Small business in particular struggling with new Brexit red tape. Entirely predictable, and a function of a world trade system distorted against smaller traders. Stay with me a short while as Brexit threadmeister and story author @pmdfoster may say... 1/

The nub of the issue is the extra costs for most exports, whether this is paperwork or meeting different regulatory requirements. A fixed cost per exported load inevitably adds a higher percentage cost to small than larger business... and they may lack expertise. 2/
You'll note that in the EU, with virtually no paperwork or differing regulations, the costs of exports are similar for smaller and large companies - though even there there is a big company bias, because who can afford to lobby for friendly regulations? 3/
The same unfortunately typically applies to trade deals. If you are Nissan and threaten to leave the country without the right deal you have more clout than a small cheesemaker. As we see. But is it just the EU that is over-bureaucratic? Sadly not... 4/
One of the best UK business groups on trade policy @BritAmBusiness (and yes you can quote me @EmanueAdam) has a new report out on a UK-US trade deal and SMEs. It shows opportunities. But unfortunately problems unlikely to be solved. 5/ https://t.co/PhOzGv6IZV
The US regulatory system is just as prescriptive and difficult as the EU one, as suggested in this clip from the BAB report. And no trade deal the US has ever done has helped this, because USTR guard the independence of regulators fiercely. Hopes to change this in TTIP failed. 6/
So what of dedicated SME chapters in trade agreements, pioneered by the EU and enthusiastically adopted by the UK (here clipped from foreword to the BAB report by @GregHands)? Well, you'd rather have them than not. But their focus looks rather limited. 7/
I recall discussing limitations of a proposed trade agreement SME chapter with the EU Commission in 2015. That information is nice, but to make a difference you need to tilt the balance towards SMEs, for example implementing a dedicated small business issue resolution service. 8/
Suffice to say we still haven't really seen a good trade agreement SME chapter from EU or UK. Some SMEs trade well, in services with fewer clear barriers, niche high value goods, or as part of multinational supply chains. But too many struggle. 9/
But finishing with Brexit, once again we have to face new long term trading realities, that small business will be particularly disadvantaged by the end of seamless trade. Government could choose to do more to help, but so far SMEs are not their priority. 10 / end

More from David Henig

Not the easiest to follow, but for those interested in the big picture of trade relations between US, EU and China this exchange between @alanbeattie and @IanaDreyer is an essential read. Real debate on key issues, and good points on both sides.


Also reading this from @gideonrachman on EU-China. My view (cynically?) - that EU-China is a deal that makes a lot of sense given a probably unresolvable trade policy superpower triangle with the US, and best for the EU to move while China will.

The US and EU roughly agree on China that it should do some things differently, but not really the details of what those are. Meanwhile the EU and US have long standing trade policy differences, which neither (or their key stakeholders) prioritise resolving.

For the EU, the China deal has sent a message to the new US administration, you can't just tell us what to do. And delivered some (probably marginal in reality) benefits to business. For China, this is the 3rd deal with EU or US in 12 months. Pretty clear strategy there.

The key assumption that lies at the heart of too much writing on EU-US relations is that the two should cooperate on trade. After 25 years of largely failing to do so, I'd suggest we might want to question that a bit more deeply.

More from Brexit

This very short article by Jeremy Cliffe is the best thing I have ever read on Brexit and the EU. It pivots on the contrast between Delors’ and Thatcher’s authentically provincial Christian visions and suggests the battle in Britain between the two is not over.


Thatcher: Protestant believer in the totally free market and absolutely sovereign centralised nation state. Delors: Catholic believer in third way personalism, corporatism and federalism. Individualism versus relational love. Heterodoxy versus Orthodoxy.

The article useful gives the lie to the idea that the Catholic vision of the EU has altogether vanished even though it is weakened. Delors wanted a social dimension to the free market and single currency and yet lexiteers laughably insist the EU is more neoliberal than the U.K.!

Subsidiary federalism is a doctrine of democracy and human fraternity. State sovereignty is a doctrine of naked power. It is a face of Antichrist. Leviathan.

Those combined that democracy can only be inside a single state fail to power just how much of private law and evermore so is necessarily international. Thus if political institutions don’t extend over borders there can be no democracy.

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