British exporters sending goods to far-flung destinations in the coming days risk being locked out of harbours around the world as a no-deal Brexit looms, business leaders have warned.
The Confederation of British Industry, the EEF manufacturers’ lobby group and trade experts said exporters could be dispatching goods from UK ports imminently which would not arrive until after the 29 March deadline – raising the prospect of goods being stuck in ports or facing hefty additional costs in the event of a disorderly Brexit.
The maximum shipping time to anywhere in the world is about 50 days – with the furthest being Australia and New Zealand – meaning cargoes sent from this weekend could face disruption when they arrive around the 29 March deadline.
Ben Digby, international trade director at the CBI, said: “In the event of a ‘no-deal’ Brexit, there are ships that are setting sail from the UK today that will have to weather a thick extra fog of uncertainty on the high seas, as they could arrive in port effectively locked out of the very market they have travelled across the world to get to.”
He warned that a shipment of whiskey going to South Korea could risk having to wait in its destination harbour until the situation becomes clear. As much as £71m of bottles are shipped to Korea each year, with the potential for 20% tariffs to be slapped on bottles overnight should they not arrive in time for 29 March, costing the industry £14m a year.
The problems for seabound British exports – and imports – applies to several countries with EU trade deals where the UK benefits from preferential trading rights as a member of the bloc, which risk being lost straight away under a no-deal scenario.
British trade officials are rushing to secure deals with individual countries to roll over those existing agreements, although they admitted to business leaders at a private meeting on Wednesday that the majority wouldn’t be ready in time.
The UK exports roughly £5bn worth of goods, on average, to the 60 countries that have free trade agreements with the EU, highlighting the potential knock-on effect for the economy that a no-deal scenario would have on UK companies. The EU and the countries it has trade deals with cover about 32% of global GDP.
Seamus Nevin, chief economist at manufacturing lobby group EEF, said: “These problems don’t just start on 29 March. It takes several weeks for container ships to travel from the UK to East Asia, Oceania, or South America. Very soon, sea-freight will be leaving the UK with no idea of the trade rules that will be in place when the goods arrive.”
The situation has parallels with the US-China trade dispute last year, when US ships raced across the world to deliver soybeans before Beijing could impose tariffs on them. Some boats were stuck in harbours after failing to miss the deadline.
It also comes after Greg Clark, the business secretary, warned on Wednesday that the real deadline for averting no-deal Brexit was much closer than 29 March, due to the amount of time businesses need to ship goods around the world.
Speaking in front of the parliamentary business select committee, he said firms shipping goods to Japan needed six weeks’ notice to make decisions. He added: “People often say these things at the last minute. The last minute for important exporters is fast approaching over the next few days and weeks.”
Industry insiders said they hoped that countries would show leniency and continue to accept shipments of British goods after the deadline. They warned, however, that these might come with higher tariffs set under World Trade Organisation rules, which would be higher than existing arrangements.
Lesley Batchelor, director general of the Institute of Export and International Trade, said that most countries would want to continue trading. She added: “If I was a shipper I would not ship anything knowing this was going on without checking what was happening.
“If it’s a deal and we have transition, it’ll be fine. It’s really just no-deal talk that’s scaring everyone.”
A spokesperson for the Department for International Trade said it would not comment on the private meeting, but that the government was continuing to prepare for all eventualities.
The spokesperson said: “We are making good progress on securing deals and have signed agreements with Chile, the Faroe Islands, and Eastern and Southern African Economic Partnership Agreement states. We have mutual recognition agreements with Australia and New Zealand, and expect others to follow soon. We have also agreed the text of a trade agreement with Switzerland, which the government expects to sign shortly. ”