A reminder of how the Brexit process began, as we look at where the years which followed have taken us.
23rd June 2023 saw the 7th anniversary of the UK’s referendum on EU membership. After much discussion and political changes, the Trade and Cooperation Agreement (TCA) came into effect on 1st January 2021.
The TCA formed the basis for current UK-EU trade, with terms such as tariff free and frictionless highlighted. Those ideals have not matched reality for a fair proportion of businesses.
Even so, exports to the EU have by no means collapsed, other than in diversity. A number of small companies who were exporting to the EU have ceased to do so, finding the demands too onerous, or too costly.
Larger businesses are more able to absorb the costs and some continue to trade much as before. Overall exports to the EU increased year on year in the first quarter of 2023, although there was a notable exception.
The Food Sector
In just the last year, beef exports to the EU fell 16%, pork 22%, meat and fish exports are down around 50% since Brexit. The dairy sector is not faring much better, along with a range of agrifood businesses.
Their products can face rigorous checks at the European border, with preparation for arriving there quite complex. The additional expense makes remaining competitive hard to achieve and a proportion of companies have stopped trying.
The Agriculture & Horticulture Development Board stated “it is important to maintain the pressure on trade with Europe, we can’t just walk away”. A laudable stance with our still largest trading partner but practical changes may help.
Food imports from the EU have largely been maintained but they extra checks they were intended to face have been repeatedly postponed. Additional sanitary, phytosanitary and customs checks still have no definitive date.
Apart from practical delays, they would impact food prices at a difficult time and the range of food consumers can access throughout the year.
Rules Of Origin
Once the TCA started to take effect in January 2021, so did a requirement to demonstrate the origin of goods traded with the EU. As with other aspects of the agreement, there is a degree of phasing in over time.
The principle is generally consistent, in order to qualify for tariff free journeys, goods and their constituent parts must significantly originate in the UK or EU. How significantly varies for different items.
Meeting rules of origin requirements has admin and compliance costs, which impact profitability. There have also been surprises across sectors where items couldn’t meet the rules, so tariffs become payable.
Neither is this just a UK issue, with aspects of EU to UK trade gradually becoming enmeshed. Rules of origin are often part of trade deals but for the TCA, analysis and renegotiation make sense and may take place.
We mentioned a couple of significant points which bring ongoing concerns. There are of course others, which affect a range of industries and consumers.
Equally, the real terms fall in trade has not been as bad as some predicted. A few non Brexit, long established systems have come to the rescue, such as the ATA carnets for the EU we supply, making temporary export a relative pleasure.
There have also been a few tweaks in recent times and joint progress on Northern Ireland. Many hoped this would lead to improved cooperation on a wider basis, a different spirit from the early years.
The relationship has stopped getting worse but seven years on, barriers remain. They have been clearly voiced by EU representatives, as you can see in a summary of the way we could move forward from 2023.