CIA prefers single market

C&I Issue 7, 2017

The UK Chemicals Industries Association (CIA) has criticised the UK government for making the full transition for Brexit unnecessarily complex. The CIA has, for example, questioned the value of an interim customs union, and believes continuing membership of the single market is essential.

‘Cross-government acceptance of the need for a transition period is very much welcomed by our sector and many others…Surely, however, the best way to guarantee no adverse disruption to business and trade during a transition period, and to guarantee only one adjustment before reaching a final agreement with the EU, is to seek to retain our existing membership of the single market and customs union, rather than pursue a “close association” with the customs union that still leaves key questions around regulatory continuity, tariff and non-tariff barrier impact,’ says the CIA.

Steve Elliott, CIA chief executive, also said: ‘Whilst we can see the argument about the government’s latest position giving us the flexibility to start negotiating other free trade agreements, the EU remains by far the most critical for chemical imports and exports; simultaneous negotiations on new free trade agreements and our future EU relationship will be inter-related and therefore incredibly complicated, and it’s also very possible that countries outside Europe, with whom we seek a new trading relationship, will want to know the final new deal we secure with Europe before they agree anything with the UK.’
CIA member companies have also stressed the importance of an improving EU economy to their UK manufacturing operations. In a recent CIA survey, a third of the companies saw an expanding EU economy as an opportunity over the next 12 months -  the EU is the UK chemical sector’s biggest export market accounting for 60% of total UK exports.

Total sales and export volumes continue to grow for the UK industry, and expectations for export growth remain high, with 50% of companies surveyed expecting them to grow over the next year, and only 6% forecasting a decrease. Capital expenditure and R&D spending , along with employee numbers, are also expected to rise, at the fastest rate since early 2015. While 41% of companies expect to increase capital expenditure, with only 9% looking at a decrease, no companies forecast a decrease in R&D spending, with 21% predicting an increase.

Commenting on the survey results, Elliott said: ‘In spite of the positive results, the survey also showed that trading uncertainty was already weighing down exports and potential increases in regulatory costs was a big concern for chemical businesses. We therefore continue to urge the government to provide clarity over the future trading and regulatory relationship with the EU to ensure frictionless tariff-free trade, regulatory consistency, and access to skilled people are essential to maintaining the growth of the chemical sector across the UK.’

A recent survey by Nepic (North East of England Process Industry Cluster)  shows that business confidence among the region’s industry remains high, with four-fifths of companies reporting a high level of optimism, with winning new domestic orders at its heart, along with the development of new products and services. Talent attraction and retention remains the biggest challenge, couple with intense competition from emerging markets.

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