Amid growing concerns that the UK will leave the European Union without securing an exit deal, the VDMA has outlined three points that it hopes will limit the damage Brexit will cause to the EU and UK machinery industries.
The UK will leave the European Union at 11pm on 29 March 2019, whether there is a deal in place or not, meaning that with just seven months until the deadline, future trade is still shrouded in uncertainty.
According to reports, all parties are seeking to avoid so-called ‘hard Brexit’, which would see the UK revert to World Trade Organisation (WTO) Most Favoured Nation levels for all UK-EU trade in goods as this would have the largest financial impact on all parties.
However, the UK’s progress on securing trade deals with the EU and other nations appears slow, and with the deadline looming, UK and European businesses and associations are becoming increasingly concerned.
This week, the VDMA described three points which it hopes would make post-Brexit trade smoother and more beneficial financially for both sides. Holger Kunze, director, VDMA European Office, says: “For us there are basically three points that are really important. The first one is that we need a customs agreement, which will lead to facilitation for our companies, and we definitely do not need any customs tariffs.
“The second thing is that we have to avoid that the technical legislation in the UK will develop in a different direction than EU legislation. And thirdly, we also need the free movement of workers because if you sell a machine, you always have to send workers in order to install them.”
As is the case with countless other European and UK industry associations, Kunze wants there to be as few obstacles to efficient and productive as possible. But as the UK prepares to leave the EU and possibly the single market too, some argue that this is counter-productive.
In a recent report published by UK law firm Baker McKenzie, the company states: “In short: it may not be possible to replicate entirely the position of trading from within the Single Market, but supply chains can be altered with care.”
It continues: “However, companies should also be pursuing open growth strategies and exploring the third markets that offer the greatest potential to offset losses associated with departing from the single market.
Imports and exports
In his speech, Kunze noted that with each textile machinery order a company receives, members of its staff are also sent to the buyer in order to set the machinery up, a factor that is key to exports. However, he also stated that without the guaranteed free movement of workers, this could be in doubt.
However, speaking to Sky News, the UK government’s international trade secretary, Liam Fox, hoped that for UK companies this free movement of workers would not be a problem. Asked if it would be harder to export to the EU post-Brexit, Fox told Sky News: “We hope not.”
He continued: “That is exactly why we want there to be a full and open deal.” Fox outlined in his department’s export plan promotional video that the UK has the potential to become a “21st century exporting superpower,” as he outlined plans to encourage greater exports post-Brexit. In the video, it is suggested that as many as 400,000 UK companies could export but do not, and that he wants to increase exports as a proportion of GDP from 30% to 35%.
Meanwhile, the UK also relies heavily on textile imports from the EU. 45% of the UK’s textiles and 25% of its clothing is imported from the European Union, according to the UK Fashion & Textiles Association (UKFT). This equated to a UK trade deficit in fashion and textiles of £15.4bn in 2016, up from £15bn in 2015.
Neither side is hoping for an outcome that would harm its textile industry in the long-term, and at present, it is still not clear if the EU, the UK, or indeed their respective textile industries, will get deals that guarantee long-term prosperity.
