Rules of origin red tape causing damage to Cumbrian exporters

Businesses in Cumbria are calling on the government to provide a support package for the aviation sector and other exporters suffering due to the economic downturn brought on by Brexit and the Covid-19 global pandemic.

Figures by the British Chamber of Commerce show that UK export figures are down by 41 per cent, with a German-British Chamber of Industry and Commerce study also released this month highlighting similar issues.

A North-West export breakdown of the BCC Quarterly Economic Survey (QES) reveals that:

46 per cent of businesses in the region have reported a decline in overseas orders/advance custom/bookings in the last three months.
45 per cent of businesses in the region have reported a decline in overseas sales/custom/bookings last 3 months.
45 per cent of businesses in the region are having to increase their prices, largely due to an increase cost in rural materials or general overheads.

Jayne Moorby, marketing manager at Oxley Group, feels the situation for businesses such as Oxley – a third tier supplier in the civil aerospace market – is worse than is being portrayed.

Oxley Group, based in Ulverston, rely on 82 per cent of their products being exported to 34 countries, a number of which are in the EU.

Oxley have been hit by the increased rules of origin requirements as part of the Brexit Deal done in late December. This is creating a large increase in the level of work the company has to do, to the point where they are considering taking on additional staff just to deal with the paperwork.

Jayne, also a Department for International Trade’s Export Champion, said: “The increase in paperwork and checks at customs is creating a big impact. Hypothetically if we send parts out to Slovakia and back we would previously be looking at a two-week turnaround. Now it is more like 10 and this is making us uncompetitive.

“Some of the things we export will include 50,000 inventory parts from more than 15,000 different supply chains.

“Even though we’re supposed to be in a grace period, some of our EU customers are already asking for the rules of origin paperwork and it has caught most businesses off guard. Just the size of the bureaucratic and administrative work is massive and the process is presenting us with real problems.”

Cumbria Chamber of Commerce has previously warned of supply chain issues and the economic damage through having a last minute deal, and pushed for an agreement to be completed earlier to give businesses a far better ability to adjust.

Suzanne Caldwell, Chamber Managing Director, said: “We’ve heard from a number of businesses who have seen export volumes fall and are experiencing increased disruption through red tape and additional customs paperwork.

“This is a critical issue for SMEs in Cumbria. The challenges businesses are facing are absolutely not making it easier to trade or support exporters, quite the reverse. The government needs to make it far easier and quicker for businesses to prove the necessary rules of origin.

“Exporters need to be supported with specific grants, otherwise there will be a significant impact, not just on them, but through their supply chains too.

“Not surprisingly, businesses have reported that taking part in webinars around dealing with these structural issues isn’t sufficient in quickening up the process. Businesses need more in depth practical support help to address these changes.

“There is some support available but it’s not enough.

“We would like to see the UK and the EU get back around the table to address the remaining structural problems in the UK-EU trade deal and focus on long term improvements to the flow of trade between them as soon as possible.”

Cumbrian businesses which rely on the export market have suffered a mix in fortunes with evidence depicting a clearly negative swing.

Kingfisher Seafoods Ltd, of Barrow, who specialize in live shellfish, have reported a significant decline in their export sales. Most of its business is traditionally exported to Europe and the firm’s Co-Founder Dr Omar Namor has confirmed that Brexit had had a significant negative impact.

Dr Namor said: “We had an excellent fourth quarter in 2020 this year has been a disaster and Brexit as a seafood exporter has been infinitely worse than Covid.

“We are exporters of Class B live bivalves and our business has come to a stand-still since January 1.

“The government needs to engage with the EU to find a solution, which they are not doing. Both sides seem adamant they’re right. If the UK government is confident that their stance is correct and that the ban of live bivalves from class B waters is unjust then take it to the European court, rather than do nothing and let the industry collapse.

“Even is the issue does get sorted, will it be done within a timeframe to keep businesses from collapsing. Since January 1, we have had zero sales due to Brexit.

“In my opinion is due to government not understanding the nature of the business to such an extent that they were unaware of their own ignorance and therefore not realising the implications until after the event.”

Meanwhile Clark Door, a Carlisle based high performance specialist doors manufacturer, are bucking the trend with a rise in export sales, although the firm’s Managing Director, Andrew Ashley, has stated that “travel restrictions have presented lots of problems. Our team has adapted in leaps and bounds to overcome them using technology, teamworking and being flexible.”

* Cumbria Chamber’s Business Beyond Brexit toolkit has all the information you need about trade post-Brexit. There’s also information on travel and transport, legal and IP issues arising from Brexit, sector guides, the implications for recruiting and retaining staff, plus podcasts, webinars and videos. You can find information there on the Brexit Support Fund, which is available until 30^th June and offers grants of up to £2,000 to SMEs pay for support on importing and exporting ahead of import controls coming into force from April and July, and on the Field Force Support Programme for businesses that trade more than £250,000 of goods with the EU each year.