No-deal Brexit threatens European plywood market confidence

Fuente:
ITTO/Fordaq
Vistas:
680
  • text size

Turning to Brexit, there remain fears if the UK leaves the EU without a deal, it could further undermine European market confidence, which is already fragile due to fresh spikes in incidence of Covid-19 in a growing number of countries. But late September, negotiators on both sides were making more conciliatory noises and sounding more positive a deal would be struck.

A leading UK importer added that, while they remained concerned about hold ups at ports and customs as new administrative procedures bed in in the event of a no-deal Brexit, they were not hedging by increasing stocks.

“We always keep a buffer and don’t anticipate we’ll need more than this,” they said. “In addition, all our competitors will be in the same position.”

Another importer said they were cautious about building stock in case the current ‘US demand bubble’ underpinning the global market bursts. “In that case prices would drop,” they said.

UK companies added that they were not ‘overly anxious’ either about having to undertake due diligence on imports from the EU under the new UK Timber Regulation, which succeeds the EUTR in the UK, if a deal is not struck.

This includes FLEGT-licensed product imported via EU countries.

“We have the systems in place, and are already subjecting Latvian plywood and OSB to due diligence, for instance, so we don’t see it as a significant additional administrative burden,” said one company.

One complication is the position of Northern Ireland post Brexit. Under the original ‘Withdrawal Agreement’ concluded by the UK and EU, it remains subject to the EUTR, so goods shipped from the rest of the UK to Northern Ireland would have to undergo due diligence and be subject to the same duty as those imported into the province from other non-EU countries.

However, under the UK government’s recently proposed Internal Market Bill, goods could be shipped to Northern Ireland without any checks or duty, in which case those exported from Northern Ireland to the Irish Republic would be subject to EUTR due diligence.

“About 10% of our turnover comes from goods exported to the Republic via Northern Ireland, and this uncertainty is not helpful,” said a UK plywood importer. “But we have been assured, we won’t be paying duty twice.”

Brexit deal or no Brexit deal, all UK imports from outside the EU will be subject to the duty rates in the new UK Global Tariff unless:

  1. the supplier country or region has a trade deal with the UK
  2. a developing supplier country has Generalised Scheme of Preference status with the UK
  3. an open Product Quota has been registered with the WTO.

That said, many of the duty rates will be unchanged from those of the EU. Some will be lower.

As for quotas, this includes the EU Coniferous Plywood Quota. According to the UK Timber Trade Federation, if the UK strikes a trade deal with the EU, then it will continue to take its share of this annual quota, as before. If not, plywood from the EU will count as part of its share of the quota.

“Our understanding is that the UK will have its own duty free softwood plywood quota of around 167,000 m3 starting January 1, 2021, which is based on its usage of the [EU] quota over the past five years,” said a TTF spokesperson. “If we do not sign an EU deal then coniferous plywood from Finland, France and Sweden will have access to the quota along with the rest of the world so it is likely to be used up faster than before.”

Also in EU plywood sector news, the Dutch EUTR Competent Authority has ordered the Netherlands company Sakol to stop importing tropical-faced plywood from Chinese supplier Jiangsu High Hope Arser Co. Ltd, which it deems in breach of the Regulation.

The Environmental Investigation Agency NGO says the move sets a precedent for the rest of the EU, and it urges Competent Authorities in France, Belgium, Greece, and the UK, which import similar products from China, to follow the Dutch example.

“This decision is significant as it delivers a blow to the protective cover that these global supply routes have provided for high risk and illegal tropical timber and shows that European authorities are rising to the challenge posed by complex timber supply chains,” said EIA Forest Campaigns Director Lisa Handy.

“For the EU to demonstrate it is truly a level playing field, and if the UK does not want to become a back door for illegal tropical timber in the region, the decision taken in the Netherlands should trigger a domino effect across Europe. We look forward to other authorities taking similar actions.”

On the trade outlook, EU plywood companies highlight continued downside risks in the market. These include further increases in new cases of Covid-19 – the so-called pandemic ‘second wave’. Importers are also concerned that unemployment will rise as governments withdraw worker furlough support, with a consequent loss of consumer confidence. Some expressed a worry too about sufficient new construction work coming on stream, despite public investment, once pandemic-delayed projects are completed.

However, the sector is not overly downbeat. “We’re in a better position now than we expected to be six months ago, and at the moment we’re seeing recovery continuing to pick up,” said an importer. “We’re taking things week to week, month to month, as the picture is so uncertain, but we’re cautiously optimistic.”

Publica comentario