The Chartered Institute’s third annual Import Export Show took place in central London yesterday, with international trade experts, policymakers and industry representatives gathering at the Leonardo Royal Hotel, St Paul’s for a day of discussion and networking.
Across a number of sessions panelists noted the volatile international trade environment firms face currently, highlighting a uniquely challenging year in trade with the swift rise of protectionism, but many said there were reasons to be optimistic.
Insights were shared across a range of topics, including EU-UK cross-border trade, FTA utilisation and managing compliance amid increasing sanctions.
Is mindset the problem?
In an afternoon session on whether mindset is the biggest barrier to business’ trading, panelists were quick to note the challenges they currently face.
NatWest Group’s head of sales channel management, Nicholas Clark, said that “market volatility” was ultimately the biggest barrier, with the external environment currently marked by “uncertainty”.
George Riddell, managing director of trade consultancy Goyder, added that it’s been “a really tough decade” for UK traders and that the impact on businesses should not be underestimated.
Many speakers highlighted changes within the wider business ecosystem that could be helpful to smaller traders.
The executive vice-president of the UK’s chapter of the Organization of Women in International Trade, Noreen Burroughs-Cesareo, described this as a need for the right “architecture” to be in place: “compliance, market and contracts”.
While the market will change, firms can take control of compliance and their contracts.
This point was echoed by the Chartered Institute’s professional practice director, Kevin Shakespeare, who said that “knowing your business” is key to being able to export successfully – an understanding of your product or service, plus “a core base of good supplier relationships”.
All agreed that accessing trade finance is not a UK-specific problem, especially for small businesses, which can still be perceived as a risk by many banks.
FTA utilisation
In a session led by the Chartered Institute’s UK public affairs lead Grace Thompson, and sponsored by NatWest, on utilising free trade agreements (FTA), panelists highlighted the benefits for businesses of exploring the UK’s recently signed trade deals.
A representative from the Department for Business and Trade (DBT) highlighted the deals secured this year, including the UK-India FTA, and noted the ongoing negotiations with the Gulf Cooperation Council.
Highlighting the benefits of new agreements to smaller businesses, they gave the example of a small business being able to collaborate with a Japanese partner firm more effectively owing to the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP).
CPTPP and bilateral agreement with Japan, mean they don’t have to set up a local office, can move data freely between offices and also send people to service their contracts, they said.
While none of those challenges are individually insurmountable, they would all come together to form a reasonable friction, they added.
They concluded that, as DBT continues to progress other FTA negotiations, being based in the UK means you have access to all of these markets.
Another panellist noted that while FTAs present great opportunities for firms to export, it’s important they do their due diligence and market research first, rather than assuming that, just because an FTA is in place, a certain country is automatically a good choice of export market.
They recommended taking a week to explore the market in person, visiting trade shows and understanding the competitor landscape, which is ultimately lower cost than rushing into the wrong market.
Even lower-cost, and much closer to home, a senior figure from the Chartered Institute highlighted the value of attending Chartered Institute training courses to become confident in to customs practicalities needed to trade compliantly.
With these online and remote tools available, smaller firms are better able to “harness” their power.
EU cross-border trade
In an afternoon session sponsored by EORI (UK) on changes to EU cross-border trade, panelists discussed how advancing UK-EU trade cooperation could yield practical benefits to traders but could come at a cost.
One senior customs leader said that the UK needs to move from mutual recognition to dynamic alignment, which means agreeing on a set of rules, rather than having ongoing back and forth about how to proceed.
We should nonetheless be reflecting on how customs have worked at the border since Brexit, and be proposing changes in our interests, they added, noting that much of what has been done is to reimplement the same legislation.
They concluded that we now have an opportunity to agree on a better system.
The UK’s development of its own Carbon Border Adjustment Mechanism also presents opportunities for EU alignment, although one speaker warned that it will take a lot of negotiations before this happens.
Currently, the UK’s CBAM is slated for implementation in 2027, while the EU’s – already in force – will enter its 'definitive phase' and charge businesses from next year. Following recent changes, small and medium businesses will no longer be in scope, reducing the administrative burden they face.
Another business leader cautioned that it will be important not to replace red tape with green tape, if significant evidence is required of small firms to demonstrate they’re not in scope, the benefits are then lost.
Sanctions and controls
In a session that looked at the rise in export control measures and trade sanctions, and how businesses can remain compliant, panelists outlined where firms can take control amid increasing sanctions circumnavigation.
The rise of AI and quantum computing was noted as making it more difficult to police sanctions enforcement.
Steps businesses need to take to ensure they’re not unintentionally violating controls include basics such as knowing your customer. Panelists also highlighted the need to expand the scope of this to areas that are “both geographically and geopolitically close” to sanctioned countries and entities.
It was highlighted that, as well as a potential threat, AI could be part of the solution – able to spot anomalies in trading data that could be indicative of mass non-compliance with sanctions.
However, a data gap between large multinationals and smaller firms emerges, which would make the rollout of AI solutions more challenging for SMEs.
Elsewhere in the headlines
· Trade has been weaponised amid China-Japan tensions over Taiwan, with China suspending Japanese seafood imports
· The UK government is announcing 13 new sites for defence manufacturing, with industry being encouraged to submit proposals for “munitions and energetics factories”
Yesterday in trade
- The first half of the Import Export Show included a keynote speech from John Drummond, head of trade policy at the Organisation for Economic Co-operation and Development highlighting trade's resilience in the face of rising protectionism
- He also joined a spirited panel on what's next for UK-EU trade, which covered reactions to overproduction from China, innovation and digitalisation in trade and political challenges
You can read more about those stories here.
