Andrea Collins is Managing Director of the Export Department and has more than 24 years of experience in exporting to Europe and Overseas. On behalf of Leicester/shire Growth Hub she has been delivering information sessions and one-to-one consultancy to support businesses who wish to continue trading with Europe. In the first of a three-part blog, she discusses the issues that have emerged over the last three months.
There has been a lot of engagement from companies across Leicester and Leicestershire, keen to understand the implications of the UK’s exit from the European Union and, believe me, there is a lot to understand and some of it has still not been finalised.
We have had some of the Growth Hub’s typical small business clients attending but a number of people we’ve been talking to are larger companies with 50 to 200 employees. Because they are larger, with more funds, they can ride out the transition period and they know that the EU still represents a great market for them but there is quite a lot of pain involved.
These pain points are pretty much as we predicted before Christmas: companies are struggling to get to grips with Product Origin which is needed to trade under the Trade and Co-operation agreement. And VAT is still causing massive issues. It’s this VAT element that has meant that some of our ecommerce retailers have just decided to stop shipping. The stress is too much, and the costs are just too high particularly if they’re using fast parcel operators. I’ve looked at their invoices and there are more and more costs being added – deferment fees, Brexit fees, declaration fees – and it just starts to snowball out of control, eroding the margins. We have also seen a significantly high volume of consumer goods returned to the UK with EU consumers refusing to pay the duty and/or VAT on import.
Northern Ireland is causing massive pain and that’s essentially why the Government has delayed some of the processes required to ship from Great Britain; the EU isn’t very happy about this unilateral action. We get a lot of companies coming through that might have had exclusivity over the UK and Ireland for a company based in the EU. Now that it’s very difficult to deal with Ireland from the UK, they’re having to think about whether they should pass Ireland back to the EU manufacturer because it’s too complex for UK companies to ship products into there.
Other things that are causing frustration on the export side of things are those sanitary and phytosanitary measures; getting the right certificates for the shipment of animals, foods and plants is difficult and unknown territory for some UK companies. However, we’re still at the negotiation table with the EU so there’s a chance that we may come together and agree a way forward on these. One thing that doesn’t help our negotiations right now is that the EU isn’t feeling the same pain as the UK. Their exporters aren’t having to do anything additional to get product into the UK whereas we’re having to do a lot to get product into the EU. Until the EU starts to feel that pain – which could be as late as October or January next year, then there’s no real requirement for them to come back to the table and try to strike agreements for equivalence on those sanitary and phytosanitary measures.
Overall, if your company has decided it doesn’t want to trade with Europe anymore, there’s probably not much I can say to change your mind. But if you’re a company for whom Europe makes up a significant part of your business, it is worth weathering the storm and understanding as much as you can about how to get round some of these challenges because there are ways we can help you with that.
Free webinars coming up:
- 10 May | 1-2-1 support sessions to help you manage issues with EU trade
- 11 May | Overcoming the new complexities of B2C sales into the EU
- 25 May | How can UK service companies adjust to the new way of trading with the EU?
For more EU support information from the Growth Hub, visit www.bizgateway.org.uk/trading-with-europe-support.
