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Vital parts for British goods such as cars and fridges could fall into a legal limbo as Brexit red tape holds up supply chains, The Independent has learnt.
Manufacturing is at risk from serious disruption because the government has failed to devise a suitable replacement for the EU’s safety standards system.
This means components needed for use in the UK will not have a suitable “kitemark” to guarantee a product is safe which could force manufacturers and their suppliers to down tools or divert their trade elsewhere, leading figures warn. Without confirmation that these safety and environmental standards are met, products and parts cannot be sold on the UK market.
It is the latest setback for British industry as it reels from pandemic-triggered supply chain shocks and labour shortages.
During Brexit negotiations, the UK failed to secure an agreement with the EU to recognise one another’s safety standards, known as conformity assessments.
Currently, there are markings on products throughout homes and offices in Britain and Europe. They can be spotted by the stamp “CE” which means they meet European health, safety and environmental standards.
These kitemarks must be policed by a government-approved testing body, and from January 1 2022 most products must be separately approved for a UK regime.
But the failure to secure recognition for the UK’s conformity assessment (UKCA) bodies has cut a slice off the UK’s advantage in international trade. The government’s own guidance said, “it was not the desired outcome” in talks.
Industry bodies, factories and conformity assessors told The Independent that there isn’t enough capacity, or no capacity at all for testing certain goods ahead of the January 1 2022 UKCA compliance deadline. It now risks a major falling out between business and government if, as feared, it derails British supply chains.
It could also hold up business’ recovery efforts in the wake of the pandemic.
Projects such as refurbishing commercial premises or building homes could be stopped in their tracks, because contractors are required to install products, such as fridges and fridge components which meet UK regulations.
These can only be found to comply with that contractual obligation if confirmed by the new UKCA regime, and some products are currently caught in backlogs.
Three people familiar with government engagement on the issue said that it had come to a head in a meeting last month of the Business Brexit Taskforce, which includes the B5; the British Chambers of Commerce (BCC), Confederation of British Industry (CBI), Federation of Small Businesses (FSB), Institute of Directors (IOD) and Make UK.
David Frost, former chief Brexit negotiator and the government lead for EU-UK relations, was told ahead of the meeting and during the session, that conformity checks are an urgent issue, according to the people and correspondence reviewed by The Independent.
So far, the government has been reluctant to extend the deadline for insisting on UK-only checks, arguing that it’s a matter of UK sovereignty and that businesses must not use delaying tactics to avoid changes, sources said.
“Conformity assessments are rapidly becoming a major blockage for companies who are now in a queue to get their products approved with the clock ticking down to the end of the year,’ said Ben Fletcher, chief operating officer at industry body Make UK.
“Many more are not even aware that this change is happening so soon.”
He added: “There is enormous bureaucracy involved in approving test centres and government needs to urgently fast track their approval so these delays in getting products approved for UK companies can be removed.”
Mr Fletcher said that there was also the risk of a “knock-on” effect from EU companies coming up against these delays, and choosing to give up on supply the UK market.
This is because companies will have to get their products tested both for the EU and for the UK markets, duplicating red tape and costs. The UK’s market is far smaller than the EU’s, which will make that additional cost unappealing for many suppliers.
It comes after figures from the number of cars rolling off UK production lines slumped to the lowest level since 1953 in June, according to the Society of Motor Manufacturers and Traders (SMMT). This excludes activity in June 2020, which was still impeded by the first pandemic-triggered lockdown.
The global shortage of semi-conductors and a shortage of labour were both major factors, according to the SMMT.
This was underscored by fresh survey data from IHS Markit on Monday which showed stretched supply chains were acting as handbrake on manufacturers’ output.
These shortages in supplies mean that purchasing managers at factories are having to fight off competition in order to secure crucial parts.
The added friction of additional Brexit red tape makes those conversations harder, and ultimately make it more expensive to buy-in supplies, supply chain managers at major UK factories said.
Brexit has moved UK from a global leader on conformity assessments to a relatively isolated regional player. The UK’s testing laboratories took around an 80 per cent of this business activity across the entire EU market before it quit the bloc.
Now, it is struggling to set up its own independent assessment regime. UK testing bodies are no longer recognised by the EU and vice versa from next year.
Without a UK-recognised conformity assessment provider, manufacturers do not know how they will meet standards from January 1, a problem they have raised with government over several months.
Two people familiar with the operations at carmakers who have a major presence in the UK told The Independent that they need 6-10 months’ notice to switch conformity checks in order to make sure the vehicles coming off their assembly lines meet the correct standards.
