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Post-Brexit trade: Is red tape chaos just ‘teething trouble’ as the UK government argues?

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January has seen Brexit set in motion for real — but for many businesses, operations have ground to a standstill as they struggle to shift goods across new borders.

With the UK now outside the EU’s Single Market and Customs Union, importers and exporters on both sides of the English Channel say the new rules have brought a nightmare of red tape and extra costs.

Paperwork and border checks have led to seafood being left stranded in ports, and empty shelves in some supermarkets as deliveries failed to materialise.

Supplies from Great Britain to Northern Ireland have also been hit as the need to keep an open land border on the island of Ireland means the North is largely following EU rules.

The UK government has attributed much of the chaos to “teething problems”, arguing the longer term will bring great opportunities. But some trade experts say some of the new burdens on business are here to stay.

The nature and scale of the problem is illustrated by this selection of some of the hassles reported by traders:

  • “My regular logistics partner has suspended their service completely from the EU to the UK until February. These guys operate in 31 countries & know how to move stock quickly, but the paperwork nightmare is just too much for them” — Daniel Lambert (Wines), wine import company, Bridgend, Wales. He wrote a 22-point Twitter thread detailing problems encountered.
  • “It’s not good. This situation, for me it’s too much paperwork, too much wait, wait, all the time is wait. This is not good.” — UK-based Polish lorry driver Petar Loba, stuck in a queue near Dover.
  • “A shipment that used to cost £95 (€107) and take five minutes to organise will now take an afternoon and cost £400 (€452)” — Richard Townsend of Bailey Paints, a small business which exports paint from Stroud in England to Ireland.
  • “We can’t get deliveries you know. Companies are taking orders and then they’re ringing us back going, ‘we can’t deliver that until further notice’.” — Kieran Sloan of Sawers delicatessen in Belfast, on supply problems from Britain.
  • “The first days were difficult, there were a great deal of delays. Some of our drivers had to wait a week on the British side to make export declarations… (There were) customers who’d declared nothing, those who’d made admin mistakes… queues to obtain documents in England.” — Benoît Lefebvre of French firm Sonotri, on transporting chemical products to England.
  • “All the EU (countries) that used to buy a lot of our fish, they’ve kind of stopped because the fish that were getting transferred were going off, going bad. So we’ve lost our entire export market.” — Ben Vass, fisherman, Devon, England.
  • “80% of our sales get shipped to the EU, so obviously now it’s all stopped. Our prices have dropped. All our fish is getting frozen.” — Nathan Daley, fisherman, Devon, England.
  • “We have had to completely suspend the sending of all our consumer parcels to the EU. We had a bounce-back of every single parcel that we sent from 4th January onwards… It’s because you now need a health certificate even for a consumer parcel. The cost of a health certificate is £180 (€203) per consignment.” — Simon Spurrell, Cheshire Cheese Company.
  • “A customer… had to pay over 50% of what his overall parcel was worth to get it out of customs and we had to send him a VAT invoice… It’s been horrible and it’s almost gotten to the point where we’ll have to probably stop trading with the EU, which is going to cost us thousands of pounds over the next three months.” — Joycelyn Mate of Afrocenchix, exporting afro hair products from the UK.

Why are traders suffering like this?

The Brexit trade deal struck on Christmas Eve was celebrated as a great success. It certainly brought huge relief, avoiding an even more chaotic no-deal scenario with just days to spare.

The agreement means trade can continue between the UK and the EU, free of tariffs (import taxes) and quotas.

Boris Johnson has claimed, wrongly, that there are no non-tariff barriers. The reality is — as seen by the above examples — is that the new trading regime has brought a mountain of extra bureaucracy and costs.

Firms now need to fill out customs declarations. The process involving codes and new IT systems can lead to significant delays. Slower procedures mean higher costs. There are also new regulatory checks for food, with meat, dairy and fish products needing health certificates.

There is a risk that supplies get stuck. Under the “groupage” system, multiple consignments often travel in one trailer. But all may need to be checked, and problems or mistakes can hold up the whole shipment.

There are also complications over “rules of origin” regulations, and VAT (Value Added Tax), as the UK is no longer part of the EU’s VAT area. EU exporters sending goods to the UK have to register with UK authorities and may have to pay UK import VAT. VAT and excise duties are also due on goods entering the EU from the UK.

Some changes have been unexpected. Ireland, for instance, has discovered that it has been sometimes hit by EU import duties. Despite the no-tariff Brexit deal, there is no exemption if goods pass through Britain on their way to or from the continent, as they are no longer considered to be of EU origin.

The European Commission warned last July of significant border disruption from the end of the transition period, regardless of whether a trade deal was agreed.

What have industry bodies been saying?

The UK’s Road Haulage Association says so worried are exporters over customs demands or the danger of getting stuck in port — not to mention the additional burden of COVID-19 tests for drivers — that many are not sending at all.

The RHA has reported that at least 40% of lorries bringing goods from the EU to Britain are returning to the continent empty, which has a “huge impact on the supply chain”.

The British Meat Processors Association has said the post-Brexit problems “are now causing a serious and sustained loss of trade with our biggest export partner”.

“If continental supermarkets are unable to have products delivered the way they need them to be, this trade will simply be lost as EU customers abandon UK suppliers and source product from European processors,” said Nick Allen, BMPA’s Chief Executive.

“Members are already being told by their EU customers that they’ll be looking to Spain and Ireland to buy products from now on.”

The fishing industry, whose produce is equally highly perishable, has echoed such complaints. The Scottish seafood industry in particular has been sounding the alarm.

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Ukraine crisis: Why Russia-US talks may prove crucial

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Senior diplomats from the US and Russia are meeting in the Swiss city of Geneva for the first of a series of crunch talks aimed at defusing tension over Ukraine.

