Referendum result poses challenges to exporters but will not end EU trade, says Chamber International
24 June 2016
Overseas trade sailed into unchartered waters today (24 June) after voters chose to leave the European Union in the referendum called by David Cameron.
Financial markets and the pound sterling were in turmoil and Prime Minister, David Cameron, announced his resignation in the immediate wake of the referendum result of 51.9% to leave the EU and 48.1 per cent to remain.
Much of the focus for exporters and businesses will be on what sort of overseas trade deal the UK can now negotiate with the rest of the EU.
Chamber International director, Tim Bailey, said: “Today’s referendum outcome is going to create some challenges for all of us who work in export. It will not stop us exporting but, without access to EU trade agreements, UK businesses could become less competitive.
“This whole issue has to be a priority for the Government. Ministers need to establish a negotiating structure that can start multiple trade negotiations. We need to get back to the trading position we are in now as quickly as possible.”
Tim Bailey said that, since the EU–South Korea free trade agreement was put in place in July 2011, UK exports to Korea had increased by more than 100 per cent, largely because the agreement removed Korean import duties on EU goods, giving UK manufacturers a competitive advantage.
He added: “The EU has streamlined the way we do business with Europe and introduced simpler procedures for exporters. We saw this with the opening of the single market.
“Before we had the single market, up to 100 different trade documents could be needed to ship goods from the UK to another EU country. The single market removed customs controls and the need for any shipping documents.
“Even the terms ‘import’ and ‘export’ were dropped and replaced with ‘acquisition’ and ‘dispatch’. The idea, which virtually became a reality, was that it was as easy to deliver goods to Newcastle as it was to Paris.
“There is no doubt, whether we like it or not, that the EU plays a significant role in what we do. We issue EU trade documents for exporters, use EU resources to help businesses access new markets, work to EU origin regulations, tariffs and trade agreements and the Government must come up with a competitive coherent plan as soon as possible.”
Commentators have warned that, in the short term, there may be less investment in Britain while a falling pound could boost exports.
In recent years, and especially since the launch of the European single market in 1992, a great deal of inward investment to Britain has been attributed to the UK's access to the single market of more than 500 million people across the EU and the European Free Trade Association (EFTA).
A decision to pull out will mean that many countries will want a slice of this action for themselves. So, the type of deal which the UK does, and how quickly it succeeds, will be crucial.
That is why many believe the UK would have to stay part of the single market. However, no country has been able to do this without also agreeing to free immigration from the rest of the EU which was a key bone of contention in the referendum debate.
Meanwhile Chamber International’s views chimed with national sentiment. British Chambers of Commerce acting director general, Dr Adam Marshall, said: "Business will want to see a detailed plan to support the economy during the coming transition period - as confidence, investment, hiring and growth would all be deeply affected by a prolonged period of uncertainty.
”If ever there were a time to ditch the straight-jacket of fiscal rules for investment in a better business infrastructure, this is it. Businesses need action to maintain economic stability, a timeline for exit, and answers to their many practical, real-world questions about doing business during and after this historic transition.
"Firms want help to get Britain back to business at a time of great uncertainty. The health of the economy must be the number one priority – not the Westminster political post-mortem.”
Follow Chamber International on Twitter @ChamberInt and on Facebook to learn about upcoming events.
