North East England Chamber of Commerce Submits Evidence on Impact of EU Exit.
Date published:
One year on from the UK’s exit from the European Union (EU) he North East England Chamber of Commerce submitted evidence to the International Trade Committee on the UK-EU Trade and Co-Operation Agreement (TCA).
Our evidence outlined the implementation, impact and future of the TCA across the North East business community. Evidence has been collected from Chamber surveys, member feedback and official data to demonstrate the TCA’s impact since 1st January 2020.
The short implementation period, between 24th December 2020-1st January 2021, meant many were unprepared, or unaware of the implications of the TCA on their business model. The wide reaching changes implemented across the international community and activities caused major disruption in the early months, as businesses grappled to understand new trading arrangements.
As the year progressed, understanding of the deal developed, but complexity of trade barriers increased, meaning the niche and technical elements of the agreement were put to test. In October we welcomed Director of Border & Policy Group, Tom Smith, to discuss technical barriers in depth with a roundtable of members.
Since the TCA’s implementation, the below have been recurring issues:
- Preferential Origin- calculating and complying with new rules of origin and maintaining a goods preference as it moves between the UK and EU. Likewise, managing preference or fiscal barriers on goods destined for the EU, coming via the UK, and vice versa. Managing proof of origin, a growing issue.
- VAT- paying of duties and VAT in Europe continues to be a prominent and complicated issue and potential barrier to trade. Members struggle to adapt to the state-to-state differences in VAT rates and requirements to comply with payment.
- Customs- both the completion of and time taken for new customs processes has become burdensome for business, with new processes being introduced into the EU this year, undermining UK suppliers.
- Northern Ireland- The requirements for, communication and implementation of the Irish protocol has jeopardise many trading relationships, with some being locked out of Ireland.
Beyond this, we have experienced member issues with migration, regulations and services, what’s more it is important to remember trade is a two-way dynamic, with members reporting issues from EU customers. These complications come at a time of constricted supply chains and unpredictable global restrictions as a result of the pandemic.
If barriers to trade are not addressed, and without support to overcome them, we fear the region will be less competitive internationally. Having lost unfettered access to the European Market, and erecting permanent trade barriers, members report EU clients are beginning to look for other EU suppliers, while third-country partners seek EU operators to service the 450million population market, without further trade barriers seen between UK-EU.
According to HMRC regional trade data, the North East has experienced a 22% decline in North East-EU trade in 2021, contributing to a 7% decline in total regional trade. According to our surveys, 75% of regional business believe UK-EU Exit to have had a negative impact, with 38% reporting reduced or lost sales with EU partners.
We submitted this evidence in the hope that it can help inform and shape UK customs and trade policy, to better serve the needs of the North East business community.
Summary of recommendations
- Reopen and expand access to funding for training for businesses to upskill staff which has equal coverage to exporters and importers.
- Communication regarding legislation and trade processes with the island of Ireland is clear and communicated timely. Ensure the stability of trade on and with the island of Ireland.
- Continue to update guidance regularly to ensure business knowledge is as great as possible and ensure that guidance is focused on ‘actions’ that business can or must take. Intermediary guidance for businesses to break down the full detailed information on the government website should be available.
- Approach to divergence from EU standards must not disrupt trade between the UK and the EU, or jeopardise any future UK project bids and partnerships.
We will always campaign on behalf our members, if you have been affected by any issues in International Trade, please let us know at: [email protected]