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Navigating Trade & Business 1 Year Post-Brexit

Brexit
Archives, EU Trade, Global Trade Daily, International Trade

Navigating Trade & Business 1 Year Post-Brexit

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It is just over five and a half years since the Brexit referendum delivered a surprise 52/48 verdict in favor of the UK departing the European Union.

It has been a period of intense political upheaval in the UK resulting in the departure of two successive Prime Ministers and two general elections, all against the backdrop of fraught negotiations to agree with the EU a Withdrawal Agreement (WA), setting out the terms of the departure, and a new Trade and Cooperation Agreement (TCA), designed to frame the new relationship.

The WA was concluded in December 2019. The UK exited the EU on January 31, 2020, but nothing changed until the expiry of a transition phase at the end of that year, by which point the TCA was also agreed.

The dust has still not fully settled on the definitive shape of EU-UK relations as there are several as yet unresolved issues due to certain grace periods (the UK is only this year beginning fully to implement checks on EU imports) and some unfinished business (defining the modalities of the vexed arrangements for Northern Ireland). However, the general direction of travel is clear. The UK has opted for the most severe form of exit, seeking to cut most ties with the EU and aiming to achieve the maximum degree of regulatory independence.

The economic and social dislocation caused by the pandemic has made it difficult sometimes to distinguish between the impact of Brexit only versus that of COVID 19. However, this article seeks to describe, as far as possible, how Brexit has affected the business and regulatory environment across the full range of areas covered by Steptoe and Johnson practices so far, and to identify issues of potential future concern for companies.

Trade, Customs, and the Level Playing Field

Customs and Supply Chain Issues

2021 was a year characterized by supply chain issues. Not just in the EU or the UK, but globally. While trade was down in the first half of 2020 due to the global pandemic, 2021 saw a complete reversal with global ports being highly congested. This issue was felt differently in the EU as compared to the UK, however. Euro-area exports of goods in October 2021 were close to pre-pandemic levels, being only 2,34% down from October 2019.[1] In the UK, on the other hand, exports of goods were 9,6% lower in October 2021 than in October 2018, the “most recent ‘stable’ period” in the UK.[2]

A key reason why customs and supply chain issues were more acute in the UK as compared to the EU appears to be Brexit. UK companies have so far experienced more difficulties in trading under the new customs arrangements following Brexit than EU companies.[3] Indeed, the EU has been applying full customs checks to imports from the UK since January 1, 2021, while the UK has repeatedly delayed similar checks on imports from the EU. However, as of January 1, 2022, the UK has introduced full customs checks on goods imported from the EU to Great Britain, with exceptions regarding Ireland and Northern Ireland.[4] UK importers are likely to face significant disruptions, at least in the short term, as they get used to the additional red tape due to the application of full customs checks. This could have an important impact on EU export volumes to the UK, similar to the disruptions caused to UK exports to the EU when the EU started applying full customs checks on imports from the UK.

The Level Playing Field

Ensuring a post-Brexit “level playing field” was a key issue during the Brexit negotiations. A key fear of Brussels was that having left the strict rules of the EU, the UK would turn into an economy with limited regulations and uncontrolled subsidies while retaining duty free access to the Single Market. The TCA ended up including a number of components related to the level playing field, with key parts being related to subsidies and state-aid. The outcome of this on the UK side has been the UK Subsidy Control Bill 2021,[5] which seeks to strike a balance between the UK’s obligations under the TCA, while at the same time allowing the UK with sufficient flexibility to provide subsidies where it deems fit. In its current form, its principles regarding subsidy control largely mirror those of the TCA, although there does seem to be room for interpretation and it remains to be seen whether the EU will consider the implementation thereof to be in line with the TCA.

In parallel, the EU is in the process of adopting a new regime to address distortions caused in the EU market by foreign subsidies.[6] This would give the European Commission the power to investigate foreign subsidies granted to any company active in the EU and impose regressive measures to counteract any distortive effects (see our blog post describing this proposed regime here). While this proposed legislation is not specifically related to Brexit, it could have implications for UK companies active in the EU which have received UK subsidies.

