Chamber News

• 20% of firms say poor transport connections are a barrier to exporting • 41% of businesses are put off by the cost of international transport connections

A survey of more than 8,000 businesses released today (Thursday 10 May 2012) by the British Chambers of Commerce, shows that while exporting by UK firms is on the rise, poor transport connections prevent them from exporting more. The survey showed that the number of companies exporting goods and services from the UK has significantly increased. Last year a fifth (22%) of firms surveyed were exporting, compared to almost a third (32%) this year.

Despite encouraging signs of more firms exporting, the findings also highlight a number of barriers that prevent companies from selling overseas. One in five businesses (20%) say poor transport connections are a barrier to trading internationally. Exporting plays a vital part in rebalancing the economy and ensuring a lasting recovery, so we would urge the government to boost transport connections to help businesses take their products and services to new international markets.

Transport connections support supply chains and are essential for moving goods to market. According to the BCC’s survey, businesses in the UK believe that the cost and quality of these connections are vital to trade. Time is money, and if firms can’t access markets quickly enough, they end up holding more stock, which hits their bottom line.

Overall, a fifth (20%) of firms see poor transport connections as a barrier to export; increasing significantly for businesses based in Scotland (34%) and Northern Ireland (32%). But more than quality, businesses are concerned with the cost of transport when exporting. 41% say that the cost of trade connections is also an obstacle. Almost half (49%) of firms that would consider exporting are concerned by the cost of trade connections – a worrying finding as the government looks to encourage firms to consider exporting for the first time. It is not just international connections that create problems for exporters. Nearly a quarter of UK businesses (23%) said that domestic transport links are a concern.

Support international trade by improving transport connections

Based on the findings, the BCC is making a number of recommendations to the government, including:

• A comprehensive aviation strategy for the UK: Politics and short-termism must not be allowed to hamper efforts to build a world-class system of airports and connections. That means alleviating the South East’s capacity crunch, ensuring regional airports have strong international connections, and maintaining good links between regional and hub airports.

• Measures to encourage private sector investment in infrastructure: In addition to implementing the National Infrastructure Plan, the government must encourage more private sector investment. That could include the introduction of a national infrastructure bank or fund that co-funds local and national infrastructure projects.

• Accelerate the implementation of road tolling: This would provide funds for new capacity at pinch points, such as the A14 between the Port of Felixstowe, Cambridgeshire and the Midlands. In the longer term, a more comprehensive, nationwide system of tolling or pricing along trunk routes could improve the effectiveness of the UK’s road network for business.

Commenting, John Longworth, Director General of the British Chambers of Commerce (BCC) said:

“Encouraging more British firms to export should be the government’s number one priority. Exports are vital to creating and sustaining an economic recovery. More businesses are exporting in 2012 compared to last year which is good news, but many still face barriers when looking to trade overseas.

“We need to unlock the potential of our existing and future exporters by improving transport links, both locally and nationally, and by slashing burdensome regulation that deters companies from taking their business abroad. Delivering a clear aviation strategy, improving access to sea ports and committing to investment in infrastructure projects would help to tackle some of the major transport issues businesses face when trying to move their goods not just around the UK, but globally. Furthermore, scrapping damaging increases in airline taxes would go a long way to reducing the transportation costs many companies say is a major concern when looking to export. British businesses must also be able to treat Europe as their home turf. Making it easier to trade in these countries is a must.

“We have fantastic companies in Britain with products ready for export. The government needs to get behind these businesses so they can penetrate new markets, and feel confident when taking their goods and services overseas.”

Commenting on the Queen’s Speech today, Caroline Williams CEO Norfolk Chamber of Commerce said:

Business has said time and time again that the government must choose between boosting the economy or playing short-term politics. Businesspeople and voters understand that the economy must come first, especially given continued uncertainty across the eurozone.

On balance, business will welcome some of the government’s proposed legislative measures, but express serious reservations about others. Positive steps such as reform to employment tribunals and red tape reductions could be undermined by complex new burdens around shared parental leave, for example.

Ministers could have been bolder by including legislation to establish a British business bank, and to further simplify dismissal rules.While there are clear wins for business in the government’s programme, ministers are wasting parliamentary time on House of Lords reform and other politically-motivated measures, rather than on more support for growth and jobs.

