UK trade with the EU is now governed by the EU-UK Trade and Cooperation Agreement concluded on 24th December 2020 just a few days before the UK was due to leave the single market at the end of the year. The Agreement allows for zero tariff trade between the two partners but does not exempt UK companies from the red tape associated with a customs border, including the need to handle customs declarations for imports and exports.
The UK tax office has estimated that British businesses will spend £7.5 billion a year handling customs declarations for trade with the EU — as much as they would have done under a no-deal Brexit – and has stated that the number of customs forms needed to trade with the EU under the Brexit deal “is not materially different from a no-deal situation”.
The effects on UK exports to the EU have been immediate. A Road Haulage Association (RHA) member survey found the volume of exports going through British ports to the EU fell by 68% in January compared to the same month last year, mostly as a result of problems caused by Brexit.
While there has been a huge fall in UK exports to the EU with the immediate introduction of EU customs controls to UK products on 1st January, the situation in relation to UK imports from the EU has been different.
UK imports from the EU have been affected by port congestion and a shortage of freight capacity. However, unlike the EU, the UK government chose a phased approach to introduction of customs controls, postponing the introduction of certain import procedures for EU products.
These grace periods are designed to give businesses more time to adapt to the new rules and ways of working.
The UK’s initial intent was that requirements for phytosanitary certification of UK imports from the EU should be introduced from April while requirements for full customs declarations on entering the UK market, rather than submitting forms at a later date, should be introduced from July.
However, on 11 March, the UK announced that these grace periods would be extended for an extra six months in a bid to give businesses and customs officials more time to prepare for the additional red tape and to avoid the threat of food shortages in the summer.
The move means the first checks on imports from the EU into the UK will not start until October, with full border controls not being carried out until 1 January 2022 – a full year after the UK left the EU.
These changes have significant implications for the UK timber importing trade. In a typical year, the UK imports around 9 million cubic metres of timber from Europe, mostly softwoods and panel products, but including some hardwood products, most notably oak sawnwood and birch plywood.
Timber imported from the EU accounts for well over half of all timber and panels consumed in the UK. In addition, the UK imports wood furniture with a total value of USD1.2 billion from the EU, around one third of all imports and 15% of all consumption of wood furniture in the UK.
Insights on the immediate effects of the UK’s departure from the EU single market on the UK timber importing trade are provided in a TTF member survey published on 1st March. The survey draws on the views of thirty-six respondents representing timber importers, merchants, agents, and manufacturers.
In introducing the survey, the TTF note that, “Q1 2021 has already brought multiple reports of haulage and freight companies rejecting jobs and hiking prices to travel to Britain amid long waiting times at British ports”.
The survey suggests that the effects of Brexit on the UK timber trade have been muted so far, particularly in the hardwood sector. However, since border controls have yet to be fully implemented, this may not be indicative of the long term impact. The survey report finds that “Brexit red tape has caused a mild impact on their business as customs and due diligence mapping combined with logistical challenges from increased border checks has slowed down trading, but not demand”.
Somewhat contradicting this conclusion, the survey report also finds that “Members have stated they are experiencing a dramatic slowdown in deliveries, particularly from haulage across the English Channel from European countries”.
Where impacts are reported, they are a very much focused on softwoods. While 66% of respondents stated they have had “logistics issues importing and exporting softwood due to haulage companies charging increased rates, rejecting their request for delivery in and out of the UK, and a lack of truck ability due to the trade barriers introduced by Brexit”, only 33% and 0% of respondents stated these same issues had impacted on the hardwood trade.
Similarly, new requirements for phytosanitary certificates on UK imports from the EU had impacted on 33% of hardwood traders compared to 66% of softwood traders.
A significant issue for many TTF members to date has been growing obstacles to their trade with Northern Ireland (NI). Although NI is a part of the UK, the region also remains in the EU single market to prevent the creation of a hard border between NI and the Irish Republic and thereby protect the NI peace process.
The TTF survey report notes that “while ‘unfettered access’ from Great Britain to Northern Ireland had been promised, in reality trading has become more difficult, with a number of our members reporting they are looking to cease trading with Northern Ireland until the trade barriers are removed”.
The TTF also notes that new requirements for UKCA marking are starting to concern members. “While this year members can continue placing CE-marked goods onto the UK market, from January 2022 the UKCA mark will become the sole UK conformance mark. This would raise considerable trade barriers and challenges next year with concerns businesses will not have enough time to prepare for the implementation of the new mark.
The TTF has announced that it “will work with the Construction Products Association (CPA) and the Confederations of Business Industries (CBI) to advocate for a deferment of the implementation of the mark or to achieve equivalence with the CE Mark”.
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