IoD Midlands Spring

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Keep up to date at www.iod.com/westmids and at www.iod.com/east-midlands Technical Briefing: Brexit and exporting Post-Brexit trade: Short-term headache or long-term pain? Pharma boss and Chairman of Morningside Pharmaceuticals Ltd, Dr Nik Kotecha obe, examines whether the current challenges posed by the post-Brexit trade deal and the end of the Transition Period are temporary hiccups or a more permanent problem. When the 11th hour Brexit Trade Deal arrived at the back end of 2020, most businesses hailed it as a breakthrough, largely because the prospect of No Deal would have been so damaging to UK businesses. On the one hand, the deal has given most UK businesses certainty, which will enable companies to finally be able to make long-term plans, as well as invest for the future. I am a great admirer of how UK businesses are able to adapt and innovate as their operating environments evolve, and this skill will provide many opportunities to grow into new markets as the UK continues to sign trade deals around the world. However, on the other hand and despite the business community’s initial enthusiasm, the devil was always in the detail. Indeed, some sectors weren’t included in the deal, such as financial services. It’s also clear that the new arrangements are not without their challenges. I talk to many business leaders and every company and sector is having to adapt – and to adapt very quickly. My company, Morningside Pharmaceuticals, is no different, as we import and export our pharmaceutical products globally, as well as to the EU. So the question to really ask is whether these are short-term teething problems or a longer term fundamental challenge? Pre-Brexit, we made extensive preparations for every eventuality, such as increasing buffer stocks and off-site warehousing; agreeing post-Brexit processes with freight forwarders; and ensuring EU supplier and customer readiness. But inevitably there have been some issues since the new arrangements began, although it’s still too early to say whether these are all down to the new post-Brexit landscape, or are being amplified by the ongoing Covid-19 pandemic restrictions. Trucks parked at one of the temporary parks set up in Kent to accommodate Dover overflow traffic. Was this event at the turn of the year a sign of things to come, or a one-off? A few of the challenges we’ve faced so far include additional paperwork, which has slowed turn-around times for shipping arrangements; extra shipping costs; customs brokers refusing work because of increased demand; and a shortage of haulage firms and drivers able, or willing, to take UK deliveries. Some of the consequences of the UK/ EU Trade Deal have also affected our supply chain. One example is around specific Incoterms, which specify who is responsible for paying for and managing the shipment, insurance, documentation, customs clearance, and other logistical activities. This has led to a ‘‘ Additional paperwork has slowed turn-around times... but we worked closely with our EU partners and freight forwarding companies to refine our processes... ‘‘ substantial amount of paperwork needing to be carried out by our EU suppliers, at a time when their resource time is inhibited by the pandemic. To work through these issues we have taken a number of actions, including working closely with our EU partners and freight forwarding companies to refine shipping and customs processes and continuing our export strategy to focus on the rest of the world, as well as the EU. We will also continue to work closely with the Department of Health & Social Care (DHSC), which is keen to support our sector where possible, as well as look to engage Government directly and through trade associations such as the <strong>IoD</strong> and the Chambers of Commerce, to whom I would encourage all businesses to provide feedback to. So to come back to the question, the majority of the current challenges we face should be short- to medium-term bumps in the road that get resolved in time as we learn to adapt. A longer term fundamental concern is the new trading arrangement with Northern Ireland and the issues around rules of origin, which must be 14 www.iod.com/emidlandsevents
esolved quickly. As a business that has exported to more than 120 countries since our inception in the 1990s I have seen first-hand the opportunities which are out there, and the huge benefits on offer for UK Plc. It’s clear the new trade deals negotiated by the Department for International Trade (DIT) will offer UK businesses a real long-term advantage, including the potential for the UK to join trading blocks like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). So, despite all of the headwinds we face, there are green shoots ahead and businesses must bear in mind that Brexit is a process, rather than a complete package from day one. One very useful way to get a personalised list of actions for your business is through the Brexit Checker on www.Gov.uk website, which provides a quick ‘gap analysis’ of your business activities to help navigate through the new trading environment. In time UK businesses will adapt to the new arrangements with the EU and begin to grow into exciting international markets, which offer huge growth potential for ‘Brand UK’. It may just be a bit bumpy along the way. DIT targets exports growth The Department for International Trade (DIT) has launched a new campaign to help UK agriculture and food & drink companies to take advantage of new trade deals and explore new market opportunities overseas. There is a huge demand for quality and premium British food and drink produce around the world, with growing opportunities across emerging markets for products including meat, seafood, alcohol, spirits and dairy. Overall, the UK’s agriculture, food and drink industry represents one of the UK’s vital manufacturing industries, with the agri-food sector contributing £120 billion to the UK economy in 2018 alone and supporting around four million jobs. In 2019, nearly 8,000 businesses in the agricultural and food industries exported their goods, supporting the jobs of over 500,000 employees up and down the UK, demonstrating the value of trade. The Government has so far negotiated trade deals covering 64 countries plus the EU – to cover £889 billion of trade - and is looking to build a network from the Atlantic to the Pacific. And with new trade deals being finalised globally, there is a huge opportunity for British agriculture, food and drink businesses – of all sizes, and from all regions of the UK – to grow. To increase the number of businesses looking to exploit this huge export opportunity, the DIT is offering bespoke exporting advice and support. Whether it is Welsh lamb to Qatar and the UAE, Cornish clotted cream to Japan or a growing demand in the USA for the drinks industry, there are opportunities everywhere. In March last year, access to the US was granted for UK beef exporters for the first time in 20 years, with the industry estimating beef exports to be worth £66 million over the next five years. In the last 10 years cheese exports have more than doubled to the UAE, demonstrating the appetite for UK dairy products across the Gulf, as well as Japan and across south east Asia. For more information, visit gov.uk/ grow-by-exporting to learn how you can tap into new opportunities abroad. www.iod.com/westmids/events 15
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