Director General British Chamb ers of Commerce John Longworth’scomments on particular issues arising in the Queen’s Speech can be found below:

On banking/finance (Banking Reform Bill):

In broad terms, we support the aims of Sir John Vickers’s recommendations on ring-fencing. There is a need to strengthen the UK’s banking system and make it easier for business customers to punish poor service or take their business elsewhere. However, the Banking Reform Bill put forward here does not include a fully-fledged British business bank, which we believe is necessary to address the finance gap facing many companies, particularly high-growth businesses and new borrowers.

On executive pay (Enterprise and Regulatory Reform Bill):

Businesses must be able to reward good performance. Conversely, there should be no rewards for poor performance. But these responsibilities should be exercised by companies’ non-executive directors and remuneration committees, in the interests of shareholders. Shareholders themselves must also hold boards to account.

On regulation and red tape (Enterprise and Regulatory Reform Bill):

We welcome the commitment to reduce regulatory burdens on business, and to limit the number of inspections that businesses face. These are steps in the right direction. Firms value positive, constructive interaction with regulators, but not un-coordinated inspections and punitive enforcement. If these proposals remove red tape and lessen the amount of time businesses spend on compliance, they will be welcomed by companies across the land.

On employment Tribunals (Enterprise and Regulatory Reform Bill):

“We warmly welcome the government’s commitment to reforming the employment Tribunal system, particularly the introduction of fees for claimants and efforts to ensure that fewer bogus claims are even considered in the system.

However, we need to be sure that these new fees result in a reduction in the number of cases employers are faced with year-in, year-out. One in five companies has been threatened with a Tribunal in the last three years, according to BCC’s own member research, and this puts companies off hiring. So we will be watching closely to ensure that this number diminishes, and fast.

On flexible working (Children and Families Bill):

The government has decided to expand the right to request flexible working to all employees, not just those with children under the age of 17. In doing so, they have ignored the clear view from business that no additional regulation was necessary. Companies are already agreeing flexible working with employees on an informal basis, and new regulation will only lead to unintended and perverse consequences, such as risk-averse behavior and less hiring. The evidence is clear: there’s just no need for this new regulation.

On shared parental leave (Children and Families Bill):

Ministers have chosen to ignore the fact that a complex new system of shared parental leave brings fiendish complexity and huge uncertainty for employers across Britain. These proposals will hit business at precisely the time ministers are asking companies to create jobs and spur growth.

While most businesspeople identify with the idea of gender-neutral parental leave, they’ve warned time and again that the government’s proposals are unwieldy, difficult to understand, and fraught with potential complications.

Businesses may now be exposed to endless appeals, legal challenges and grievances. The government has promised to cut red tape, but continues to tinker with employment legislation, bringing uncertainty and costs to businesses. If shared parental leave is introduced the government must ensure that the possible patterns that can be requested are limited to reduce complexity, by limiting requests to chunks of one month or more.

On utilities (Energy Bill and Draft Water Bill):

If the UK is to secure the investment needed to upgrade its energy infrastructure over the coming decade, we must have an electricity market that provides predictability and stability for both investors and businesses. As ministers progress with electricity market reform, they must get the design of the new system right, and take the needs and cost concerns of both existing and future businesses into account.

Business would have preferred stronger and more immediate action on water to extend the benefits of competition to companies across England and Wales, who presently do not benefit from the choices available to businesses in Scotland.

Norfolk businesses are expressing ‘guarded optimism’, so the news that the UK economy contracted in the first quarter – thereby heralding a technical recession is unexpected. Norfolk businesses are advising of strong exports and plans to create more jobs. Read the latest comments on Norfolk business from Caroline Williams, CEO Norfolk Chamber on the Channel 4 Jobs Report blog.

• 40% of exporters saw an increase in export sales over the last three months

The fourth DHL/BCC Trade Confidence Index, a measure of the UK’s exporting health, reveals that exporters in the UK have seen increases in exporting activity over the first quarter of the year, with many businesses expecting the trend to continue in Q2 2012.

The index, which draws upon a survey of over a thousand exporters and an analysis of export documentation (required of all UK companies exporting goods outside the EU), shows that export orders and sales have increased over the last quarter. Trade documentation data for UK goods exports in Q1 2012 shows an almost eight percent increase (7.7%) on the same quarter last year, demonstrating that growth in export goods continued.

When asked about export activity over the last three months, 40% of businesses said they had seen an increase in export sales. When asked with regards to expected export activity, 39% reported an increase in export orders for the next quarter. The survey series shows that many exporters found last year challenging, with high input prices for oil and other commodities hammering many firms. However, the survey for the first quarter of this year shows that the price pressures are easing, and this combined with lower inflation could make it an easier year for many exporters.

