What global trade opportunity could mean for business
As the UK continues to adapt to life after Brexit, trade issues remain. These primarily concern disruption between the EU and UK, with some firms on either side halting their services to the other due to increased restrictions, paperwork, cost and frustration. Many businesses continue to be frustrated at the situation as teething issues emerge within the new processes.
By leaving the EU, the UK has lost access to the European Single Market and the freedom that comes with it. This has resulted in some of the challenges currently being faced. However, it is not all necessarily bad news for trade. Outside of the Single Market, it is no longer more advantageous to trade with the EU than anywhere else in the world. This opens up the global opportunity to UK importers and exporters.
In the run-up to the end of the EU transition period, the UK government secured free trade agreements (FTA) with many countries and continues to add to this list. With these new opportunities, there is more possibility for trade than ever for businesses who embrace it.
In this blog, we examine what global trade opportunity could mean for companies in post-Brexit Britain.
- What being outside the Single Market means
- Agreed trade deals with the rest of the world
- New custom
- Supply chain diversity
What being outside the Single Market means
For those who endorsed the UK’s exit from the European Union, one of the leading reasons was to leave the Single Market. As part of this trading bloc, although the UK benefitted from barrier-free trade with other member states, policy was primarily determined by Brussels. Due to this, the UK could not have standalone deals with non-EU countries.
Coming away from the Single Market means that the government has increased control to set out its own trade policy and agreements. This means that British priorities can be focused on. For example, tariffs can be tailored to encourage the export goods that the UK needs while preventing competition for products that domestic suppliers can create.
The new level of control means that, theoretically, the government can adapt trade to accommodate UK businesses and citizens’ needs, which will be welcome to many. However, only time will tell if this becomes the case.
Agreed trade deals with the rest of the world
Since the vote to leave the EU, the British government has created trade deals with many countries. There are numerous agreements in place, but below we have listed some of the most valuable, based on past trade figures:
- Southern Africa Customs Union and Mozambique (SACUM) trade bloc
- Iceland and Norway
- South Korea
These are on top of the Trade and Co-operation Agreement with the EU – which, although it does not provide the same freedoms as the Single Market, gives businesses some support in their trade to EU countries.
While the details of the deal vary in terms of tariffs and restrictions, the number of agreements across diverse countries shows the opportunity present to importers and exporters. It is also worth noting that the government continues to negotiate with countries to develop deals, such as the US, New Zealand and Australia. This means even more options may present themselves in the future, bringing more benefits to UK businesses.
Undoubtedly one of the most significant benefits of global trade opportunity is that businesses can target new customers and generate sales. For UK firms, this may mean dealing with parts of the world that were previously untouched.
These new trade options will be most welcome to companies who have previously sold mainly to the EU but are now facing lower demand due to increased red-tape. With a level-playing field for global trade and agreements with new countries, demand may shift from the EU to the rest of the world. This will enable exporters to tap into new markets while still maintaining healthy trade levels.
It has been reported that about 90% of the growth in world imports happened outside the EU in the last ten years. This shows the scope available to businesses seeking to increase their trade levels and generate sales.
If you are looking to seize new trade partnerships for your business, it is vital to familiarise yourself with any deals the UK has. Many of these deals may offer incentives for specific products, such as reduced tariffs, which may benefit you. By being aware of the details, you can create an export strategy that maximises your opportunities while remaining cost-effective and realistic for your operations.
Supply chain diversity
Alongside generating sales, global trade can create opportunities for UK firms who regularly import goods from outside of the country. For businesses experiencing supply chain disruption or shortages following Brexit, a solution may lie in sourcing goods from other countries outside of the EU. These include countries with which FTAs have been agreed, which could help to keep supply costs down.
Utilising new supply chain options will enable businesses to minimise disruption to their operations and continue to bring regular imports to provide products and services. It may also allow companies to obtain a broader range of supplies, with different countries able to offer various goods that may be otherwise unavailable in the UK or even EU.
Even if goods are available domestically, the possibility of imports from other countries may allow businesses to utilise goods at a higher quality or better priced, for the benefit of their customer offerings.
Increased competition across the supply chain could also force exporters to consider their services and products to better serve demand, such as offering more affordable products. This is good news for businesses, leading companies to provide better quality, competitively priced supplies, leading to a higher import and export standard across industries.
It seems accurate to say that Brexit has brought trade challenges to businesses, both in the UK and the EU. While red-tape and cost increases may bring frustration to firms, it is worth remembering that there is still opportunity available.
Seizing the possibilities provided by global trade, resulting from a level-playing field and new deals agreed across the world, could potentially uncover hidden treasure for businesses. This includes increased demand from new markets and a broader choice for supplies. In some case, it could even help exporters and importers recover from their post-EU struggles.
The key is understanding what is available for your business and embracing it.
If you need support in adapting your business for trade, our team of advisors are here to help. We can take you through the FTAs agreed by the UK government, helping you to identify where business may lie.
We can also help you to adjust your trade processes to comply with new EU rules, minimising disruption and delay.