We are living through times of unparalleled change. The pandemic has tested the resilience of our instit-utions, our companies and ourselves as individuals in ways we had never imagined. As we start to recover from this period of intense disruption, we will see what returns to normal – and what has changed forever.
What hasn’t changed in the importance of international trade and investment in the UK’s overall prosperity. Trade and investment create jobs and increase productivity by bringing the world's best technology and ideas to the UK, as well as providing access to export markets for our own companies.
In 1980, the UK accounted for over 6% of the global market for exported goods and services. By 2019, that had shrunk to less than 4%.
For this Forum, we bring together a group of influential experts to debate, discuss and inform on the subject of International Trade and Brexit.
Nick Broom
CEO, PVL UK & Middle East
Nick set up PVL in 2000 from scratch and now employs 50 staff. PVL is the biggest manufacturer of reflective vehicle safety markings to UK emergency and security fleets, and an established export market with partners in Europe and the Middle East.
Through diversification we are known for our capability with a wide range of materials that enable us to brand every surface.
www.pvluk.com
01444 810 180
nick@pvluk.com
Andrew Griggs
Senior Partner, Kreston Reeves
Andrew has significant experience working with both national and international businesses. He leads the firm’s international team and is a Board member of Kreston International, of which Kreston Reeves is a leading member. Andrew chairs the Kent Corporate Finance Alliance steering group and is a Non-Executive Director of Locate in Kent.
www.krestonreeves.com
+44 (0)330 124 1399
andrew.griggs@krestonreeves.com
Gary Hayes
Leader of the International Trade Department, Surrey Chambers of Commerce
Gary leads the International Trade Department at Surrey Chambers of Commerce, a position he has held since 2015, providing support to businesses across Surrey on international trade matters. He has been at the forefront of the Chambers response to Brexit, providing businesses with information, support and guidance and providing valuable feedback to the British Chambers of Commerce and government.
www.surrey-chambers.co.uk
01483 735540
gary.hayes@surrey-chambers.co.uk
Adam Williams
Partner, DMH Stallard
Adam Williams is a Partner at award-winning law firm, DMH Stallard. Adam heads up the firm’s Business Immigration team, and has a wealth of experience advising businesses on the immigration aspects of international deals and the movement of workers across borders.
www.dmhstallard.com
01483 467 413
Adam.Williams@dmhstallard.com
What are you seeing to be the problems with international trade due to Brexit?
GH: From what we are hearing from our members and businesses that we are supporting within areas such as documentation and customs, is that there is still a lot of confusion out there. There are still a huge amount of challenges regarding both Covid and Brexit, with some sectors coping particularly well, but others that have been decimated.
Are you finding that companies are stopping their export business because it’s become too complex?
GH: We are finding that a lot of businesses are ceasing to trade with Europe, or finding new markets, markets that they probably wouldn’t have looked at before Brexit. The far east is starting to pick up, along with eastern Europe as well. We are also noticing that there is a lot of interest in South America. Fortunately, for some of these countries we already have trade agreements which makes things a lot easier for companies.
AG: The first thing is that businesses crave certainty, and you quite rightly mention that we’ve had not only Brexit but also Covid, meaning there is a lot of uncertainty right now. I would agree that we are also seeing clients seeking new markets, particularly with the rise of the Asian markets. Britain has done a lot of trade with Europe in the past and clearly still wants to continue that history, but there have been a lot of obstructions because of Brexit. From what I’ve seen this isn’t stopping them from trading, but forcing them to find new ways of doing so.
Do you think this will be a permanent change, or do you think that Europe will wake up and look to smooth this out?
NB: I think that the main thing to consider currently is that there will be an adjustment period. Who knows how long that will be? We’ve entered a stage of ‘Long-Brexit’ where we will see the true affects of Brexit. For us, we can’t currently say if prices have drastically increased or not because the shipments we have coming in were priced pre-Brexit, the only difference is that the time has increased for everything to get done. What we do know is that we are now out, Brexit has happened and we have left the single market. I think that provides some level of certainty.
AG: I agree, this is what has been happening throughout 2020, people were unsure about what was going to occur in the long term, but now that we know we are out, we can start to develop our markets accordingly.
AW: This is much the same with the movement of people as well, however the timeline is slightly different. Due to Covid, borders have been closed and businesses have been occupied with other things, but now that they are opening back up again businesses are wanting to send teams out to other countries to do business. The difficulty is that each member state within the EU is able to have a different definition of what counts as business, when talking about travel. There isn’t a blanket set of rules that we can look to, and we are still in the middle of sorting out exactly where we stand with each nation, making this a much more long-term problem.
Does this not make it extremely difficult to send employees out to countries when we are dealing with 27 different sets of rules?
