Post-Brexit ‘teething problems’ hit UK-EU trade

How British businesses are coping after country left biggest trading bloc

A truck drives towards the entrance to the Port of Dover, following the end of the Brexit transition period, in Dover, Britain. Reuters

A month after Britain's New Year split from the EU economic embrace, businesses are getting used to frustrating checks, delays and red tape.

British meat exporters say shipments have rotted in lorries awaiting European health checks.

Scottish fishermen have protested at Parliament about the catch they can no longer sell to the continent because of complex new paperwork.

The manufacturers’ organisation, Make UK, said on Monday that 60 per cent of companies have had “significant disruption” since January 1.

The British government says the troubles are “teething problems" but companies say they are causing serious pain.

“A teething problem is something that will go away eventually,” said Alan Russell, who runs plant retailer Trees Online.

New Customs rules and health checks have prompted him to stop shipping to the EU and Northern Ireland, which is part of the UK but remains in the bloc’s economic orbit because it shares a border with EU member Ireland.

“It’s 5 or 10 per cent of my business I have just lost overnight,” Mr Russell said.

“I’m used to a little bit of unpredictability. But this is without doubt the most severe and unpredictable event that I can’t do anything about.”

Britain left the EU politically a year ago, and quit the bloc’s single market and Customs union at the end of 2020.

A post-Brexit UK-EU trade deal means goods can still be moved without tariffs or quotas, but businesses face new costs, paperwork and barriers.

While many companies prepared as best as they could, details of the new arrangements were not finalised until the trade deal was sealed on December 24, just over a week before it took effect.

The British government is accentuating the positive. UK supermarkets have not run short of food, partly due to businesses stockpiling against uncertainty caused by Brexit and the coronavirus pandemic.

Traffic has not piled up at English Channel ports and the government says its “reasonable worst-case scenario” of 7,000-lorry tailbacks is now unlikely.

Cross-Channel traffic is flowing relatively smoothly, with fewer than 5 per cent of lorries being turned back because drivers lack the correct paperwork, the government says.

Business groups say that is because some companies are simply staying away.

The flow of goods is only about three quarters of its January 2020 level, and Make UK says many companies have “put a hold on importing and exporting from the EU in a hope that things improve".

While many British businesses expected hurdles to trade with the EU, those that ship to Northern Ireland from other parts of the UK have found they also face new Customs and veterinary checks.

They are part of measures to maintain an open border between Northern Ireland and the Irish Republic.

An open Irish border, free of checks on goods or people, has played a major role in building peace in the region.

The sensitivity of the issue was highlighted last week, when the EU threatened to ban shipments of coronavirus vaccines to Northern Ireland as part of moves to shore up the bloc’s supply.

That would have drawn a hard border on Ireland, which was what the Brexit deal was intended to avoid.

British, Irish and Northern Ireland politicians expressed alarm at the plan, and the EU dropped the idea.

UK business groups say companies need more support to overcome post-Brexit hurdles.

Make UK urged the British government and the EU to simplify Customs paperwork and to cut “rules of origin” red tape that has left businesses struggling to prove their goods are British and thus eligible for tariff-free trade.

The British government says it is spending millions to help companies adjust. But it also says some of the new trade friction is permanent.

“We’ve always been clear that trading as a third-party country would involve processes, the similar processes that you have for trading with the United States or Japan or any other countries,” International Trade Secretary Liz Truss said on Sunday.

Brexit supporters say any short-term pain will be offset by Britain’s new freedom to set its own economic agenda and strike trade deals around the world.

On Monday, Britain applied to join the Comprehensive and Progressive Trans-Pacific Partnership, a trade bloc of 11 countries including Japan, Singapore, Australia, Canada and Mexico.

Critics note Britain’s £111 billion ($152bn) in annual trade with the Pacific bloc is a fraction of the £670bn a year between the UK and the EU.

Trade expert David Henig of the European Centre for International Political Economy said the British government was not being open with people.

“They are saying ‘teething problems’ when it is actually a permanent economic shift,” Mr Henig said.

“Certain things are just going to become a lot harder.

“It’s a long-term economic adjustment that this is leading to."