The Northern Ireland Protocol

While Brexit happened on February 1, 2020, and the Brexit transition period ended on January 1, 2021, there are still many unresolved issues under negotiation. Throughout 2021 the EU and the UK have been engaged by intense negotiations regarding the Northern Ireland Protocol, which has in effect resulted in Northern Ireland remaining in the EU Single market for goods. This has, however, resulted in several disruptions in trade between the rest of the UK and Northern Ireland, with several customs checks on goods, and severe disruptions on agri-food products, due to the absence of a veterinary agreement.

These disruptions are despite the fact that all the checks under the Protocol have not yet been fully implemented, while the UK has continued to extend the “grace period” during which lesser checks apply.

Towards the end of 2021, the situation got very tense, with the UK threatening to unilaterally suspend part of the Protocol over continued trade disruptions caused by the Protocol. Although at the time of writing the situation seems to have somewhat settled down, UK red lines remain, and the UK remains prepared to suspend part of the Protocol should the parties not come to an agreement.[7]

Should the UK suspend (part of) the Protocol, the EU has indicated that it may initiate dispute settlement proceedings and/or take retaliatory measures. There is even the potential that the EU may renounce the TCA in its entirety if the UK suspends the Protocol, although this appears less likely. It is clear, however, that a UK suspension of the Protocol would have significant consequences for EU-UK relations; not only in terms of trade but also other issues dealt with in the agreement.

Regulatory landscape

Competition

Since the end of the transition period, EU competition law ceased to apply to the UK and EU competition law is no longer applied by UK enforcement authorities. Although they must have regard to EU guidance and future EU case law, they are not bound by future EU law and may depart where appropriate.

The UK’s competition authority, the Competition and Markets Authority (CMA) is no longer party to the EEA’s cooperation network, nor does it benefit from the 60+ cooperation agreements between the EU and third countries. The TCA envisaged such an agreement and under discussion are provisions to share information, attend each other’s interviews (M&A and infringements), and request the other to conduct raids. However, it has yet to be concluded.

EU block exemptions (which define certain types of agreements that are allowed under the EU’s competition rules) have been retained as part of the UK’s domestic law. The EU has been conducting public consultations on some Block Exemptions which will expire soon, including those concerning vertical agreements. The CMA is in the process of preparing its own version. The two are likely to diverge, not least because the EU’s Single Market imperative is not relevant in the UK context, save as between the UK nations (where the UK now has its own UK Internal Markets Act).

As regards merger control, the UK regime is voluntary and the thresholds are unchanged. It is envisaged that mandatory notification may be introduced in the digital markets. The UK has now also adopted, in line with other major jurisdictions, a foreign direct investment (FDI) screening regime – the National Security and Investment Act (NSIA). Under the NSIA, there is currently mandatory notification of transactions required in 17 key “sensitive” sectors, including notably telecommunication, technology, and defense. The CMA has issued new Market Assessment Guidelines which, for example, broaden the CMA’s approach to when it will claim jurisdiction over a transaction. The CMA closely monitors the market and has significantly increased the review of transactions and called in completed transactions for investigation.

Sanctions

During Brexit negotiations, the EU and UK stated their desire to coordinate as much as possible on sanctions policy post-Brexit without agreeing on a formal framework to do so. The past year has seen several examples of continuing cooperation when EU and UK political priorities align, including announcing coordinated measures under their respective Belarus, Global Human Rights and Myanmar sanctions regimes. Yet, the decoupling brought about by Brexit has resulted in a degree of divergence between EU and UK sanctions priorities, designations and implementation.

The UK’s establishment of an autonomous Global Anti-Corruption sanctions regime in April 2021 underlines the UK’s efforts to develop a more agile autonomous sanctions regime that is capable of swift action. The move brought the UK more into line with the scope of the “Magnitsky” regimes adopted in the US and Canada, which unlike the EU’s Global Human Rights Sanctions Regime also apply to corruption offenses. It also emphasized the UK’s commitment to expanding the roster of like-minded international partners with which it will collaborate post-Brexit.