The balance of firms reporting increases in export sales (over the last three months) and export orders (for the next three months) rose to levels last seen in Q4 2010. While it would be too rash to draw the conclusion that the UK economy is now firmly on the path to recovery, the data is encouraging, and shows that many exporters are more confident in 2012 than they were the previous year.

Commenting on the results of the index, John Longworth, Director General of the British Chambers of Commerce, said:

“At the end of 2011, there was a huge amount of uncertainty surrounding the eurozone sovereign debt crisis and its impact on UK firms. But the beginning of 2012 saw some semblance of calm retuning which has translated into greater confidence and activity among UK exporters. Export orders and sales have risen strongly in Q1, and documentation returns are the highest on record. While it is too early to say this represents the start of a strong recovery, it’s fair to say that it is a reason to be optimistic – in particular contrast to some of the most recent economic data.

“Exports are vital to the rebalancing of the UK economy, which is why it’s crucial that we support firms looking to trade internationally. We must maintain the UK’s position as a strong trading nation. So making sure our business owners and exporters of the future are well-equipped with the right skills is key. Only by looking at international trade from every possible angle now will we have the building blocks for a vibrant exporting community in the future.”

Phil Couchman, CEO of DHL Express UK and Ireland said:

“Despite the amount of flux in trading confidence and activity over the past year, this report indicates that there is light at the end of the tunnel for UK exporters. Both export sales and orders have strengthened within the first quarter of 2012, an increase after four consecutive quarters of decline.

“We have seen an increased demand for British exports to countries outside the Eurozone, with our greatest volumes going respectively to the USA and China. We are also seeing an increase in trade to the booming BRIC nations, including Brazil which has recently overtaken the UK to become the sixth largest economy in the world*.

“Yet more needs to be done. British businesses that are looking to export for the first time need our help, and we in turn must be prepared to support them navigating the complexities of new markets; from local nuances to complicated customs or shipping regulations.”

For the full report, click here.

The 1987 Convention on a common transit procedure establishes the measures facilitating the movement of goods between the EU and Iceland, Norway and Switzerland.

The rules are effectively identical to those of the Community transit system, the procedure used for customs transit operations between the EU Member States themselves, as well as Andorra and San Marino.

The detailed rules are set out in the Community Customs Code.

It is planned that the Convention on a common transit procedure (as well as the Convention of 20 May 1987 on the simplification of formalities in trade of goods) will be extended to include Croatia and Turkey.

The European Commission has adopted two proposals with regard to the position to be adopted by the Union in the EU-EFTA Joint Committee, when these matters are debated.

As both countries have however fulfilled the legal, structural and information technology requirements, which are pre-conditions for accession, and as the Joint Committee has effectively invited them to apply, these are merely formalities.

Both countries can be expected to be taking part in the common transit procedure with effect from 1 July 2012.

Iconic companies including Mars, McLaren, Airbus, The Royal Mint and Sunseeker are among those selected to take part in a national exhibition, which showcases the very best of British manufacturing.

Beating competition from hundreds of UK companies, they will join around 40 others at the Make it in Great Britain exhibition, which will take place at the Science Museum during the Olympic and Paralympic Games this summer.

The exhibition aims to raise awareness of the dynamic, advanced and innovative industry that exists in the UK today, and will feature British manufacturing feats including the manufacturing journey of a Mars bar; ‘from bean to bar’, and a lightweight on-demand transport system, which has been piloted at Heathrow Terminal 5. Other Make it in Great Britain exhibition highlights will include a macro camera black box showing telescopic, planetary and earth images from E2V.

Business Minister Mark Prisk said:

“Manufacturing accounts for 8 per cent of total UK employment and well over half of export goods, yet current perceptions of the industry are out of date and do not reflect that reality. We have selected a really exciting mix of exhibits, from the manufacture of MRI magnets by Siemens, to the secrets behind McLaren’s winning team.

“I hope that as many people as possible visit the exhibition and see all of the great examples of British design and manufacturing – it will be spectacular.”

Mark Cropper, Chairman of James Cropper plc, and a member of the exhibition judging panel, said:

“The Make it in Great Britain exhibition will be a fantastic display of manufacturing prowess, telling stories from around the UK; ranging from a Sunseeker luxury motor yacht to a multi-award-winning laser ophthalmoscope – developed by a company called Optos – that allows an optician to take a 200 degree scan of a patient’s retina when a normal eye examination would only allow around 30 degrees. This is truly groundbreaking and manufactured right here in the UK.”