The lack of clarity from the UK government means that for critical inputs such as for airbags, which must meet UKCA standards on pyrotechnics, legal compliance cannot be secured in time. At the time of writing, there is no means to meet UKCA requirements for airbags from January 2022.
The impact on industry is much broader than airbags, however, with critical components for a very broad range of goods requiring new testing for the UKCA regime from January. It’s a problem for importers and exporters, according to business lobbying body, the BCC.
“We have serious concerns about the effect on business of the looming deadline for CE marked goods coming onto the market in Great Britain,” said William Bain, head of trade policy for the BCC.
“Without a long-term solution, or at the very least an extension to the easement beyond January 2022, manufacturing supply chains could face serious disruption if suppliers in the EU cannot have components assessed under the British standards regime.”
He added that the body was “hopeful” the government could supply a solution to the issue, but “with around 150 days to go the clock is ticking loudly”.
Mike Hawes, chief executive of the SMMT, said his organisation was “working closely” with government officials on implementing new UK certification processes.
He added that the SMMT supports “government exploring all options, including an extension to the grace period to give certainty and reassurance to businesses as soon as possible.”
Lord Frost’s team, aided by other government officials is due to present a solution to industry in the autumn, but some bodies fear even this is not timely enough. The uncertainty has damaged relations with suppliers, and the failure to secure mutual recognition of UK-EU conformity assessments is a major blow for the UK’s competitiveness, they said.
A business department spokesperson said: “Businesses have a responsibility to ensure their products meet the requirements of regulations. We continue to work with industry on this issue and to ensure they understand their obligations.”
Former Brexit Secretary David Davis has told Nigel Farage on GB News that talks with Brussels to iron out issues with fisheries and the Northern Ireland protocol will take years to complete. Mr Davis and the former Brexit Party leader sat down for Mr Farage’s Talking Points segment on GB News to reflect on Britain’s journey to leaving the EU. Mr Farage described the Brexit deal delivered by Boris Johnson as “not perfect” and agreed that further negotiations would likely take years.
Mr Farage and the former Brexit Secretary discussed Mr Davis’s role in bringing down the leadership of Theresa May with his resignation in protest over Brexit.
The GB News host said: “You did it and thank God you did.”
Mr Farage went on to say: “And we got [Brexit], it is not perfect, Northern Ireland is not perfect by far, fisheries aren’t perfect by far…”
“It is about three years more negotiations to happen,” concluded Mr Davis.
More to follow..
Plans to radically transform the UK’s border to make it a world leader as it strikes trade deals across the globe are set to be complete in the next 20 months. The old system currently in use is from the 1990s and is thought to be slowing down checks at ports.
Businesses have complained bureaucracy at the border is slowing down shipments to the EU since the end of the transition period at the start of the year.
Its replacement will be online and will help the UK set the pace globally in creating a digital border.
Checks will be able to take place at a quicker rate, speeding up the process of sending shipments abroad.
Prime Minister Boris Johnson sees making the UK a world leader on new technologies as a key way of proving the success of Brexit.
The new system has already been introduced for the trade of goods with Northern Ireland and countries outside of the EU, but will be implemented for goods travelling to the continent in the coming months.
Officials at HMRC have been working on the new system for a number of years.
The Customs Declaration Service (CDS) will completely replace the Customs Handling of Import and Export Freight (CHIEF) system on 31 March 2023.
CDS has been designed specifically to cope with an increase in trade as the UK looks to strike more free trade deals with countries around the world.
Since leaving the EU, Britain has signed 67 trade deals, although many of these are continuity agreements from when a member of the Brussels bloc.
In a joint statement, Sophie Dean and Katherine Green, Directors General for Borders and Trade at HMRC, said: “CDS is a key part of the Government’s plans for a world-leading fully digitised border that will help UK businesses to trade and to prosper.
“This announcement will provide clarity for traders and the border industry.
“We are committed to making the switch-over as smooth as possible and are working to ensure traders are fully supported with the new processes.”
HMRC had hoped to have CDS fully up and running before the UK left the EU in January 2020.
However, its rollout for EU customs was delayed due to it taking longer to developed than originally planned.
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The software was only rolled out in December last year.
A decision to scrap Chief, first introduced by John Major, was made shortly after the 2016 referendum.
In 2015 the system handled 55 million customs declarations.
That number would have increased to 260 million without the rollout of CDS.