The decision to not directly transpose existing EU sanctions regimes into the UK’s new legal framework for sanctions already has resulted in divergence in designations and the implementation of sanctions policy, bringing with it the potential to create sanctions compliance difficulties for companies that are subject to both regimes. For example, the legal tests for designation are different in the EU and UK, which has resulted in disparities between EU and UK sanctions lists. It is likely that, over time, these differences will expand further in response to the refinement of designation thresholds and shifting political priorities. The UK also has introduced new tools, such as general licenses, to enable companies that meet certain conditions to undertake otherwise prohibited activities under specified sanctions regimes.  Such tools are absent from the EU’s sanctions architecture. This could potentially complicate the navigation of sanctions exemptions and licensing derogations for companies operating across Europe.

Insurance

In preparation for Brexit, many insurers rationalized their business so that UK business was handled by entities in the UK and EU business was handled by entities in the EU. Numerous books of business were transferred using portfolio transfers (almost half of those from the UK were to Ireland or Luxembourg). In other cases, insurers simply discontinued their UK or EU business.

The TCA, concluded at the last moment, largely excluded financial services.

Following Brexit, the right under EU law for insurers to passport from the UK into the EU, and vice versa, ended. However, the UK permitted EU insurers to carry on business as usual in the UK for a limited period, under a temporary permissions regime (“TPR”), the intention being to allow such insurers to become UK-authorised if they wished to do so. Fewer insurers than expected opted into the TPR. The EU did not offer any comparable arrangement, and most EU Member States now prohibit UK insurers from conducting new business and have stringent rules concerning the run-off of existing business.

During the Brexit negotiations, the possibility of the EU recognizing the UK as an equivalent regime under the EU’s insurance legislation was a key topic. Although the UK has granted equivalence to the EU, the EU has not done so with the UK’s regime. The EU and the UK regimes concerning solvency may diverge in the near future due to the ongoing reviews of an applicable framework on both sides of the Channel, which further reduces the likelihood of the EU recognizing the UK as equivalent.

UK and EU re-insurers have adjusted their operations to reflect the restricted market access rights, including by establishing local licensed entities and setting up appropriate outsourcing arrangements for the most efficient allocation of group resources.

Chemicals

Those campaigning for Brexit often cited the benefits of a more flexible, targeted, UK-centric approach to environmental regulation as one of the prizes, and in 2021 the UK government wasted no time in seeking reform. However, of all the environmental issues, the regulation of chemicals stands out as creating some of the biggest Brexit challenges.

The issue stems from the European approach of ‘no data, no market’, which requires companies to submit data on hazard properties through a registration process to obtain market access. The UK failed to reach an agreement with the EU on the existing database, so the independent regimes for the UK market require companies to populate new databases, at a cost estimated at over a billion euros.

In response to industry concerns about timescales and costs, in December 2021 the UK announced a review to explore a ‘new model’ for data packages, with longer timescales for submitting data and a greater focus on use and exposure, allowing ‘more targeted’ regulatory action. Also, in December 2021, the UK announced its approach to identifying ‘substances of very high concern’, setting a different process to the EU list. The moves generated an immediate reaction from NGOs who claim the UK is not upholding the terms of the TCA on ensuring a ‘level playing field’, and urging the EU to step in.

The arguments are likely to intensify in 2022, when the EU pushes forward with its legislative agenda to deliver the Chemicals Strategy for Sustainability, with some significant changes predicted. In 2022 we also anticipate the UK’s own chemicals strategy, first promised in its 25 Year Environment Plan back in January 2018. With chemicals underpinning so much of the economy, this is an agenda with implications far beyond the chemicals sector itself, and international companies should monitor this closely. You can read more in our briefing.

