Businesses are preparing for disruptions, despite the post-Brexit trade agreement

But despite the postponement, for the first time in almost half a century, food, cars and other goods moving between the EU and the UK will be subject to customs controls from 1 January and will have to comply with separate sets of standards and regulations. .

The British government estimates that there will be 215 million additional customs declarations a year, almost 600,000 a day, which companies say will take time and cost to organize. Some companies will have to pay inspection fees, apply for import licenses and learn how to account for value added tax. British food and animal exports to the EU will be checked on arrival, while some professional qualifications will no longer be automatically recognized. Some companies say they do not yet fully know how they will respond because they have not yet seen the details of the trade agreement.

Predicting long lines in British and European ports, as well as piles of new documents, business groups are now calling on both the UK and the EU to help companies navigate change and alleviate any new trade frictions, including giving companies time to adapt to the new rules.

“Coming so late in the day, it is vital that both sides take immediate action to keep trade moving,” said Tony Danker, director general of the British Confederation of Industry. The business lobby group wants a six-month grace period to allow companies to adapt to the new rules without being penalized.

Businesses face the “gigantic task of adapting to the new arrangements just a week before they take effect,” said Adam Marshall, director general of the British Chambers of Commerce. Many companies are already facing the pandemic and have staff away from the Christmas holidays, he said, calling for the introduction of new rules.

The US Chamber of Commerce in the EU has also called for the introduction of new rules, saying members are worried about how quickly they should adapt. Asked at a briefing on Thursday about a possible room for maneuver for companies, an EU official said “there is no grace period in this agreement … We believe that companies have had a long time to prepare for this”.

A British government spokesman said it was preparing for future changes, including investment in jobs, technology and border infrastructure. He also said that border controls will be implemented in stages.

Thursday’s agreement does not comprehensively address service industries, such as Britain’s huge financial sector, which will lose automatic access to EU markets on 1 January.

Fearing additional paperwork and disruption to transportation, pharmaceutical companies such as Pfizer Inc.

and GlaxoSmithKline PLC have already stockpiled drugs from carmakers, including BMW AG

built inventories and aircraft manufacturer Airbus SE asked suppliers to keep additional components handy.

On Thursday, Airbus said it was pleased that the potential disruption of a scenario without an agreement was avoided, but that it still needed to consider the consequences of the agreement on its business.

“While a free trade agreement is a major relief, it’s still much more complex to do business in Europe than it was when we were in the EU,” said Simon Cotton, chief executive of Scottish cashmere garment manufacturer Johnstons of Elgin Ltd. cited additional documents on various issues, including how EU customers will recover taxes.

The additional bureaucracy could cost British companies about £ 17 billion, the equivalent of about $ 23 billion a year, and EU companies about £ 14 billion, according to estimates by law firm Clifford Chance.

EU and UK meat exporters, for example, will now need a certificate – confirmed by a veterinarian – stating that each package they sell meets the health standards of the other. British exporters say there are not enough veterinarians for this certification.

Anticipating delays at the border, Delamere Dairy is storing packaging and ingredients at its site in northern England in November.

“We’re worried about potential disruptions in ports, you don’t want your packages to stand in a seven-mile queue when you need them to pack products,” said Ed Salt, CEO of Delamere. Even though it is mainly sold in the UK, the company sends goat’s milk to be packaged in Germany before returning to the UK.

You will also need to heat treat the pallets you use to ship products to comply with EU standards for pallets coming from outside the block.

EU companies sell more goods and services in the UK than the UK in Europe. But the UK’s trade in goods with the EU is a higher percentage of its gross domestic product, at around 13%, than Europe’s exposure to the UK, at almost 3% of GDP.

Some parts of the bloc are particularly exposed to trade with the United Kingdom.

The UK is responsible for 10.5% of Ireland’s exports and 27% of its imports, according to the Organization for Economic Co-operation and Development, while Germany has a trade surplus of £ 29 billion in the UK, mainly due to the nearly 600,000 cars it sells to the British each year.

Few industries are likely to experience more disruption than the $ 88 billion bilateral car trade between the UK and the EU.

The UK is the second largest European car market and the largest seller in the country – Ford Motor Co.

, BMW, Volkswagen AG

and Daimler AG

—They mainly assemble their vehicles in the EU.

Last year, about 13% of cars produced in Germany went to the UK, while the UK is the third largest Ford market globally, accounting for about 30% of its sales in Europe.

Meanwhile, parts made in the UK, including engines for Ford vehicles, are being exported to European factories that produce vehicles for sale worldwide.

The European Automobile Manufacturers Association said it could not make a full assessment of the commercial transaction until all details were made public, but that “there are still major challenges”.

“Trade in goods will be severely affected by barriers to trade in the form of new customs procedures,” he said.

Anticipating potential blockages, Japanese carmaker Honda Motor Co.

started a car factory in England in early December, after running out of key parts. He blamed the congestion in British ports, under pressure amid Brexit and Christmas-related deposits, as well as the disruptions caused by the pandemic.

Some car companies, such as Aston Martin Lagonda Holdings PLC, have said they could fly parts in the UK to avoid future disruptions. The manufacturer of the fictional British spy car James Bond procures 50% of its components abroad.

Analysts are particularly concerned about volume manufacturers such as Ford, Toyota Motor Co.

and the PSA group in France,

which runs just-in-time supply chains where the arrival of parts is closely coordinated with assembly.

Toyota, for example, usually lasted only four hours on the production line of its UK car factory. In 2015, a three-week strike by French ferry personnel disrupted operations for two months.

“Incredibly complex supply chains are the problem when you operate your plants for two decades on the notion of a single market,” said Calum MacRae, a car analyst at GlobalData.

Write to Alistair MacDonald at [email protected]