Nigel Farage mocks Remainers over Brexit fears
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The damning figures have been published by Facts4EU.Org and unsurprisingly as the European Union‘s dominant member state, Germany has come out as the biggest loser after its economy plunged £12.2billion in the last 12 months compared with 2016 – the same year as the Brexit referendum vote. The EU’s biggest economy was followed by Belgium (£3.7billion), France (£3.3billion), the Netherlands (£2.7billion), and Spain (£2.6billion). In another devastating post-Brexit blow to the EU, the website also revealed British consumers bought £28billion less from the bloc compared to the referendum year.
Now Britons have launched a savage attack against the EU, brutally mocking its struggles since Britain voted to leave the bloc in more than five years ago.
Reacting to our init6ial story, one Express.co.uk reader raged: “How they hate it when their lies are exposed.
“They think the rest of the world ‘didn’t notice’ the EU’s despicable behaviour towards the UK, and the people on mainland Europe. They are mistaken.”
A second person said: “Britain leaving the EU made it look a bad apple, and the actions of the EU, petty and vindictive, showed the world what the EU was – a bad loser with nothing.”
Brexit news: Britons have launched a furious attack against the EU (Image: GETTY)
Brexit news: French President Emmanuel Macron and German Chancellor Angela Merkel (Image: GETTY)
Another reader commented: “That’s a very good start to ruining the EU economies.
“Just think what we can do with a bit more effort.
“This isn’t just a flash in the pan either – the EU can look forward to this every year from now on.”
A fourth person warned: “Can’t wait for us to start being as awkward as the EU has chosen to be when we start checking their stuff more rigorously.
Brexit news: Boris Johnson has continued to insist Britain will thrive outside the EU (Image: GETTY)
“This light touch won’t be going on for much longer.”
Facts4EU.org explained alongside the findings the huge loss of trade experienced by member nations was not a “Covid effect” or because of new border controls.
The website said: “As the EU’s largest economy, it is not surprising Germany has lost most in terms of financial totals.
“If an EU country sells more, it loses more if there is a trend away from buying from EU countries.
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Brexit news: The UK and EU signed a trade deal at the end of last year (Image: GETTY)
Brexit news: European Commission President Ursula von der Leyen (Image: GETTY)
“The actual totals in pounds can therefore disguise the impact on individual countries.”
Facts4EU.org added: “The problems at the borders have all been about UK exports, not EU imports.
“These have been caused by the over-zealous actions of the EU and its customs authorities in allowing UK goods going to the EU.
“Goods flowing the other way – from the EU into the UK – have continued to flow thanks to the UK deciding to operate a ‘light touch’ customs operation with the EU.
“To the best of our knowledge, no EU trucks have been impounded in the UK due to a French lorry driver having a half-eaten ‘baguette jambon’ in his cab.
Brexit news: The European trade landscape following the UK’s departure from the bloc (Image: EXPRESS)
“This is not the case with the EU, sadly. Last week the Chairman of Marks & Spencer described how an M&S lorry had been impounded in the Republic of Ireland because their driver had a ham sandwich in his cab.
“The driver was then forced to complete hundreds of pages of EU forms by Irish customs officials before being allowed in.
“British people have nothing against EU27 people – it’s the EU autocracy that’s the problem.
“As we wrote yesterday, any move by British people and businesses to buy less from EU27 companies has nothing to do with the British public’s views about the citizens of EU27 countries.”
Facts4EU also lashed out at the Brexit Project Fear doom-mongering, branding it “utter tosh”.
It continued: “Today the United Kingdom is the fifth-largest economy in the world according to the IMF.
“Who wouldn’t be queuing up to sell to us? We represent a massive market for global producers. We are home to the world’s international business language.
“We have the most powerful financial hub in Europe. English Common Law is widely respected around the world for the protections it gives and the efficiency it provides in doing business.
“And – is if all that wasn’t enough – we have the most fecund Prime Minister in the world, sporting the world’s worst haircut. What’s not to like?”
Archwood Group met with the Timber Trade Federation (TTF) and CBI Wales for an in-depth webinar discussing two of the biggest issues facing the timber sector right now: Covid-19 and Brexit.
Archwood Group held the event to explore how the pandemic and Brexit have affected the timber industry, including the challenges to supply and logistics.
The event was led by Ian Price, director of CBI Wales, a not-for-profit business organisation that provides a link between its members and the Welsh and UK governments. On the panel were Josh Burbidge, managing director of Archwood Group and David Hopkins, managing director of the TTF.
Mr Hopkins explained how Brexit and the pandemic have combined to create a “perfect storm”.
“They’ve both presented barriers to trade and doing business,” he said. “The pandemic has increased demand for timber products, whereas Brexit, over time, will produce a drag on doing business.”
