This blog post is by TTF Managing Director David Hopkins.
As you know, the Government is currently discussing its future options for customs arrangements with the EU. To many of you, this may seem long overdue.
We are now nearly two-years down the road from the EU referendum, 14 months since triggering Article 50, and 9 months since Customs options were first proposed in the Government’s agenda. Yet, the Cabinet is still trying to figure out its negotiating position on our post-Brexit future!
Despite this, I would urge you to keep reading as these talks have the potential to have a major impact on the future of the UK timber trade.
Currently, over 60% of all timber products used in the UK are imported from the EU. When it comes to timber in construction, this figure rises to around 90%.
Over the past two years, since the depreciation of the currency as a result of the EU Referendum vote and increased global demand, timber import prices have risen considerably and many of our members have struggled to accommodate these rises in their own business or pass them on to customers.
Now, the Customs Union options threaten to make this situation worse in several ways.
Firstly, over VAT payments. Under current rules, importers can spread the payment of VAT on EU imports, giving time for goods to be sold before having to pay the tax. This eases cash flow, especially for small business.
However, under the terms of the Taxation Bill, currently going through Parliament, once the UK leaves the EU and its VAT area, this may no longer be possible.
The current option contained in the Bill means timber importers will be obliged to pay 20% VAT upfront, causing huge cost and cash flow implications for our members.
Secondly, and on a wider point, the change to our customs arrangements with the EU will mean a slow-down in throughput of goods into the country. Currently, all timber entering the UK from Europe can clear ports immediately. However, if we leave the Customs Union and goods are subject to customs checks, this will slow down trade, increasing time, bureaucracy and ultimately cost for TTF Members.
Whatever your views on leaving the EU, it is hard to see that anyone voted to slowdown trade and increase cost and red tape for business.
This is why the TTF is raising the issue and the implications with Ministers, MPs and local authorities. We have prepared three documents to be circulated – through our Member companies all over the UK – to local MPs to help them understand the scale of the problem.
- The first is a letter to local MPs outlining the issues above.
- Second is an infographic which details the issues in an easy to understand format, downloadable here.
- Finally, TTF as an affiliate Member of the British Standards Institute (BSI), is supporting the BSI campaign for common product standards to remain after we leave the EU. The reasoning for this can be found in this easy-to-understand graphic here.
It is small actions like this which help push the campaign to MPs across the country, as well as the heads of select committees and cabinet members we have been meeting with and targeting as part of our own efforts.
I realise there is an endless cacophony concerning Brexit and its implications, and that many people are now sick of it, but it is vital that we maintain communication with our MPs to remind them of the importance of the timber sector and the work that your business does in their constituency and across the country.
We are not taking a pro or anti Brexit position, we just want them to be aware of the impact their decisions can have when they are voting in the house.
Meanwhile it’s good to see that many organisations across Europe – not least the Timber Industry Brexit Forum (TIBF) in Ireland – are stressing the importance of getting a fair and mutually beneficial agreement with the UK in the post-Brexit scenario. From that angle, I invite you to check this report ‘Brexit: Protecting growth in the Irish Timber Industry’ produced by the TIBF.
Theresa May is fond of saying “Brexit means Brexit”. Well, it’s our task to ensure that the same trading access and the same business opportunities will stay in place for our dynamic Industry.