LONDON (AP) – The Brompton Bicycle Ltd. team thought they were prepared for Brexit.
The bosses of a British company exporting handmade folding bikes to 47 countries examined the uncertainty swirling around the decision to move the UK out of the European Union and began stockpiling parts.
With just over a month to go before Britain makes a sharp economic rift with the EU. His experience proves that Brexit will be bumpy, even for businesses that have been trying to prepare.
“We built this fantastic stock for the worst case scenario for Brexit,” said Will Butler-Adams, CEO of Brompton.
The coronavirus epidemic then struck. Orders dried up when stores closed during the spring shutdown and only rose when they opened.
“We fought to get the parts back,” Butler-Adams said. “So we had to eat into our Brexit stocks, which saved us in many ways. But that means now that we were prudent and organized everything three years ago, now we’re here with a month left and we don’t have a Brexit stock and we’re ahead of Brexit. “
Brompton is just one of thousands of British companies longing for huge changes on 1 January as Britain leaves the 27-member bloc’s economic structures. The UK broke politically with the EU earlier this year, but remained part of the bloc’s economic embrace during an 11-month transition as the two sides tried to negotiate a new free trade agreement that would take effect on 1 January.
However, months of tense and often trying negotiations have not resolved disagreements over fishing rights, fair competition rules and the settlement of future disputes. Intensive negotiations should result in a breakthrough or final breakdown in the coming days.
If there is no agreement, New Year’s Day will bring tariffs and other barriers to trade between the UK and the EU. The burden falls mainly on Britain, which accounts for almost half of its trade with the EU.
Things will be smoother with an agreement that would eliminate commodity quotas and tariffs, although businesses are still struggling with new barriers and bureaucracy. Brexit means millions of customs declarations to be filled out, thousands of new border staff to check shipments, and the construction of parking spaces for huge trucks as a new border is built after decades of smooth trade.
According to David Henig, a trade expert at the European Center for International Political Economy, January 1 marks “the biggest overnight change in trade relations any country has experienced since 1945”.
“It starts with a permissive regime where we can trade more or less anything with the EU that we like, a permit-based system where we have to control everything we want to trade – be it goods or services – we even allow it,” he said.
Proponents of Brexit say any short-term pain is worth it, because without EU rules, the UK could set its own priorities and forge new trade relations around the world.
But most economists say the economy will suffer. According to Britain’s Independent Budget Responsibility Office, unbound Brexit will wipe out 2% of UK GDP in 2021, in addition to epidemic damage.
Brompton boss Butler-Adams is an optimist and an outstanding fan of cycling and British manufacturing. He is confident that Brompton, which exports 75% of its bikes, can thrive despite Brexit.
The company is expanding its factory on the outskirts of London, where workers assemble commuter-friendly bicycles that can be folded to about the size of a briefcase. The company employs 500 people and plans to employ 200 more next year. Brompton has added e-bikes to its repertoire and is planning a serious boost to bike-loving Germany.
But Butler-Adams was shocked by the news that one of the British government’s first post-Brexit trade decisions will be to end the EU’s anti-dumping duty on Chinese bicycles. Brompton and other UK manufacturers say the abolition of the 48.5% tax will flood the market with cheap bikes backed by the Chinese state.
– We can’t compete. This is not a level playing field, ”Butler-Adams said.
Brompton prompted the government to change its mind, arguing that officials had concluded from outdated statistics that British-made bicycles accounted for 1% of domestic sales, which is the threshold for maintaining the duty.
The Department of International Trade said it had consulted with British bicycle manufacturers and “assessed the evidence received against certain criteria” but did not reject the measure.
“We recognize the challenges facing the industry, but British consumers will bear the brunt of higher prices if anti-dumping measures are maintained or relocated from the EU,” the statement said.
Prime Minister Boris Johnson’s government may have extended the post-Brexit transition period, and this was urged by a number of businesses after the coronavirus began to ruin lives and the economy. The government refused and told businesses to prepare for the changes on 1 January
Many companies complain that they don’t know what these changes will be – in part because they are still negotiating them. The government recognizes there could be delays and disruptions in trade, including a “worst-case scenario” supporting 7,000 trucks near the port of Dover and a two-day wait to cross the Channel.
Over time, for Britain and the EU to approve and ratify the convention before the end of the year, it is still unclear whether there will be an agreement. The agreement requires the EU to restrain its demands on fisheries and Britain to succumb to competition rules, which are difficult issues for both parties.
“It’s about settling the policy,” Henig said. “If it were about solving the technical details, we could have a business tomorrow.”
Butler-Adams says the deal will make things easier, though he is struggling to get all businesses to rise above Brexit. But he remains optimistic about the future, whatever happens.
“Of course, we would all prefer free trade, we all prefer minimal bureaucracy,” he said. “(But) we shouldn’t just give up if there’s a little hurdle in the bureaucracy and the tax. We just have to move on because there is still a chance.
___
Follow AP Brexit coverage at https://apnews.com/hub/brexit
