News & Publications

The Future of European Trade

The year 2022 promises to be a harbinger of changes to European trade, with modifications made to prior agreements as a result of Brexit, Russian military aggression, and United States-based council meetings.

As of January 1, 2022, any goods exported to Great Britain from the European Union must now have a full customs declaration, yet another impact resulting from Brexit. Additionally, all exporters and importers will have to provide proof that the products have been manufactured or produced in either the EU or the UK in order to benefit from preferential tariffs.

During the second half of 2022, there will be additional requirements for exports such as veterinary checks on food products and dairy products, as well as other products that have animal origins. Since there are currently negotiations taking place regarding the Northern Ireland Protocol, all full custom control checks have now been paused between Northern Ireland and UK.

Pivoting to Russia, the invasion of Ukraine is already creating ripple effects that will affect the global economy, and the world is watching to see how western powers, including the United States, UK, and EU, are going to respond. The EU currently accounts for 37.3% of Russia’s international trade, and the two powers primarily trade mineral fuels and mineral oils. The EU had previously stated that if Russia decides to invade the Ukraine, then serious sanctions would be a direct consequence—this could potentially backfire on the EU, however, since many countries have close business relationships with Russia. Members states may not want to have to pay the extra costs that will come with the placement of these sanctions.

Due in large part to sanctions previously levied, Russia’s GDP has already declined down by 2%. Prior to the invasion, Russian president Vladimir Putin extensively prepared Russia for harsh economic sanctions by isolating Russia’s economy, thereby making it more robust to potential penalties. Russian retaliation to EU-based sanctions could include limiting or even cutting off oil and gas exports to the EU. The invasion itself could also disrupt the supply chains that facilitate oil and gas logistics, since Ukraine has multiple pipelines that run through the country.

In order to soften the blow of potential Russian blowback, the International Energy Agency asked Saudi Arabia to increase their oil productions so that the prices of oil may stabilize. Saudi Arabia has refused thus far, however, and so the price of oil continues to rise. Excess cash flow due to artificially heightened oil prices could result in Russia being more capable of weathering the impact of sanctions placed on them by the EU; such a scenario would limit the options that the EU and other western countries could deploy in order to financial punish Russia for its invasion of Ukraine.

Moving across the Atlantic, more changes are underway that will impact European trade in 2022. The U.S. – European Union Trade and Technology Council (TTC) was formed during the Obama administration to help ease strained transatlantic trade relations. One of its goals for 2022 is to assist allied democracies in order to boost their chances in competing with China. During the latest TTC meeting that took place in Pittsburgh, PA in September 2021, an agreement was made to strengthen semiconductor supply chains, curb China’s non-market practices, and have a united approach towards regulating global technology firms. A follow-up meeting will take place in 2022 to discuss progress as well as strategize future steps.

With all of these events currently taking place in the EU, there may be updates on the horizon for trade compliance in imports and exports. If you have any questions about any of these developing situations, or if you would like additional information, please call Allyn at 239-489-9900 or email us at sales@allynintl.com.

Contributor: Emmelee Crane


About Allyn International

Allyn International is dedicated to providing high quality, customer centric services and solutions for the global marketplace. Allyn's core products include transportation management, logistics sourcing, freight forwarding, supply chain consulting, tax management and global trade compliance. Allyn clients range from small local businesses to Fortune 500 firms. Allyn conducts business in more than 20 languages and has extensive experience in both developed and emerging markets. Highly trained experts are positioned throughout North and South America, Europe and Asia. Allyn’s regional headquarters are strategically located in Fort Myers, Florida, U.S.A., Shanghai, P.R. China, Prague, Czech Republic, and Dubai, U.A.E. For more information, visit www.allynintl.com.

 

This website uses a variety of cookies, which you consent to if you continue to use this site. You can read our Privacy Policy for details about how these cookies are used. Manage Cookies