Data protection

Brexit left a question mark over the flow of personal data between the UK and the EEA. That question was not resolved until June 2021 when the European Commission issued its decision confirming that the UK does ensure an adequate level of protection. While that outcome was highly political, it was difficult for the Commission to come to any other decision given that the UK had implemented the EU’s data protection legislation into national law and, to date, applied the case law of the European Court of Justice. However, the adequacy decision is not permanent. It may be revoked by the Commission if the UK no longer provides that requisite protection and will be reviewed in 2024. If that review does not result in an extension, the decision will expire on June 27, 2025.

Notwithstanding the above, the UK has flagged its intention to deviate from the EU’s privacy strategy by adopting a supposedly more business-friendly approach. In particular, the UK is likely to adopt its own set of adequacy decisions, develop domestic data transfer mechanisms and has stated its intention to overhaul the regulation of website cookies. In addition, the UK will not be a party to the upcoming changes in the EU to the regulation of cybersecurity, AI, and more.

How quickly and how far the UK deviates from the EU’s data protection legislation is yet to be seen. Whatever the possible deviations, the key question will be how far the EU is prepared to tolerate such divergence and still grant adequacy.

Criminal Investigations

The WA and the TCA have significant implications for cross-border cooperation in criminal matters in the UK and EU.

In relation to financial crime enforcement, the key provisions in the WA are contained in Title V on ‘Ongoing Police and Judicial Cooperation in Criminal Matters.’  In relation to investigations and proceedings commenced before the end of the implementation period, requests or judicial orders received by the appropriate authority in the UK or EU prior to the end of the implementation period remain enforceable.  For requests or orders issued after that time (including European Investigation Orders (“EIOs”)) mutual legal assistance arrangements will need to be relied upon instead.  These arrangements can be administratively burdensome and time-consuming. There are also exceptions that allow members states to refuse to comply with a request, including where a matter has already been adjudicated on in another state, that state may refuse to comply with a request.

Part 3 of the TA concerns ‘Law Enforcement and Judicial Cooperation in Criminal Matters,’ and covers a number of areas including exchanges of operational information, cooperation with Europol and Eurojust, surrender, mutual legal assistance, anti-money laundering and counter-terrorism financing, and freezing and confiscation orders.  Most significantly, the UK ceased being a member of Europol and Eurojust, with its influence and involvement being significantly reduced as a result.  The availability of the European Arrest Warrant (“EAW”) in the UK also came to an end, and was replaced by a new regime known as ‘surrender’.  In essence, surrender is based on the mutual recognition of arrest warrants issued by another state.  In contrast to an EAW, states can elect to refuse to comply with a request for surrender on the basis that the underlying offense is ‘political’, and may also elect to refuse to surrender their own nationals or attach conditions to the surrender of their own nationals.

The TCA also expressly provides for Joint Investigation Teams (“JITs”) between UK and EU member state investigating authorities, although it is largely silent on the detail.  It is envisaged that changing political moods and relationships have the potential to affect the willingness and ability of authorities to cooperate with each other.

Conclusion

While some of the impacts of the UK’s departure from the EU are becoming increasingly clear, much of the detail remains to be defined. The politics of Brexit are likely to remain fraught, both around the Northern Ireland Protocol and other areas such as fisheries, data privacy, chemicals, and financial services. Companies will need to follow very closely both the fine-tuning of existing arrangements as well as the way potential new arrangements will evolve. Steptoe and Johnson can offer detailed and informed commentary and advice on all the areas covered in this article.

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*Co-authors: Renato Antonini, Eva Monard, Byron Maniatis, Charles Whiddington, Alexandra Melia, Guy Soussan, Angus Rodger, Simon Tilling, Ruxandra Cana, Leigh Mallon, Charles-Albert Helleputte, Diletta De Cicco, Zoe Osborne

[1] See https://ec.europa.eu/eurostat/documents/2995521/11563419/6-16122021-%20AP-EN.pdf/fe1315b6-a0c5-56b3-3de3-13468db7becd, and https://ec.europa.eu/eurostat/documents/2995521/10662401/6-16122020-BP-EN.pdf/083d8003-af99-e3c6-0294-6b5df4e68156.

