CTI Blog - Brexit: The future of trade and the EUTR
This guest blog post is by David Hopkins, CTI Director and Managing Director of the Timber Trade Federation (TTF)
The triggering of Article 50 this week has started the long process of negotiation and withdrawal from the EU which could have major implications for the timber industry.
It was good to see, therefore, that the formal letter dispatched by hand to President Tusk was far more conciliatory and constructive in tone than much of the triumphalist rhetoric which has been circulating in recent weeks and months.
Whichever side of the debate one sits on, it is hard to deny that this will be a complicated affair, with emotions running high from all participants. It is in the UK best interest to acknowledge this and approach the talks positively, calmly and with everyone’s best interests at heart.
Certainly, the TTF view is that we should focus efforts on making this transition as smooth as possible for our trade. To do this, the most important part of the future arrangements with the EU must be to negotiate a mutually beneficial customs arrangement to ensure the same trading access as is currently the case. This would include ensuring the same regulatory environments for our industries and supply chains.
Our view is that, if we cannot complete this process within the two year time frame – which seems a very tight window given the complexity of the negotiations - then a transitional arrangement must be agreed.
To be clear, it is not just tariffs that are the issue. Timber attracts relatively low tariff levels even under WTO rules. But, the potential to slow down trade due to suddenly having to make customs declarations and border inspections on all goods entering the UK would significantly slow down trade – especially as HMRC and other agencies are unlikely to have the staff or the know-how to make this work.
As our largest timber trading partner and an EU member state, Sweden’s views on the future of UK-Sweden trading relations must be taken into consideration. On March 15, Sweden’s National Board of Trade published a report summarising potential likely options for trade procedures between the EU and the UK. The report concludes that it is likely that any alternative situation negotiated will be less favourable than the current, with increased administrative requirements, higher costs and ‘reduced predictability in the flow of goods’.
Since this is an issue which will affect many industries in the UK, it should be given careful consideration. The exit negotiations must take these potential future burdens into consideration to ensure that trade can continue, freely and unhindered after we have left the EU in whatever form.
The next step within the UK following the triggering of Article 50 will be the implementation of ‘The Great Repeal Bill’ to repeal the EU Communities Act 1972 and begin transferring EU law into UK law for the interim period. With this in mind, there are a number of key items of EU legislation affecting the UK timber trade which will need to be addressed, mostly notably the EU Timber Regulation (EUTR).
The TTF and its membership believe strongly in the value and effectiveness of EUTR and advocate its retention post-Brexit.
The wording of the Article 50 letter stated: “We should…prioritise how we manage the evolution of our regulatory frameworks to maintain a fair and open trading environment, and how we resolve disputes.” This is to be welcomed and supported and should not be undermined for supposed short term gain.
The timber industry is not alone in wanting to maintain the current regulatory status quo with Europe. The CBI, Chemical Industries Association, Institute of Directors, the City of London and many others have called for much the same thing. The regulatory regimes are priced into most of their business models and they see little to gain from undermining them.
TTF has already begun a programme of meeting with ministers and civil servants from key government departments such as Defra, BEIS and DfID about potential impacts to the timber trade. It is our view that the timber sector can show a very positive picture of free trade with nations across the globe, based on a common set of principles and regulatory regime.
As the talks continue, we will keep members updated and will be running regular MP visits to members businesses around the country.
We applaud the Prime Minister’s view that the UK should be seen as an innovative modern, global leader in international trade and want to ensure this is the outcome that prevails.
However, if the UK does want to be seen as a modern leader in global commerce, rather than a hand-delivered letter to Brussels, should Mrs May not have just sent an email?