Three months on, what impact has Brexit had on UK-EU trade? – Euronews

Three months after Brexit began for real when the EU's rulebook stopped applying to the UK, many areas of life have noticed a difference.

The impact has been felt by both people and businesses -- although it has sometimes been hard to distinguish from the overwhelming impact of the pandemic.

British exports to the EU have been hardest hit by new border formalities, despite the last-minute deal struck in December ensuring tariff-free trade.

Although some sectors report improvements since the early chaos in January, they also say the problems run deeper than the "teething troubles" the UK government highlighted at the time.

Meanwhile, a further UK delay in imposing import checks on EU goods means European exporters have not been affected to the same extent.

Euronews examines the effect of the changes so far on several major sectors of the economy.

Official UK figures in March showed the UK recorded a record fall in trade with the EU in January, as the economy struggled with post-Brexit rules and the pandemic.

Goods exports plunged by 41% and imports by 29% as the UK's departure from the EU's single market had a major impact, as did additional bureaucracy and sometimes unexpected costs and taxes.

Figures released on March 18 by Ireland's Central Statistics Office said imports from Great Britain fell by 65% in January compared to a year earlier. Recent German figures showed imports from the UK dropped by 56%, while exports were down by nearly a third.

Trade between Great Britain and Northern Ireland has also experienced new barriers under divorce deal arrangements designed to protect an open north-south border on the island of Ireland. The EU has begun legal action against the UK after the British government unilaterally extended a grace period on some food checks.

Euronews listed several examples of early problems food producers and other traders reported. An avalanche of cases airing similar grievances has followed: the pork exporter forced to spend an extra 4,000 per load that still got held up by customs; the Belgian supermarket now looking to Ireland instead of Britain for supplies; the UK beekeeper who can no longer import bees from the EU.

A UK parliamentary report on March 23 notes that UK food producers are facing new trade barriers with the EU in the form of health measures, extra paperwork, higher haulage costs and some "outright export bans".

Exports of some products such as seed potatoes have come to a halt, says the House of Lords EU Environment Sub-Committee. Small businesses in particular are suffering from red tape and transport costs. The lack of equivalence agreements is adding to friction, it finds.

An analysis published on March 23 by the UK Food and Drink Federation of a 75% fall in exports to the EU in January -- salmon collapsed by 98%, beef 91% -- cited COVID-19 and stockpiling. But it said much was "likely due to new non-tariff barriers". The FDF added that the "collapse in groupage movements" -- where different companies send goods in the same load -- had hit small and medium-sized firms in particular.

"Dismissing trade disruption at the borders as simply short term teething problems is no longer credible," says a Brexit Impact Report by the British Meat Processors Association. "British meat companies are painting a very different picture. They are reporting systemic weaknesses in the current export system, mountains of red tape and a potential permanent loss of trade of between 20 and 50 per cent."

Some bureaucratic demands are due to increase: for example, more export health certificates will be needed after grace periods end. The House of Lords committee warns that barriers to trade could become permanent unless the UK government takes action.

The UK wine trade has welcomed a second delay announced by the government on controversial import forms for EU wine from July until December 31, which the UK Wine and Spirit Association said would have brought "price hikes, permanently disrupted supply and drastically reduced consumer choice".

Deadlock over fishing rights was one of the main obstacles in post-Brexit trade negotiations, with the EU pushing to retain access to UK waters while London insisted on "taking back control".

But the deal brings many "long-term" barriers, the Lords report says, dismissing the government's description of early problems as temporary.

The impact of new demands for customs declarations and other paperwork hit UK exports immediately. Delays saw catch values halve and often made fresh fish shipments unviable.

UK environment minister George Eustice told a committee of MPs on March 25 that the EU's ongoing ban on the imports of live shellfish was unlikely to change. UK producers have been unable to sell mussels, oysters and scallops to the bloc -- and have been told to invest in purification material or seek new markets for frozen shellfish.

Cornwall Council in England and France's Brittany region have reportedly agreed to work together to facilitate shipments of British fish and seafood by ferry.

There was huge relief in the car industry on both sides of the English Channel when the Brexit trade deal was sealed, keeping the EU-UK market free of tariffs and quotas. A grace period over rules of origin -- delaying a requirement to declare where parts come from -- has also been welcomed, although this is due to expire at the end of 2021.

However, concern over the impact of non-tariff barriers on supply chains continued into the new year. "That does not mean zero cost," Mike Hawes, CEO of the Society of Motor Manufacturers and Traders (SMMT) told a House of Commons committee on February 23.

"I would characterise all the industry as paddling furiously below the water to keep things going," he went on. "In terms of general daytoday operations, moving parts in and out, it is difficult. The administration is significant... This is the new normal; we accept that. Ensuring the entire complexity of the supply chain can continue to operate is a major challenge."

Paul Everitt, Chief Executive of the ADS Group, had a similar message concerning aerospace and defence. Companies were experiencing "a daytoday battle to make the new arrangements work and to find their way through this," he told the committee, citing delays and extra transport costs.

He added that key parts of the industry "are not able to do business, and some of them are actually losing business", because of uncertainty over the future EU-UK relationship on aviation safety and regulation.

British manufacturers reported a near-record increase in supply chain disruption and rising costs, attributed to Brexit and the pandemic, in an IHS Markit/CIPS survey carried out in February.

"This disorder was primarily created by shipping delays, transportation shortages and customs border commotion. Though it was difficult to see clearly where COVID disruption ended and the Brexit muddle began," said Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply.

Brussels gave an initial green light in February for personal data to continue to flow between the UK and the EU in the post-Brexit era. The European Commission's draft decision concluded that the UK's data protection regime complies with the EU's own flagship law.

Health organisations on both sides of the English Channel welcomed the move. EU recognition of the UK regime "is vital for the functioning of the European health sector," they said in a joint letter. "It determines everything from the delivery of cross border health and social care for thousands of European citizens to governing how health data is securely shared to advance research."

The fact that the export of medicines and medical devices continues tariff-free under the Brexit trade deal has also been welcomed.

However, last year the European pharmaceutical industry highlighted the importance of reaching a mutual recognition agreement (MRA) on inspections and batch testing as part of a trade deal. Agreement was struck on the former but not on the latter.

The UK has unilaterally waived batch testing requirements for products coming from the EU for two years. But the EU is still imposing testing on medicines going the other way.

The Association of the British Pharmaceutical Industry (ABPI) has warned that this results in repeated testing "that complicates the supply chain and can delay the batch of medicine reaching patients for an average of 6 weeks and costs 1,500 per batch".

The Brexit deal contained only vague commitments on services and left financial services to a separate process.

The UK and the EU have reportedly reached a "memorandum of understanding" -- as had been expected by the end of March -- on future cooperation. It's thought it could help City of London firms regain some access to the EU lost when the UK left the EU's single market.

However, this goes nowhere near returning the full "passporting rights" giving blanket access to EU markets. And a decision on the lesser form of access -- given when the EU accepts a third country's regulation to be "equivalent" to its own -- rests in the hands of Brussels.

The immediate post-Brexit period in 2021 has seen a flight of share trading activity from the UK into the EU, while since the 2016 Brexit referendum hundreds of UK-based financial firms have moved at least some operations to the bloc.

Read this article:

Three months on, what impact has Brexit had on UK-EU trade? - Euronews