The agreement reached between the United Kingdom and the EU after Brexit does not impose tariffs or tariffs on the flow of goods, but it does require the introduction of border controls and bureaucratic procedures that in practice are supplying extra costs for businesses. Supermarkets in the UK, for example, warn of rising costs in exports.
The mail systems have canceled part of their services and the fishing industry reports waste of products due to trade barriers. With the treaty reached between the EU and the United Kingdom, the feared "hard Brexit" was avoided by many, but, at least for the moment, that has not prevented noticeable changes from having an impact on trade in the first days after the separation. "Bureaucratic burden" Shane Brennan, CEO of Cold Chain Federation, representative of refrigerated storage and transportation companies, says that some problems are beginning to become apparent despite the fact that the amount of cross-border traffic is still quite low.
"Trade flows are still only about 50% of what we would expect, but even at those levels there is confusion and delays," Brennan told the BBC. "The feeling is that we are building quite a significant potential disruption," he added. Mark & Spencer, one of the UK's most popular supermarket chains, said the new trade deals were creating "very complex administrative processes." The chain admitted that the bureaucratic burden and potential tariffs on some exports would "significantly affect" its business in countries such as Ireland, the Czech Republic and France. Shapps, UK Transport Secretary, says he is working with companies to ensure an orderly transition to new trade deals.
Perfect storm Although the new agreement preserved the absence of fees and quotas to access the Single Market, most retail businesses that use the UK as a distribution center for European businesses could face fees when re-exporting goods back to the EU. "The absence of tariffs doesn't feel like that when you read the fine print," Steve Rowe, chief executive of Mark & Spencer, told Reuters. "For large companies there will be interim solutions that will take a long time, but for many others this will mean paying tariffs or reinvesting in the EU." The British Retail Consortium, which represents more than 170 retailers, is working with its members to seek short-term solutions and dialogue with the British government and the EU to offer final options and mitigate the effects of the new rates. The rule of the country of origin These new problems facing British businesses are due to a clause in the agreement known as the "home country rule". It argues that goods made or containing components manufactured outside the UK and the EU and resold by UK businesses are taxed when moving to the EU. Many British companies that export to the Union have a large part of their supply chain outside the borders of the bloc, which means that this clause affects them. Some have suspended sales to customers in the EU as they try to establish whether they should pay import duties or can switch to UK or EU components. Rotten fish On the other hand, fish and seafood exporters in Scotland claim to have been hit by the "perfect storm" in the Brexit disruption, threatening to sink a century-old industry. "These businesses do not transport rolls of toilet paper. Transporting high quality seafood has a time limit to reach the market in optimal condition," said Donna Fordyce, CEO of Seafood Scotland.
If the time limit passes, Fordyce said, those products "go to waste." Fordyce adds that the sector had already been weakened by the coronavirus, the closing of borders with France before Christmas and "trouble after trouble" associated with Brexit. They fear that without exports, fishing fleets will have little reason to go out to sea. "Before long we could see the destruction of a century old market that contributes significantly to the Scottish economy," warned Fordyce. Mail cancellation The British division of parcel service DPD said it has halted its European Roads Service over increased customs paperwork for parcels heading to the EU, including the Republic of Ireland. In an email to its business clients, the company said it had been a "challenging few days" for its international operations and that it would "stop and review" its service. It is scheduled to restart on January 13.
"It has now become clear that we are increasingly burdened with the new and more complex processes and additional customs data that we must request from packages sent to Europe," the firm wrote. Anger in European companies Some specialized online retailers in the EU have said they will no longer deliver to the UK due to tax changes that went into effect on January 1. Businesses are angry that they now face higher costs and more red tape to comply with UK tax authorities. At the same time, international shipping companies, including Federal Express and TNT, have said they are applying additional charges to shipments between the two markets. They said this reflected the increased investment they had to make to adjust their systems to deal with Brexit. Other firms in the sector, such as DHL and UPS, also took similar measures.
Source: DGCI News
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