Brexit: Firms warn of problems as new EU trade rules kick in

2 weeks ago
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Truck at Dover

EPA

New border rules introduced last week are already creating problems for exporters and traders, say firms.

On Friday, Marks & Spencer became the latest company to warn of the administrative burden and increase in export costs to some countries.

Parcels firm DPD has already suspended some services and there have been warnings from seafood exporters.

One export trade body told the BBC there was a “growing problem and sense of unease” among its members.

Shane Brennan, chief executive of the Cold Chain Federation, which represents chilled transport and storage companies, said the emerging problems have come despite the amount of cross border traffic still being quite low.

“Trade flows are still only about 50% of what we would expect, but even at those levels we are seeing levels of confusion and delays,” he told the BBC’s Today programme. “The feeling is we are building to quite a significant potential disruption.”

M&S said the new trade arrangements were creating “very complex administrative processes”. The red tape burden, along with potential tariffs on some exports “will significantly impact our businesses” in Ireland, the Czech Republic, and France, the retailer said.

The retailer added that the free trade agreement with the EU would not mean extra tariffs on its core UK sales.

A government spokesman acknowledged that there had been “some issues”, but said ministers had always been clear there would be some disruption at the end of the transition period.

Earlier, Transport Secretary Grant Shapps told the BBC that it was estimated only about 1% of trucks have turned up at ports without the correct paperwork.

However, Labour accused the government of failing to prepare properly. Shadow transport secretary Jim McMahon said: “It’s clear the problems caused by its poor preparation and delaying tactics have not gone away.

“Ministers have to get a grip on this and make sure essential workers are actually able to do their jobs, or we risk seeing a repeat of the chaos on our roads at Christmas.”

Perfect storm

The UK sealed a trade deal with the European Union (EU) on 24 December that was billed as preserving its zero-tariff and zero-quota access to the bloc’s single market.

But major retailers that use the UK as a distribution hub for European business could face possible tariffs if they re-export goods to the EU.

“Tariff free does not feel like tariff free when you read the fine print,” M&S’s chief executive Steve Rowe told Reuters on Thursday, ahead of the retailer’s trading update on Friday.

“For big businesses there will be time-consuming workarounds but for a lot of others this means paying tariffs or rebasing into the EU.”

The British Retail Consortium (BRC), which represents more than 170 major retailers, is working with members on short-term options and is seeking dialogue with the government and the EU on longer-term solutions to mitigate the effects of the new tariffs.

Rotten fish

Scottish seafood exporters say they have been hit by a “perfect storm” of Brexit disruption, which could sink a centuries-old industry.

“These businesses are not transporting toilet rolls or widgets. They are exporting the highest quality, perishable seafood which has a finite window to get to markets in peak condition,” said Donna Fordyce, chief executive of Seafood Scotland.

“If the window closes these consignments go to landfill.”

Scottish fisherman sorting crustaceans

Getty Images

She said the sector has already been weakened by Covid-19, the closure of the French border before Christmas as well as “layer upon layer” of problems associated with Brexit.

The group fears that without exports, the fishing fleet will have little reason to go out.

“In a very short time we could see the destruction of a centuries-old market which contributes significantly to the Scottish economy,” added Ms Fordyce.

Lost in the mail

The parcel delivery service DPD UK said it has paused its European Road Service due to the ‘”increased burden” of customs paperwork for packages heading to the EU, including the Republic of Ireland.

DPD said 20% of parcels had “incorrect or incomplete data attached”, which meant they would have to be returned.

In an email to its business customers, the company said that it had been a “challenging few days” for its international operation, and that it would “pause and review” its service. It plans to restart on 13 January.

“It has now become evident that we have an increased burden with the new, more complex processes, and additional customs data we require from you for your parcels destined to Europe” the firm wrote.

Hauliers grinding gears

The boss of one of Wales’ largest hauliers said logistical problems have emerged at the Irish border too.

Andrew Kinsella, managing director of Gwynedd Shipping, said his company has a backlog of 60 lorries waiting to be shipped to Dublin.

He said many hauliers are finding that their customers are not able to generate the special declarations that are needed to ultimately enable a lorry to get onto a ferry.

“Whilst you don’t see queues at ports and terminals the reality is that these queues are developing elsewhere in our depot in Holyhead , in our depot in Deeside and in our depot in Newport in South Wales and lots of hauliers have depots in the proximity of ports,” he said.

“There are a lot of issues about demarcation about who is going to arrange the export declaration with the UK revenue authorities, who’s going to arrange the import declaration, the hauliers then trying to arrange the import safety and security declaration to create an ENS number which helps you generate a PBN number so there has been a lot of everyone finding their feet”.

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