One of the EU’s regions most economically linked to Britain is urging its companies to look beyond the UK for new opportunities until they feel the full impact of post-trade conditions. Brexit.
Jan Jambon, Minister-President of Flanders, told the Financial Times that his administration is encouraging companies to think ambitiously about new markets – by harnessing the region’s strengths in high-tech sectors such as chemicals and machinery.
The strategy mirrors that advocated by British Prime Minister Boris Johnson. Mr Johnson believes that once UK companies get a handle on filling out forms and other new requirements for doing business with the EU, they will have the administrative know-how to easily do business elsewhere.
Mr Jambon said his government’s agenda – known as ‘Going beyond Brexit’ – was driven by a similar logic, noting that the UK’s departure meant Flemish companies would have to navigate customs procedures that did not exist in the EU and that they should make use of this new knowledge. .
“Companies will be supported [by the government] diversify their export markets and transform their business activities, ”said Jambon.
Plans for the region include support for customs formalities and other administrative obstacles, as well as assistance from a government agency in defining export strategies.
The move shows how the EU is grappling with the realities of what Brexit means for trade, as businesses, especially SMEs, face new obstacles to established trade relationships. The message from Flanders is that it is not just the UK that needs to move forward.
Mr Jambon acknowledged that Flanders also had to be prepared for the eventuality that trade with Britain – its fourth largest export market – was simply not as lucrative as it had in the past.
Studies cited by the Flemish authorities suggest that even if Britain had opted for a more flexible Brexit, by remaining in a customs union with the EU, Flanders would have lost 0.6% of its gross domestic product and 6,500 jobs. .
“It is already difficult to say what effect Brexit will have on the competitive position of our companies in the UK market,” said Mr Jambon. “If that changes and our competitive position will be worse than it was. . . so, okay, market diversification also helps businesses.
Flanders, which encompasses the northern part of Belgium, has been closely linked to the British economy for hundreds of years. Its ports of Zeebrugge and Antwerp are vital channels not only for Belgium but also for the EU at large in its trade with the UK. Flanders’ annual exports to the UK are around 26 billion euros, with cars and chemicals among the main sources of bilateral trade.
So far, Belgium has not been affected by the disruption that has ravaged trade on the UK side of the border, with no large-scale backlogs in ports.
But Mr Jambon said the moment of truth was yet to come – noting that UK customers of Flemish companies had stockpiled in the last months of 2020, temporarily reducing demand. That, coupled with generally light trading around the start of the year, meant the full reality of the new deals wouldn’t start to kick in until late January or early February, he said. “This will be the real stress test.”
Government officials expect food, textiles, cars and chemicals to be among the most affected sectors, according to university studies.
Tine Vandervelden, international business director at the Federation of the Belgian Food Industry, said the sector was set to reveal more issues in the coming weeks.
The UK’s new limitations as a distribution hub were of immediate concern, as some companies face tariffs when they re-export products from Ireland after importing them into Britain.
“There has been hardly any time to adjust to this situation,” said Ms Vandervelden. One proposal is to ship directly from Belgium to Ireland, removing the UK, but this would cause significant logistical difficulties.
Further complications will follow as the UK implements the full range of border controls in the coming months, having introduced a light regime earlier this year. It’s the “calm before the storm,” Ms. Vandervelden said.
Luc Vanoirbeek, general secretary of the Belgian Association for Horticultural Auctions, said the effect of Brexit on the fresh produce sector in Belgium was masked in some ways due to the quieter winter season for fruit exports and vegetables.
“Once the season really starts, every delay is too much delay,” he said, referring to the need for quick deliveries of perishable goods such as strawberries and lettuce.
Mr Jambon said contingency plans were in place to try and minimize border disruptions at ports: Dedicated parking areas have been created to deal with customs formalities, and drivers are also equipped with a app indicating when they can move from parking lanes to port terminals. .
The hundreds of questions authorities in the region have received through their Brexit Helpdesk and in webinars since the trade deal was concluded are an indication of the potential difficulties.
A webinar, organized specifically on the so-called “rules of origin” that goods must meet to be traded duty-free, filled so quickly with participants that it was necessary to organize another for the following week .