Never before has the world economy been so reliant on international trade.
Globalisation has quickly reached almost every corner of the world and businesses are trading and communicating with each other in ways which would have never been possible in the decades before now. As businesses continue to trade throughout the global crisis The Chamber of Commerce’s network is committed to support businesses and help them to adapt to the ever changing situation.
In the short term it is predicted that the impact of Coronavirus to global trading will see a downturn of anywhere between 40-70%.
Furthermore, The Office for Budget Responsibility has outlined its predictions of a fall in the UK economy of around 35% over the next three months in line with their predictions that a lockdown will be in place within this time period. It is true that these figures portray an alarming picture of what may happen to the UK economy in one scenario but it is also reassuring that the OBR’s report also stressed the bounce-back, once lockdown measures have been eased should be extremely quick with leading economic experts also expecting trade to resume normally following any restrictions being loosened and the virus itself being brought under better control.
Global trade difficulties have hit some of the World’s largest and most valuable companies, with Apple being a key example. Apple, who are located in The US and who are particularly reliant on China for the production of most of its products has struggled with trading throughout the pandemic and like many others has seen its share price fall dramatically. Only yesterday the world’s largest technology fund the Japanese based Softbank announced it expected losses of nearly $17Billion, citing the global pandemic as the reason. But others like Amazon have seen a ‘pandemic surge’ in their profits and services and despite global ‘pandemic shocks’ to economies across the world Amazon has employed an extra 80,000 staff in response to the increase in demand.
But it is not just the world’s largest companies who are being affected by changes in international trade and Coronavirus. Locally, we have seen many businesses struggling due to restrictions on global trade. Some of Shropshire Chamber’s members and Shropshire businesses rely heavily on trading globally with many reliant on Chinese imports.
• UK Borders:
As governments physical distancing rules are put into practice this has had a significant impact on customer lines and the speed in which it takes for goods to pass through.
Different countries are reacting to the pandemic in different ways and this will, of course have an impact on various policies government’s set on trade, customs and borders.
Luckily, on the whole countries are working productively together to liaise sensible customs policies to ensure goods pass through as easily as is possible.
In the UK both Dover and Heathrow offer useful examples to demonstrate the impact that the Coronavirus is having on international trade within the UK.
The Dover Port reports show that trade is down around 90% in trade column terms.
Similarly, Heathrow Airport has seen a reduction of around 75% of passenger travel since the UK government put in place stricter travel restrictions.
However, Cargo-only travel has seen an increase in excess of 400% in essential supplies travelling through UK customs.
As would be expected, cargo space costs have dramatically increased whilst cargo space expands. Cargo handling times have also decreased as workers across the world continue to follow social distancing and protection advice.
• Government Measures:
There have been a number of government measures welcomed by the business community which have allowed for international trade to continue in the smoothest way possible despite the current restrictions.
These include providing electronic documentation and alternative documentation where available at customs and borders.
The Chancellor has waived import taxes on vital medical equipment including ventilators, coronavirus testing kits and protective clothing. This move will hopefully reduce red tape to ensure frontline health workers get vital equipment quickly and removes barriers to those who want to donate supplies to the NHS.
The Deferral of import VAT and duties is available to companies who applied before 15th April deadline. The Department for International Trade can help by providing help with customs authorities to ensure smooth clearance of their products and offer advice on intellectual property and other issues with business continuity.
More information is available at:
• UK Export Finance (UKEF) can help:
- if your business is facing disruption due to late payments, UKEF can help ease cash flow constraints by guaranteeing bank loans through its Export Working Capital Scheme
- if you are concerned about getting paid, UKEF offers an export insurance policythat can help you recover the costs of fulfilling an order that is terminated by events outside your control
- UKEF can also support finance for overseas buyers through the Direct Lending Facility scheme, so they can continue to buy your goods and services
- UKEF has over £4 billion of capacity to support UK firms exporting to China, as well as significant capacity across other markets affected by coronavirus (COVID-19) to help cover these risks.
To find out if UKEF covers your region, email email@example.com
New guidance regarding electronic documentation has been published by the government and there has been an international effort to use electronic documents and signatures instead of papers at the borders where possible in order to free-up time and allow for a quicker and smoother movement of goods process.
Lobbying efforts by the UK Chamber network for greater international co-operation with electronic signatures seems to be proving positive with a significant amount of new countries joining the ever growing list on a daily basis.
For more information please visit:
Brexit negotiations are due to continue starting at the beginning of next week with No10’s Chief Negotiator David Frost to hold (virtual) talks with his EU counterpart Michel Barnier.
Both the EU and UK Government have stressed their stringent commitment to continued talks through the global pandemic crisis. Government ministers have made clear that that the UK is still fully on track to leave the EU by the end of 2020.
The Department for International Trade continues to work through the Brexit climate and is still in the process of agreeing a free trade deal with the US.
Discussions between Liz Truss Secretary of State for International Trade and her US counterpart started at the beginning of last month.
Supporting trade locally, nationally and internationally is a key mission for the Chambers of Commerce network and The Shropshire Chamber of Commerce is here to provide businesses with the all the necessary help possible to navigate through these difficult and unprecedented times.