[2] See https://www.ons.gov.uk/economy/nationalaccounts/balanceofpayments/bulletins/uktrade/october2021#total-trade-three-monthly-and-annual-movements. After October 2018 disruptions caused by Brexit started to kick in, further exacerbated by the pandemic starting in 2020.

[3] In December, the British Chamber of Commerce reported that 45% of UK companies have had difficulties in trading under the new customs arrangements put in place by the TCA. See https://www.britishchambers.org.uk/news/2021/12/almost-half-of-firms-facing-difficulties-trading-with-eu-under-post-brexit-trade-agreement.

[4] See https://www.gov.uk/government/news/less-than-a-month-until-full-customs-controls-are-introduced.

[5] See https://bills.parliament.uk/bills/3015.

[6] See https://ec.europa.eu/commission/presscorner/detail/en/ip_21_198.

[7] See https://www.politico.eu/article/uk-to-eu-british-position-on-northern-ireland-remains-unchanged/.

EU
Archives, EU Trade, Global Trade Daily

Will the EU Supply Chain Issues Encourage Growth in the UK Economy?

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Brexit and the pandemic have been disruptive for supply chains. Between new regulations, tariffs, and isolation and testing policies, importing and exporting products has been difficult. However, where disruption occurs, so too does the opportunity to seize new shares of growing and changing markets.

By discussing how Brexit has affected trade between the EU and the UK, we can explore how the UK economy may experience local economic growth and how businesses should reinforce their operations to succeed in this new era of regulated trade.

Why is Europe so important for British supply chains?

Trading with the EU has played a significant role in British business as the number one partner for trading goods, accounting for 52 percent of imports and 43 percent of exports in 2019.

In 2019, £374 billion worth of goods were imported to the UK from the EU, while £294 billion worth of goods were exported.

These trading ties are significant for sectors including food and drink, chemical, and automotive industries, supplying commodities and equipment for supply chains in the UK.

Measuring trade

However, the Brexit trade agreement has been disruptive, with imports and exports experiencing a sharp slump after the UK officially left the EU. While it has recovered, there are still some teething issues as the UK attempts to restore European trade to its pre-Brexit high. More checks, paperwork, and higher costs are just some of the problems that businesses are facing.

In May 2021, the value of imports from the EU matched levels of January 2016, lower than its peak in 2019. However, the value of exports remains relatively high, exceeding most figures as far back as 2007. The trade deficit is also at its lowest difference since 2012. The impact of Brexit has been sharp, but data shows that while the recovery is turbulent, it is a recovery nonetheless.

Opportunities for UK businesses

The UK is in a trade deficit with the EU, meaning that more goods are imported into the UK than are exported. This is not inherently bad or good. In fact, in some situations, a trade deficit can allow economies to specialize in specific sectors and achieve significant growth.

However, as imports from the EU remain below their 2019 peak, it could present an opportunity for short-term economic growth in the UK. Businesses may have to temporarily rely on domestic supply chains to sustain their current models while wider international trade deals are crafted. As businesses look to their own backyards, could it boost local communities through employment and other investment?

UK businesses that supply transport equipment, chemicals, and non-electrical machinery could find domestic investment from investors struggling to attain imports from our European neighbors, where these commodity groups equate to 17, 15, and 14 percent of import from the EU respectively.

One UK business, FPE Seals, is a manufacturer and distributor of pneumatic seals and hydraulic cylinder parts. Steve Eillis, Managing Director at FPE Seals says that while Brexit has been disruptive, a clear supply channel strategy along with the specialist focus of their products has allowed them to remain competitive across the UK and European markets. NAME said: “It’s key for businesses to focus on their strengths and what makes their products or services unique. Despite the disruption of Brexit, we’ve been able to embrace a growing UK market while maintaining relationships abroad that limit the impact on our supply chains. Ultimately, by recognizing the strengths of our partners and clients, we’ve been able to tailor our processes to a market and supply chain that is constantly changing.”

