18 May, 2024

The start of the deal

05 February, 2021

UK businesses – indeed, the UK population in general – were kept on tenterhooks right up to the 11th hour last year regarding a deal-or-no-deal Brexit outcome. In the event, an agreement was struck, although many of the ramifications for the overall economy and specific business sectors are still being pored over. Tariff-free and quota-free access to the EU marketplace was one of the major achievements of the deal, something that stretches beyond the EU’s arrangements with Canada and Japan. Moreover, Brexit offers the potential for many firms to explore new markets beyond the EU. For UK companies exporting goods overseas, greater trade freedoms could be at their disposal, and the devalued pound that came about largely due to the uncertainties surrounding Brexit could work to their advantage and prove to be attractive to foreign buyers.

In terms of the Brexit deal’s market impact for the fluid power equipment and systems marketplace, Chris Buxton, CEO of the British Fluid Power Association (BFPA), believes the fact that the EU–UK Trade and Cooperation Agreement (TCA) was announced at such a late stage did little to help companies trying to prepare for the end of the transition period – especially against a backdrop of the COVID-19 Pandemic. “We were all expecting a ‘skinny deal’ but when it was announced it was certainly short on detail in many areas,” he says. “In fairness, such areas tended to be in the financial and general services sectors rather than in the area of goods, which will have the greatest impact upon the fluid power sector. However, I feel that it was somewhat disingenuous to announce the deal as being ‘tariff-free’ as the rather obvious and understated caveat to this was the fact that goods are only tariff-free if they meet the necessary rules of origin, and most of the confusion that has since arisen revolves around the disproportionate complexity of these rules.”

Buxton explains that the BFPA seeks to help members through this jungle of regulation but considers that the more one delves into the subject the more complex it becomes. “Fluid power companies, like most product-driven industries, will have to examine their supply chains to check that they meet percentage thresholds for content,” he explains.

“This is a non-trivial exercise, and many are having to employ expensive consultants to help them through the process.” On the potential upside, Buxton adds that we may see an increase in domestic sourcing of product as the cost of importing increases – as he believes it surely will.

Vanda Jones, executive director of the British Compressed Air Society (BCAS) reflects that, as we get used to working in our new normal, we are refocusing on the industry’s requirements. “Despite a signed agreement, the process of bringing goods into the UK and providing service to the EU is not without its challenges,” she believes. “Early issues surrounding rules of origin and tariffs will be worked through, but we should not expect this to be without financial impact.” Jones adds that EU legislation and directives are also core to BCAS and as it moves into the post-EU era, and she believes it will be critically important to ensure BCAS members and users alike are well-informed of any changes and potential divergence in this important area.

As well as the day-to-day standards development work, Jones explains that BCAS is working closely with the British Standards Institution (BSI) to ensure that our industry key players are well-represented at this important crossroad. “The Society is a ‘go-to’ service for standards and legislation interpretation in our sector, and this new era brings with it challenges that we are ideally placed to support,” she points out.

UK companies will continue to adjust to the new relationship with the EU over the coming months and into the longer term. Many will also, of course, seek to explore attractive opportunities surrounding the new trading freedoms the UK now has at its disposal. Brexit is now a reality and the benefits as opposed to the constraints must be the key focus of industry. Carpe potestatem

Ed Holden, Editor

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