Juergen Maier, Managing Director, Siemens Industry Sector UK, which will be exhibiting said:

“We’re delighted that Siemens has been selected to be part of the Make it in Great Britain exhibition. It’s a real honour to be part of such a prestigious event at the iconic Science Museum. Alongside the other exhibitors, we’re committed to showing the world that British manufacturing is a dynamic sector offering great career and investment opportunities.”

Ian Blatchford, Director of the Science Museum commented:

“We’re incredibly excited to be hosting the Make it in Great Britain exhibition this summer. The Science Museum and its world leading collections demonstrate some of the greatest engineering achievements of the last 200 years. We hope that as many people as possible visit the exhibition, and see at first-hand how innovation in British manufacturing is still thriving today.”

The exhibition is the culmination of the Make it in Great Britain campaign; an initiative launched by the Department for Business, Innovation and Skills last year which aims to challenge outdated opinions of the UK manufacturing industry, worth approximately £130bn to the UK economy each year and employing 2.5 million people.

Make it in Great Britain organisers are still looking for the Make it in Great Britain 30 Under 30 – 30 young rising stars working in manufacturing, aged under 30. The deadline for nominating an outstanding worker has been extended to Friday 20 April.

The exhibition will be open from 24 July to 9 September, and is free to visit. For more information please visit www.bis.gov.uk/makeitingreatbritain

According to the British Chamber of Commerce in Belgium, Belgium is the UK’s sixth-largest export market, worth £10 billion a year. The UK is Belgium’s fourth-largest export market with two-way trade worth in the region of £22 billion, of which £2 billion is in services.

Flanders is the northern, Dutch-speaking part of Belgium. The Flanders Investment & Trade Agency describes the region as a “central location, with extensive infrastructure, and mature logistics. Flanders is a key economic region in Europe and a perfect distribution centre from which multinational companies can access all of Europe.”

West Flanders Provincial Council is seeking to assess the demand from UK businesses for a West Flanders International Office: this would provide flexible premises and business support services based in West Flanders. The Office would help UK companies to do business with their counterparts in West Flanders and, from that base, with the wider EU.

The flyer below summarises the range of services likely to be on offer.

Those of you who maybe interested in this opportunity, should complete and return the Demand Assessment no later than 21st May 2012.

The latest report from the World Trade Organization (WTO) offers bad news for exporters, noting that the 2010 “rebound” of 13.8% growth faded badly in 2011 to just 5% and is set to fall again, to 3.7% this year.

WTO economists have attributed the continuing slowdown to the global economy losing momentum due to a number of shocks, including the European sovereign debt crisis.

“More than three years have passed since the trade collapse of 2008-09, but the world economy and trade remain fragile,” WTO Director-General Pascal Lamy said. “The further slowing of trade expected in 2012 shows that the downside risks remain high. We are not yet out of the woods.”

The present trade forecast assumes global output growth of 2.1% in 2012 at market exchange rates, down from 2.4% in 2011, based on a consensus of economic forecasters.

However, the WTO warns that there are severe downside risks for growth that could have even greater negative consequences for trade if they came to pass. These include a steeper than expected downturn in Europe, financial contagion related to the sovereign debt crisis, rapidly rising oil prices and geopolitical risks.

Economic prospects have improved in the USA and Japan, as labour market conditions improve in the former and business orders pick up in the latter, but these positives will only partly make up for the earlier negatives.

Meanwhile, the European Union may already be in recession.

The WTO figures rather contradict popular perceptions with regard to developing and developed economies. The report shows that the latter exceeded expectations with export growth of 4.7% in 2011, while developing economies (for the purposes of the analysis this includes the Commonwealth of Independent States) did worse than expected, recording an increase of just 5.4%.

More details are available on the WTO website.

A network of companies fraudulently importing Chinese tube and pipe fittings via several countries in South East Asia, to evade high EU customs duties, has been uncovered.

Investigations carried out by the European Anti-Fraud Office (OLAF) and authorities in several EU Member States, in co-operation with Indian and Taiwanese customs, led to the recovery of €9 million in customs duties.

Resultant criminal proceedings in Germany and the UK have led to prison sentences for three of the persons involved.