Preparedness is key. While European opportunities may be reduced, businesses should seek out local opportunities.

Finding strengths to grow your business and the economy

The environment of uncertainty is unsustainable, as the UK and the EU move beyond the pandemic, businesses will be back to analyzing their Brexit strategy. For UK businesses to grow and to benefit the economy, there are several factors that should be considered and operations that can be more efficiently organized. Businesses that are progressing beyond Brexit and the pandemic must:

Create a new sourcing strategy

Investing in local supply chains or encouraging the establishment of international suppliers on your doorstep can help alleviate the uncertainty of European trade. Existing contracts should also be modified to account for risk in both the near and distant future.

Consider demand changes

As trade changes, so will the demand for your products. Those exporting to the EU may recognize that they cannot compete with internal-bloc businesses, but those with popular imported products may find more domestic success. Flexibility is also vital, where volatility may be a common feature of UK and European markets than previously known.

Reinforce their capabilities

Brexit means that UK businesses will have to stress their capabilities and advantages to new competition within the UK, and to their existing EU customers that may be discouraged by new tariffs, regulations, and checks. Whilst in the trade deficit, businesses should concentrate their efforts to reinforce their specialist skills and products that can also be procured through their business and trade. Only then can supply chains encourage economic growth.

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Sources

https://commonslibrary.parliament.uk/research-briefings/cbp-7851/

https://www.statista.com/statistics/284750/united-kingdom-uk-total-eu-trade-in-goods-by-trade-value/

https://ec.europa.eu/eurostat/statistics-explained/index.php?title=United_Kingdom-EU_-_international_trade_in_goods_statistics#EU_and_the_United_Kingdom_in_world_trade_in_goods

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Archives, Global Trade Daily, News

While the European Mollusc Market Struggles with the Pandemic, Brexit Emerges Another Serious Threat to the UK’s Producers

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IndexBox has just published a new report: ‘EU – Molluscs (Scallops, Mussels, Cuttle Fish, Squid, and Octopus) – Market Analysis, Forecast, Size, Trends, and Insights’. Here is a summary of the report’s key findings.

Molluscs are one of the best-known types of seafood in the EU. These include scallops, mussels, cuttlefish, squid, and octopus, etc. The market is well established and characterized by a high rate of per capita consumption in comparison with other regions. Molluscs are traditionally used in Mediterranean cuisine, they can be consumed on their own or as an ingredient in traditional dishes. Since molluscs have been a well-known and popular product for a long time, their consumption is mainly determined by the population size and the dynamics of disposable incomes.

In 2019, the EU molluscs market amounted to $3.6B (IndexBox estimates). The market value increased at an average annual rate of +2.1% from 2012 to 2019; the trend pattern remained consistent, with somewhat noticeable fluctuations being observed throughout the analyzed period. The level of consumption peaked at $3.8B in 2018 and then fell modestly in the following year. In 2019, molluscs consumption totaled 674K tonnes, flattening at 2018 figure.

The countries with the highest volumes of molluscs consumption in 2019 were Spain (309K tonnes), Italy (176K tonnes), and Portugal (41K tonnes), together accounting for 78% of total consumption. France, Greece, Germany and the UK lagged somewhat behind, together comprising a further 14%. In value terms, the largest mollusks markets in the European Union were Spain ($1.5B), Italy ($1B), and France ($280M), with a combined 77% share of the total market. The countries with the highest levels of molluscs per capita consumption in 2019 were Spain (6.61 kg per person), Portugal (4 kg per person) and Italy (3 kg per person).

Since the beginning of 2020, due to restrictive measures against the spread of the COVID-19 pandemic, the market has been facing significant challenges related to the destruction of the usual sales channels and disruptions in the supply chains. The HoReCa sector was almost completely paralyzed for several months, which significantly reduced the demand for molluscs and other types of seafood. However, retail sales did not decline as much as in-store food demand increased as consumers cook more at home and buy more products suitable for long storage. Another threat came from the possible disruption of molluscs supply chains due to the lower transport activity and quarantine restrictions.

