EU-UK TCA: IS IT DELIVERING FOR GLOBAL BRITAIN?
Updated: Jan 23
A recent survey conducted by the British Chambers of Commerce (BCC) outlines how the EU-UK Trade and Co-operation Agreement (TCA) has fallen short in delivering all the benefits it was said to achieve. Greater Manchester Chamber of Commerce has been at the forefront of supporting businesses through advice and bespoke trade and customs services to help them adapt to the new way of trading, but as we move into our second year, it is clear many businesses have come to be disillussioned with what the TCA was meant to deliver for Global Britain. BCC’s latest research on over 1,000 businesses highlights a wide range of issues with the TCA:
71% of exporters say EU trade deal is not enabling them to grow or increase sales
Only 1 in 8 exporters think it is helping them grow or increase sales
Majority think it has pushed up costs, increased paperwork and delays, and put the UK at a competitive disadvantage.
The BCC believes urgent steps should be taken to address these problems, so the UK Government’s ambition to increase the number of firms exporting can be met. Overall, just 8% of firms agreed that the Trade and Co-operation Agreement (TCA) was ‘enabling their business to grow or increase sales’, while 54% disagreed. For UK exporters 12% agreed that the TCA was helping them while 71% disagreed.
When asked to comment on the specific advantage (for those that agreed) or disadvantage (for those that disagreed) of the trade deal, 59 firms identified an advantage, while 320 cited a disadvantage.
Of the 59 comments received on the advantage of the TCA, firms said:
It had allowed some companies to continue to trade without significant change
It had encouraged firms to look at other global markets
It had provided stability to allow firms to plan.
Of the 320 comments received on the disadvantage of the TCA, firms said:
It had led to rising costs for companies and their clients
Smaller businesses did not have the time and money to deal with the bureaucracy it had introduced
It had put off EU customers from considering UK goods and services – due to the perceived costs and complexities.
This follows BCC research in October 2021, which found that 60% of exporters were facing difficulties adapting to the changes from the TCA on goods trade, while 17% found the changes easy.
The Northwest region latest export stats up to Q3-2021, showed the region was only 4% up in export values compared with Q1-Q3 2019 cumulative values, although exports to the EU were down by 2% in the same comparative period. Overall imports on the other hand were down by 1% and from the EU, a total of 10%.
Greater Manchester Chamber has also seen a steady decline in export values since we officially left the EU, with current export consignment values being in average 23% down in 2021-22 compared with 2019-20.
Responding to the latest figures, Susana Cordoba, Head of International Trade at Greater Manchester Chamber, said: “As from previous findings, we believe the UK Government must continue to work hard listening to what businesses are facing on the ground and offering practical solutions and support. Many SMES are still struggling as they lack the knowledge and skills set to adapt to the new way of trading.”
Reacting to the findings, William Bain, Head of Trade Policy at the BCC, said: “This is the latest BCC research to clearly show there are issues with the EU trade deal that need to be improved. Yet it could be so different. There are five relatively simple steps that UK and EU policymakers could take to ease the burden placed on businesses struggling with the trade deal.
“Nearly all of the businesses in this research have fewer than 250 employees and these smaller firms are feeling most of the pain of the new burdens in the TCA.
“Many of these companies have neither the time, staff or money to deal with the additional paperwork and rising costs involved with EU trade, nor can they afford to set up a new base in Europe or pay for intermediaries to represent them.
“But if both sides take a pragmatic approach, they could reach a new understanding on the rules and then build on that further.
“Accredited Chambers of Commerce support the UK Government’s ambition to massively increase the number of firms exporting. If we can free up the flow of goods and services into the EU, our largest overseas market, it will go a long way to realising that goal.”
The BCC’s five key issues, and the solutions needed, to improve EU trade are:
ISSUE: Export health certificates cost too much and take up too much time for smaller food exporters.
SOLUTION: We need a supplementary deal on this which either eliminates or reduces the complexity of exporting food for these firms.
ISSUE: Some companies are being asked to register in multiple EU states for VAT in order to sell online to customers there.
SOLUTION: We need a supplementary deal, like Norway’s with the EU. This exempts the smallest firms from the requirement to have a fiscal representative and incur these duplicate costs.
ISSUE: As things stand CE marked industrial and electrical products will not be permitted for sale on the market in Great Britain from January 2023. The same is true for components and spares.
SOLUTION: We need action from the Government to help businesses with these timelines. Many firms are far from convinced about a ban on CE marked goods in Great Britain.
ISSUE: UK firms facing limitations on business travel and work activities in the EU.
SOLUTION: Government needs to make side deals with the EU and member states to boost access in this area as a priority for 2022.
ISSUE: Companies starting to be pursued in respect of import customs declarations deferred from last year.
SOLUTION: We need a pragmatic approach to enforcement to ensure companies recovering from the pandemic do not face heavy-handed demands too quickly on import payments, or paperwork.
HAVE YOUR SAY
Are you a Greater Manchester business facing barriers when trading with the EU? Email our Head of International Trade at firstname.lastname@example.org. Your feedback is crucial in helping shape and influence ongoing discussions on the TCA.
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Sources: BCC, ONS, HRMC