The final stages of Brexit are getting closer. While the construction sector as a whole is growing stronger with a high demand for new projects, some companies are feeling uneasy about the future and its seeming uncertainty.
One of these concerns involve potential import and export tariffs on construction goods traded between the UK and EU, which could potentially affect the price of new equipment they purchase as well as spare parts for older machines.
Import and export tariff worries aside, some construction materials and equipment purchased abroad are becoming more expensive due to the fall in the national currency – although overall this is more than offset by making UK exports more competitive.
In the immediate wake of a ‘no deal’ Brexit, there is a chance that materials and equipment may be delayed at ports and borders in the short term, waiting for the right paperwork to enter the UK. But it has to be emphasised that such worries are little more than conjecture at the moment, and are not borne out by the example of seamless trade with dozens of non-EU countries.
New Trade Agreement
At the moment, there aren’t any new tariff agreements between the UK and EU. To get an idea of what the tariffs would be like if no trade deal is agreed, you can visit the WTO website. WTO rules govern fair trade between countries and are independent of any specific trade deal. They guarantee open exchange and ensure trade tariffs are kept to a minimum.
Trade with the USA – the UK’s largest single trading partner – is currently conducted under WTO rules with no impediment to commerce. The same is true of imports from India, China and Japan, so contractors should not worry unduly about the implications of no trade agreement being reached with the EU.
Once Brexit is completed, new trade agreements are likely to appear between the UK and the EU over the coming years. The new agreement may harmonise closely with existing standards, or they may be closer to the trade arrangements the EU recently agreed with Canada.
The way new customs duties will affect the construction industry depends on the EU Common Customs Tariffs and the future UK tariff, the details of which are yet unknown – but at worst will reflect WTO standards. The new tariffs could raise the cost of bilateral trade and may reduce the attractiveness of the EU and the UK products to each other, but this is by no means certain or even likely.
Stable Prices & Product Availability
At Key Services, we are following the Brexit matters closely in order to let our clients know about any potential changes. Manufacturers outside the EU provide the majority of the equipment we sell, so we are not anticipating any changes in price or availability after Brexit. For example, Loncin engines come from China while Honda and Mitsubishi hail from Japan.
Some EU suppliers may be negatively affected if their access to the UK market is compromised by a ‘no deal’ Brexit. If you currently use a European supplier you may wish to mitigate against any risk by exploring other options. Speak to us about our range of competitively priced construction equipment today.