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Manufacturers ask Government to help cure post-Brexit blues

02 July, 2021

Almost all (96%) of UK manufacturers that do business with Europe say they have faced challenges since the new post-Brexit trading arrangements with the EU were introduced at the start of 2021. A survey conducted by the manufacturers’ organisation Make UK reveals that almost half (47%) of the companies had initial difficulties with the new customs processes, although this has eased as their understanding of the rules has improved

But more than a third (36%) of those surveyed – mainly small and medium-sized companies – report that they are still struggling with the new customs procedures and paperwork, with clearance across customs borders being their biggest gripe. And more than a quarter (29%) of them are finding demonstrating the origin of their products a challenge.

Based on the survey, Make UK has produced a report, called Trade and Cooperation with the EU: Six Months On, which asks the UK Government to help ease the continuing difficulties with the new trading environment. These difficulties, it argues, have ramped up manufacturers’ costs, caused import and export delays, and are hampering smooth trade as companies struggle to recover from the Covid-19 pandemic.

Make UK reports that 86% of the manufacturers it quizzed want the Government to work with the EU to ease the difficulties around export processes and customs formalities.

The new rules to prove the origin of products were one of the last elements of the trade deal to become known, leaving manufacturers with little time to prepare or understand the detail. Almost two in five manufacturers see Rules of Origin as a key priority for further discussions with the EU – especially on the issue of goods that cross the UK/EU border multiple times during production as part of an integrated supply chain.

Another concern is that the UK falling behind the EU in implementing regulations, resulting in a “divergence by inertia” that the manufacturers fear will spread. The UK has taken back control over legislation including employment regulations, environment and climate change and, critically, product legislation and rules. But the UK is not keeping up with changes in EU rules.

For example, regulations covering medical devices changed in the EU in May, but have not been implemented in UK law, leaving UK companies at risk of not being compliant. Make UK says that, as time goes by, EU rule changes will also impact the machinery and chemicals sectors.

“It is clear that much of the trade and co-operation 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,” says Make UK CEO, Stephen Phipson.

Make UK’s report calls on the the UK Government to help ease continuing difficulties with the post-Brexit trading environment

“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,” he points out. “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.

“Similarly, it is important to smooth origin issues where goods go back and forth between the UK and EU several times during their production as part of the integrated supply chains built up over the past four decades.

“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.”

Make UK describes the issue of business travel, which is starting to unlock post-Covid, as “a ticking time bomb”, because mobility between the UK and EU remains largely untested. A third of the manufacturers surveyed said that the Government should look to improve mobility between the UK and EU to allow companies to service their contracts.

While Make UK welcomes the provisions for short-term business visits – including after-sales care, such as the installation and servicing of equipment – it adds that this needs to be extended to cover contractors, which many manufacturers use to carry out these activities across the EU.

Regulations key to manufacturers are now solely in the control of UK legislators. Make UK says the Government must decide how this sovereignty is used to benefit UK manufacturers in the UK.

Most of the 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.

Make UK:  Twitter  LinkedIn

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