Why international trade is the thorniest issue that you cannot ignore this year

International supply chains have been contending with significant turbulence since the turn of the decade. The pandemic caused the near total shut-down of international trade, followed by the impact of the Russian invasion of Ukraine, and further compounded by the recent and ongoing conflict in the Red Sea. This has forced businesses to adapt in order to survive. It has pushed many companies to the limit, as they have transformed their just-in-time supply chains to ensure sufficient produce enters the UK to meet demand.

At the same time, the British trading regime has been in a state of flux for the last four years. Despite Boris Johnson’s promise to “get Brexit done”, the post-Brexit trading framework has not yet reached its final state, resulting in a lack of certainty to many companies operating within the UK.

This year will see yet further changes taking place, with the Trade (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) Act 2024 recently made law; the introduction of documentary and physical checks on animal products, plants, plant products and high risk food and feed of non-animal origin from the EU coming into force at the end of this month; and DEFRA consulting on “not from EU” packaging labels.

As the regulatory framework that underpins our cross border trade changes, the two main political parties appear locked in an electoral arms-race to prove their “Britishness”, announcing various measures to boost British trade and promote UK production across the globe.

It is no coincidence that, as stories emerged surrounding difficulties with the India-UK Free-Trade Agreement, Labour Shadow Cabinet members Jonathan Reynolds and Angela Rayner took trips to India to speak to businesses on the ground. Concurrently, Labour has repeatedly said that it will seek a closer relationship with Europe if it were to win the next election.

The question therefore remains – how best to navigate this ever-changing landscape?

This is not an issue that can be waited out and dealt with after the election. It requires immediate action. Our supply chains are just-in-time, and any minor difficulty can have huge knock-on effects to our economy.

Despite this, international trade regulatory reform will not be at the top of any list of manifesto commitments. In fact, it is unlikely that a new Labour Government will repeal the Border TOM or renegotiate any newly struck trade deals once it takes office.  And whilst most political stakeholders are aware of how important cross-border trade is to economic growth, few understand the fine details. This means that it will be difficult to ensure trade receives the cut-through it deserves during this busy election year.

It’s important to use this ever-reducing window before the election to engage the existing Ministers and officials away from the noise of the campaign. At the same time, building relationships with those in the Labour Party who (if current polls are to be believed) look set to inherit the new regime, is essential. This is a complex issue with no silver bullet; a solutions-based approach will be welcomed by all parties.

After years of flux in which the trading regime that secures Britain’s borders has been warped, manipulated and redrawn, the next 12 months are the time to make sure that our post-Brexit trade regime works for you.

If you’d like to talk to our expert FMCG team about the issues outlined in this blog, please contact: rob.day@grayling.com