AW: Absolutely. We don’t yet know where the landmines are, we find it very difficult to deliver certainty just yet. The agreement we currently had was reached in December, EU member states simply haven’t had the time to get their heads around how they want to interpret it. For the Schengen visit visa, the EU has had years to sort it out, but for business visits it’s a different matter, like Nick said I think we will be moving into a Long-Brexit. Many companies are recruiting in the Republic of Ireland as a jumping-off point to enter Europe, but the problem there is that the UK is losing employment to Ireland and the prices are going up, so it’s not a be-all and end-all solution.
Well how about bringing people in from the EU, how complicated is it now to bring in a new employee from Europe?
AW: There is a relatively steep learning curve, but the major difference is that there is just one set of rules that we have to work with rather than 27, that makes it a lot easier. Currently our rules are static and we are confident that they are going to stay the same as well, which is an added layer of certainty. Having said that, it’s a trust relationship between UK businesses and the Home Office and Immigration. If you enter into a sponsor licence arrangement that’s on the basis that you act a certain way and you have certain compliance regimes in place. The risk factor starts at what might happen next after people arrive and you end up having a compliance visit, if you didn’t report that your employee hadn’t turned up for work within ten days and they find out, you may lose your licence. The more reliant we are on the licences, the greater the risk as more of our workforce has the potential to be stripped away from us.
We can up-skill you so you can manage it on a risk based approach though, there’s just another level of oversight that we haven’t been dealing with before Brexit. Again this comes down to that long-term view and where the complexity lies, and whether planning needs to be made for potential employees. The more we do with you now, the less we need to do tomorrow.
We’ve also got a situation where we are negotiating from a position of weakness with countries outside of the EU, they know that we need their market because we’ve lost our contract to the largest trading block on the planet.
There doesn’t seem to be a fix for this and the options are becoming smaller and smaller. With all this in consideration, there must be a major issue for SMEs?
GH: This is certainly challenging. Though, I’m more optimistic that we have some of the leading industries in the world, particularly when looking at tech industries. I think that because of this we do have a level of strength, we do have what businesses and countries want. Yes, there will be sectors that don’t fall into trade deals and that will lose out. Made in Britain has always been a fantastic plan, it’s internationally renowned. We are having discussions with India and the USA right now, some of the largest markets out there, we have to look at that as a good thing.
NB: We’ve experienced many of the problems that have just been mentioned. We wanted to send a team out to oversee a project in an EU member state, but we weren’t able to be sure that they could make it. There was never something wrong with our supply chain or our ability as a company, it was about whether our workforce would be able to make it or not, and our answer was that we simply didn’t know.
Historically the UK has been a good supplier, however when you put a barrier in there it doesn’t take much for someone to turn around and find another outlet. We’ve already lost the financial hub to Holland, Heathrow has already lost the world’s busiest airport status, how do you stop the slide?
AG: You say that, but the ICAEW business confidence monitor says that the financial services haven’t suffered over the last year. Certain sectors have and will continue to thrive going forwards. If we look at the country regionally, the South East has managed to maintain itself over the last year, and with the move towards digitalisation it’s building up a huge manufacturing base. I think that we’ll see a rebuilding of our primary economy and Britain will simply have to look at what sectors it wants to be famous for nationally and internationally.
AW: I think that I agree in terms of being able to build out of Brexit, and that some of these issues we are facing currently are just teething problems. However, there are wider issues that are seemingly unlikely to change, especially with the movement of people and the knock-on implications for business and the British brand. Our government doesn’t seem to have any appetite to enter into deals that will considerably open up our borders for workers coming in. This might be a problem when looking at those Indian markets that have been mentioned already, if we aren’t able to make a visa deal to loosen the restrictions on visa checkups, then my fear is that that will impact our ability to make lasting trade relations.
NB: I think you’re right, we do have a chance to rebuild our primary economy, especially when it comes to digital manufacturing. Covid has made so many people stay, and want to stay, at home to work which has freed up so much unused office space. If we can just convert that space into robotic tech factories, I think that would be a huge opportunity for our economy.
I get the feeling that the government is pinning it in the USA, I think that as the one of the biggest markets in the world and one of our closest allies, but I’m just not that sure if the USA are willing to do the same deal with us, we are much smaller.
GH: Something that I think we should be looking into is the developing countries, like Guyana and Nigeria. They might not be the biggest markets in the world but they are developing at a rate that is far faster than any other. We now have the ability to negotiate with them one-to-one rather than as a massive trading block, this will get the deals done so much quicker. If you look at the Canada deal that the EU did, that took three to four years which was quick for the EU. This breakage gives us so many opportunities to get into those developing markets.
AW: We definitely aren’t a juggernaut anymore, we have that flexibility that other nations don’t have when negotiating.