OLAF investigations into the imports were triggered by information from the EU industry concerned and the customs authorities in several Member States. They had noticed changes in the trade pattern, namely away from the primary sources of tube and pipe fittings in China to unknown suppliers in countries not commonly known as producers of that product.

Imports of goods, claimed to be made in Japan, by a German importer attracted the attention of Belgian Customs because the freight was actually loaded in the port of Dalian in China and then routed via Japan to the EU.

Close co-operation between German, Belgian and Dutch customs quickly led to the detection of further fraudulent imports into the EU from India and Taiwan with false commercial documentation of origin.

The two UK offenders were sentenced to a 12-months’ suspended sentence and two years’ imprisonment respectively. A third faces a financial penalty.

An anti-dumping duty rate of 58.6% on certain Chinese tube and pipe fittings of iron or steel was imposed in 1996. The duty was subsequently extended to include imports from Taiwan, Indonesia, Sri Lanka and the Philippines as a result of circumvention practices identified.

Please see below links to the latest updates from HMRC relating to further restrictive measures against Iran.

SEPA and IBAN may not mean a great deal to businesses at the moment but MEPs passing a proposal to make cross-border bank transfers faster, cheaper and safer are sure that they will.

The single Euro Payments Area (SEPA) Regulation lays down common rules and standards for euro credit and direct debit transactions between banks. It does not apply to personal credit or debit card payments. Requiring banks to comply with SEPA rules will enable their clients to use one bank account to make euro payments to and from all participating countries. To this end, the rules will ensure that euro credit transfers or direct debits that are possible within SEPA countries are also possible across frontiers between them. The legally-binding deadline for banks to migrate to the new standards is 1 February 2014. “All account users stand to gain, because international competition among service providers should drive down prices,” the European Parliament was told. “Increased competition among banks to supply services should also help to cut today’s inflated costs, and where costs are already low, they should remain so.”

SEPA covers payments made in or between the 27 EU Member States plus Iceland, Liechtenstein, Norway, Switzerland and Monaco.

Benefits to businesses

Firms will be able to set up cross-border direct debits in euro between two bank accounts anywhere in the Union, enabling them to bill customers regularly across borders. By eliminating multilateral interchange fees on cross-border direct debits as of this year, the regulation will enable businesses to establish their payment centres in any Member State. They could also organise all cross-border euro payments from a single euro account in a country of their choice in order to improve money management and speed up cash flows at lower cost. SEPA payments can be made to or from any euro account that is held with a bank located in the area. It is not necessary that the payer and/or the recipient of the payment have an account in a SEPA country that has already adopted the euro as its national currency. The key point is that the account is denominated in euro.

Businesses will enjoy common standards, faster settlement and simplified processing that will improve cash flow, reduce costs and facilitate access to new markets. There will be a wider choice of payment services providers and faster and more efficient processes, as well as greater transparency. Over the medium term, lower fees can also be expected.

IBAN

SEPA is an initiative of the European banking industry, supported by the European Commission and the European Central Bank (ECB). The European Payments Council, the banking industry’s decision-making body in relation to SEPA payments, has established rules for SEPA Credit Transfers and SEPA Direct Debits as well as a framework for card payments. Individual banks remain responsible for migrating their customers from existing national payment instruments to the new payment products.

From a consumer viewpoint, the only real requirement for migrating to SEPA is to use IBAN (International Bank Account Number) instead of the domestic bank account number (BBAN) and the domestic bank sort or branch code, when identifying accounts for payment purposes. In addition, for a temporary period, consumers may be asked to provide the BIC (Business Identifier Code). SEPA is an integrated payment system and therefore requires a common method for identifying bank accounts across countries. IBAN is straightforward, being built up in the same way for every Member State. It corresponds to the existing national bank account number and (sometimes) a national bank sort code preceded by two check digits and the international two character ISO (International Standards Organisation) country code (eg GB or DE).

Three directives will be repealed and replaced on 8 May 2012 by one regulation.

Regulation 1007/2011 on textile fibre names and related labelling and marking of the fibre composition of textile products will repeal and replace the following directives.

•Directive 2008/121/EC on textile names.

•Directive 96/73/EC on certain methods for the quantitative analysis of binary textile fibre mixtures.

•Directive 73/44/EEC on the approximation of the laws of the Member States relating to the quantitative analysis of ternary fibre mixtures.

The information required by the new regulation, available here, concerns the composition of the textile products, which must be provided using harmonised fibre names. The regulation also stipulates methods to check on whether the composition of textile products is in conformity with the information supplied.