU to allow companies to deliver the service areas of their contracts.

While Make UK welcomed the provisions for short term business visits, including aftersales care such as installation and servicing of equipment, this needs to be extended to cover contractors which many manufacturers use to carry out these activities across the EU.

Stephen Phipson, CEO Make UK, the manufacturers’ organisation said: “It is clear that much of the trade and cooperation agreement needs to be worked on further in order to smooth out continuing difficulties for both UK and EU companies in a number of areas including customs, mobility, legislation and standards.

“Government should also work with the EU to find a solution to the issue over origin of goods which is proving extremely challenging for many companies, particularly where the UK and EU both have a Free Trade Agreement with the same third country. The UK and EU need to look at third party cumulation across the UK-EU TCA which would bring undoubted benefits for both sides of the equation.

“Moreover, we would urge the Government to think very carefully about the implications of any divergence from the current EU standards and rules to which we both adhere and look to introduce a national interest test to assess the impact on trade and the economic benefits of any proposed changes before they happen.”

Most companies surveyed said they wished to see cooperation with the EU across a full spectrum of activities, while maintaining the right to take different paths if of economic and trade benefit to the UK.

Images courtesy of Depositphotos