AG: Exactly. Something that amazes me is the power of the entrepreneur, and how versatile they can be in terms of penetrating those markets, even without a deal. Roughly 98% of the UK’s economy is made up of SMEs, Brexit is just another hiccup, businesses have hiccups, we will find a way around this.
Something that we haven’t yet touched on is certificates of origin, what is the situation with that and how complicated has it become?
GH: The main difference is that rather than something having a European Community Certification of Origin, it’s a UK certificate of origin, that’s literally it. There is no problem with that being recognised in Europe or the rest of the world, There has been a change in terms of preferential rules of origin, these are things such as EUR1 forms, and what we are finding is that a lot of businesses are falling foul of the rules of origin within that trade agreement. This falls down to three rules, the first being that the goods have to be manufactured in the UK or have a transformation in the UK, they have to leave the UK and they can’t leave any other country, they have to meet the specific product rules within the trade agreement if there are any. What we see is that a company will send something in from Europe and pay no tariffs on it, do a little to it, and then send it back to Europe where their customers will have to pay duties on it.
AG: This is unless you go through a Freeport. The Freeport allows you to change the goods within the Freeport environment and then send it on to another country with a lower tariff. This opens up the potential to have a manufacturing base within a Freeport if you are adding value to it. There still will be a tariff, it will just be lower.
GH: We have also gone back to carnets in countries like France and Belgium, so goods that are in a nation temporarily may also see a charge.
NB: I think one of the biggest things that government can do currently is encourage entrepreneurs to exploit the opportunities that are arising in this confusion. So many people don’t know about these new issues and we need that guidance from the government to really guide us through them.
I think that’s very interesting, do you think that the government understands entrepreneurs and how to help them through this period?
AW: There does seem to be a disconnect between the campaign trail and the entrepreneur. You still need that connection between government and entrepreneurs, especially when it comes to international matters.
NB: I fear that they don’t. I think that often the determination and the hard work that is put in by many entrepreneurs go unrewarded. I also find it particularly sad that so many SMEs aren’t heard by government and so many of their concerns go unsolved.
GH: This is why you have the likes of the Chambers of Commerce and the CBI. You need to speak to those and discuss the issues you are having with your business. We represent over 2000 businesses and we are talking to the UK government on a regular basis via the Chamber of Commerce. I highly recommend speaking to your Chamber of Commerce if you’re reading this to have a higher level of action taken on your issues. There are also International Chambers that are able to help you in Europe and around the world. I would strongly encourage getting in contact with them as well.
Is there anything that we can look to as business owners that will be able to help us with some of the major problems that we are facing?
AG: There are huge amounts of people that have had to pivot their careers over the last year. We are seeing that a large number of people are re-inventing themselves to take advantage of new areas that are popping up because of Brexit and Covid.
Are you suggesting that there will be a wastage of certain markets and a transformation into others?
NB: There will always be changing and mixing of markets, Covid and Brexit act as a catalyst for this. The question now is not what can help us cling to what we have, but where can we go next? We need top-down leadership to allow our markets to seize those opportunities that are arising.
AW: I think that’s right, our options are either to compete locally with the larger importers or do something different. The problem is that so many are unsure about how to compete with the giants like Amazon in these new markets. To be able to fully make use of them we need that support.
AG: I agree, and the voice of the entrepreneur is a campaign that needs to be taken nationwide. I feel we are at a time where we can make radical suggestions as we are in a state of change. It seems that the new generations are influencing our organisations like no other generation before and we have the opportunity to harness that way of thinking and create some major gains out of it.
Are there any positive outcomes to come out of Brexit to do with international trade?
NB: It’s over, we are out and the level of uncertainty is lower than before we left. This means we are able to start to move forward, the positives are that we can group as a nation and support business opportunities and drive markets abroad. We can exploit existing areas as well as develop and mould new areas under this new status quo.
AG: I think that as a nation we will become stronger and build greater resilience. I think it will force us to look at areas like productivity. I think that we will have to look at new ways of doing business, particularly in automation and the digital sectors. I think that this has made us pivot and take stock to come out of this stronger. With Brexit and the pandemic there’s an opportunity to get over hurdles that it may have taken you ten years to do so without these drivers.
AW: There is an opportunity in any level of uncertainty, I think that what is important is our ability to trail blaze in member states with good British products and services, being bold and brave and going to those outposts and talking to them to say that there must be a way to work together. There are opportunities even though there are boundaries. Bringing people in isn’t as hard as it may seem, so there is an opportunity there as well, it will require up-skilling but we are relatively certain that that is something we can learn and be stable with.
GH: What businesses have to remember is that there are a lot of countries in the world, far more than just the 27 in the EU. There are opportunities with each of these other countries. We have our future in our hands and businesses will have to mould that to whatever they want.