The stakes for these talks on Monday are high. But both sides hold wildly different expectations. The US and other Western powers want to dissuade Russia from invading Ukraine.

But Russia wants to talk about its maximalist demands for Nato to retreat from eastern Europe. It’s calling for Nato to pull its forces out of former Soviet countries, end any eastern expansion and rule out Ukraine joining the alliance.

Some US officials fear these demands are deliberately unrealistic, designed to be rejected and used as a pretext for military action. Other diplomats believe Russian President Vladimir Putin is aiming high to squeeze concessions out of a Western alliance that is willing to give ground to avoid war.

They say the Russian president is effectively demanding an end to Europe’s post-Cold War security architecture and the establishment of a Russian “sphere of influence”.

A high price

Given this, the US and Nato have dismissed most of Russia’s demands as “non-starters”. And the US has categorically denied reports it is considering possible troop reductions.

But American officials have said they are willing to look at curbs on military exercises and missile deployments.

One idea is a partial revival of the Intermediate-Range Nuclear Forces Treaty that the US abandoned in 2019 after Russia was accused of breaching its provisions. Other ideas are more measures to build confidence and greater transparency between Russia and the US.

The fear among some European allies is that even this would be too much of a reward for Russia, too high a price for trying to avoid conflict in Ukraine.

They fear the US might be willing to concede too much so it can focus more on China and domestic challenges, such as the Covid-19 pandemic and the economy.

The US is aware of these fears and repeatedly insists it will not agree anything about Ukraine or European security without those countries involved.

Either way, President Putin has already made some gains, winning a platform this week to air his grievances and force the US and Europe to engage with his agenda of Nato reform.

Both sides are playing down expectations of an immediate deal. But that does not mean this week’s talks are not important.

A crucial staging post

At best, the talks could shed more light on Mr Putin’s intentions and reveal if he is serious about engaging in diplomacy.

At worst, a breakdown could lead to war, allowing Mr Putin to claim to his domestic audience that the West was not willing to talk and agree to his demands, and he was thus forced to act to ensure Russia’s security.

Western diplomats say they are ready for what they see as this false narrative: hence the Nato Secretary General, Jens Stoltenberg, insisting the alliance is ready for any Russian military action, and the firm warnings from the US and Europe that any invasion would be met with massive economic sanctions.

So, this week’s talks could prove a crucial diplomatic staging post, with the fate of Ukraine and Europe’s post-Cold War security architecture in the balance.

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Russia fines Google over illegal content breach

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bbc– A Moscow court has fined Google 7.2bn roubles ($98m; £73m) for repeated failure to delete content deemed illegal in Russia.

Details of the offending content were not specified in the announcement by the court’s press service.

This is the first time in Russia that a technology giant has been hit with a fine based on their annual turnover.

Google told AFP news agency that it would study the court ruling before deciding on further steps.

Russian authorities have increased pressure on tech firms this year, accusing them of not moderating their content properly, and interfering in the country’s internal affairs.

Hours after the Google verdict was announced, a 2bn rouble fine was handed to Meta, the parent company of Facebook, for similar content-related offences.

Earlier this week, Twitter was also handed a 3m rouble fine for similar charges.

This is not Google’s first brush with Russian authorities over content laws. In May, Russia’s media watchdog threatened to slow down the speed of Google if it failed to delete 26,000 instances of unlawful content, which it said related to drugs, violence and extremism.

President Vladimir Putin has pushed for development of a so-called sovereign internet, which would give the government more control over what its citizens can access.

Critics have accused Russia of using the campaign to clamp down on free speech and online dissent.

The country’s media regulator has blocked dozens of websites linked to jailed opposition leader Alexei Navalny, whose campaign groups have been labelled “extremist”.

Google and Apple were also forced to remove an app dedicated to Navalny’s “Smart Voting” campaign, which gave users advice on tactical voting to unseat Kremlin-aligned politicians.

Websites like LinkedIn and Dailymotion have already been blocked for refusing to co-operate with authorities, and six major providers of Virtual Personal Networks (VPNs) – which help users to conceal their online activities – have been banned.

Earlier this year, Russia also introduced a new law requiring all new smartphones, computers and smart devices sold in the country to be pre-installed with Russian-made software and apps.

The government said the move would help Russian tech firms compete with foreign rivals.

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Japanese billionaire returns to Earth from space trip

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dw- Japanese billionaire Yusaku Maezawa returned to Earth on Monday after spending 12 days on board the International Space Station, Russia’s space agency Roscosmos said.

Maezawa is a fashion tycoon who sold his online fashion business Zozo to SoftBank in 2019. Forbes estimates his worth as $1.9 (€1.69) billion.

What was the trip like?

Maezawa parachuted onto Kazakhstan’s steppe at around the planned time of 0313 GMT, along with his assistant and film producer Yozo Hirano, and Russian cosmonaut Alexander Misurkin.

The landing site was located 150 kilometers southeast of Zhezkazgan in central Kazakhstan, where there was precipitation and sub-zero temperatures.

Maezawa made the trip in a Russian ‘Soyuz’ spacecraft and became the first space tourist to travel to the International Space Station in more than a decade.

The entrepreneur made a variety of posts on social media from his trip, including photos from space of his home prefecture of Chiba, and videos showing how to make tea in zero gravity and discussing his shortage of fresh underwear.

What did Maezawa say about the trip?

In a live interview from the orbiting space station, Maezawa said that “once you are in space, you realize how much it is worth it by having this amazing experience.”

When asked about claims that he had paid more than $80 million (€71 million) for the trip, Maezawa said he couldn’t disclose the exact sum but admitted that he paid “pretty much” that much.

Maezawa is currently searching for eight people to join him on a trip to the moon in 2023. Applicants are required to pass medical tests and an interview.

 

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