He added that while sawmills and manufacturing centres around the world had to close because of Covid-19 restrictions, people across the UK were put on furlough, with many receiving almost their full pay. And because they were spending so much time at home and they couldn’t go on holiday, they decided to improve their homes and gardens, which caused demand for timber products to shoot up. This happened not just in the UK, but around the world.
“The stocks that were available went down and down and down, so by the time the sawmills and producers could reopen and start moving goods again, they were playing catch up, and that process is still ongoing,” said Mr Hopkins. “We have a very tight situation in the market.
“On top of that, at the start of this year, various issues to do with Brexit came in. Each one of those presents more paperwork and a slowing down in the ability to get goods across the border and to market.
“The two messages that need to get through to government in relation to Brexit are about priorities and pragmatism; whether you take a hard-line ideological approach, or a pragmatic view about how this could be solved.”
Mr Burbidge said the UK leaving the EU customs union and single market had caused issues for Archwood Group, impacting its two brands: stair parts, decking accessories and decorative mouldings manufacturer and supplier Richard Burbidge, and premium hardwood flooring supplier Atkinson & Kirby.
He explained there were challenges distributing product into both Northern Ireland and the Republic of Ireland, due to the misclassification of the company’s products, which were incorrectly flagged as needing phytosanitary certificates.
“We’re still seeing delays associated with documentation of up to 48 hours to get products over there but that’s almost been absorbed into how we’re doing business over there,” said Mr Burbidge.
Another major issue is the introduction of the UKCA (UK Conformity Assessment) mark, a new UK product marking that will be required for certain products being placed on the market in England, Wales and Scotland. The UKCA mark won’t be recognised in the EU market, so products that require CE marking will still need a CE marking to be sold in the EU, and these changes will take effect from January 1, 2022.
“The UKCA marking changes will cause us more challenges around labelling,” said Mr Burbidge. “It drives a barrier between us and trading with other countries. So, if a company or one of our suppliers is producing product for Europe and the UK, it will require them to put two stamps on the product. It’s an additional cost and it takes time, and that is something we’re navigating our way through.”
In addition, there’s a shortage of drivers bringing timber material across to the UK from Sweden.
“It’s too onerous and complicated for them to come into the UK,” said Mr Burbidge. “Plus, we’re seeing inflationary pressures on material.”
“When you look at certain softwood products there has been a 100%, sometimes more, increase over the past 12 months or so,” agreed Mr Hopkins.
“We’re encouraging the construction sector to think further ahead. But where this issue causes problems, particularly for some of the housebuilders, is when jobs are priced nine months or more in advance. Then, when the order comes through, the price can be way out from the original quote. That is causing a lot of tension throughout.
“But with the vaccinations and the opening up of the economy, I think we’ll see more people spending money on holidays again,” continued Mr Hopkins. “And while we want to maintain demand in the market, the current levels are unsustainable.”
Mr Hopkins added that production is likely to run behind demand for the next couple of years.
“If, on top of that, you put up further barriers within a country that is a net importer of goods, you limit growth in other sectors that are priorities for the government, particularly housebuilding. And that isn’t sensible.
“The danger is a lot of manufacturers and producers would say they do quite well without selling to the UK. And right now, that would be devastating for the timber sector because we can’t get enough material as it stands. So, we’re asking for the regulatory changes to be delayed.”
Mr Burbidge said he would like to be able to get more of the products his company needs from much closer to home. “And if I can manufacture it here, even better,” he said. “The challenge in our sector is we don’t have the material that is grown in this country to support the finer joinery products that we manufacture. We don’t have the conditions for the kind of trees we need.”
Ian Price said the issues around supply chains, and businesses sourcing or relocating their operations within domestic or national borders, had come about because of the pandemic, not just Brexit. “I think we’ll see a lot more onshoring over the next few years, for jobs and manufacturing,” he said.
Commenting on the challenges that are specific to Wales, Mr Burbidge said that the handling of the pandemic hadn’t been the easiest, from a messaging perspective.
“I’ve got 75 people who come over the border every day from England into Wales, so we’ve got different rules,” he said. “We also have an office in Scotland, so there are different rules there. The whole devolved handling of the pandemic is a challenge.”
“I don’t think anybody is suggesting one way is better than the other, but it’s not helpful the systems are different – that is the challenge,” added Mr Price.
Mr Burbidge highlighted the environmental benefits of using timber, rather than concrete and steel.
“Timber is fundamental to the whole environmental agenda associated with newbuild and building sustainably for the future,” he said. “Concrete and steel aren’t particularly environmentally friendly.
“With timber, if you follow the regulations, you’re required to take timber from a sustainable source, which means planting more trees than you’re taking away. Therefore, it’s much better for the environment.”
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