The mollusc market is expected to contract over 2020 amid a marked drop in demand from the HoReCa sector, and will resume weak growth in 2021 as the HoReCa and tourism sectors find their ‘new normality’. In the medium term, the market is expected to grow moderately with a CAGR of +1.0% between 2020 and 2030, which is projected to bring the market to 703K tonnes by the end of 2030. However, these expectations are vulnerable to a risk of intensifying the second wave of the pandemic.

Brexit poses another significant threat to the mollusc market, a problem even more serious for the UK itself than for the EU. After Brexit, the rules for third countries apply to the UK from 2021, and therefore the vast majority of mollusc sales are no longer legal since the EU cannot import mollusc from Class B waters.

Before Brexit, the UK was the third-largest mollusc exporter in the EU, with shipments of 11K tonnes in 2019. Meanwhile, Spain (145K tonnes) remains the major exporter of molluscs, comprising near 64% (IndexBox estimates) of the total exports. Portugal (25K tonnes) held the second position in the ranking.

Although the UK’s share of total exports is relatively small, more than $72M of shipments are at stake (at wholesale prices excluding retail margins), not to mention possible losses of incomes for British mollusc producing staff. Without a special agreement, the mollusc trade between the UK and EU countries cannot continue normally, and this situation threatens the existence of export-oriented British producers. The need for COVID testing for drivers delivering goods to the EU poses another threat as it degrades the quality of seafood due to delays.

The pandemic, coupled with the UK’s exit from the EU, could lead to noticeable changes in the European mollusc market, which will not only affect sales channels and supply chains but also lead to market redistribution among producers from other countries.

Source: IndexBox AI Platform

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Archives, Global Trade Daily, International Trade

The Top Five International Trade Issues Under the New U.S. Administration

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After a tumultuous stretch of international trade wars and a global economic crisis courtesy of the pandemic, the U.S. has a new president directing trade policy. What can business leaders expect from a Biden presidency as far as strategies, relations with major trading partners, and the role of the U.S. in global trade for the next few years? Early indications are that the U.S. – China relationship will remain tense, but the Biden team approach in other areas will differ greatly from the previous administration. Global partners can expect a change in tone from Washington, and there are five issues which will stand out as major differences under Biden’s leadership:

Number Five: The U.S. will reengage with the World Trade Organization (WTO), which should lead to a substantial reduction in unilateral ‘trade wars’ and tit-for-tat tariff exchanges. Under Trump, the WTO was marginalized and hamstrung by U.S. policies, as the appellate body did not have enough judges to take any action on trade disputes. Under Biden, the U.S. will be an active participant in the WTO and will use the organization to bring pressure against China and other nations on issues such as illegal support to state-owned enterprises. There is still an urgent need to reform the WTO, but the new administration seems poised to jump in and push for improvements.

Number Four: Russia is in the crosshairs. The on-again, off-again political relations between the U.S. and Russia should switch firmly to ‘off’ for the foreseeable future, as Biden’s foreign policy team has already indicated grave concerns over Russia’s meddling in Belarus as well as its treatment of protestors and dissidents such as Alexei Navalny in Russia. Biden ordered an extensive intelligence review of Russia’s actions over the last few years and will likely use the results of that report to tighten sanctions on Putin’s inner circle through the Magnitsky Act or dramatically limit trade and transactions with Russian state-owned enterprises, such as the Trump administration did with Huawei and other Chinese companies.

Number Three: The UK faces an uphill climb on their eventual U.S. trade deal. PM Boris Johnson lost an ally when President Trump left office, and the relationship with President Biden will be cordial but arm’s length. Johnson is in a tough spot, as he would like to secure a trade deal quickly to bolster his post-Brexit polling numbers, but Biden’s team is focused on the domestic agenda and probably will not see a need to negotiate this before 2022. The only way to move this deal to the front burner is to offer the U.S. one or more of the concessions it has long desired – increased access to the NHS for the U.S. pharmaceutical industry, lowered trade barriers for food imports, or improved entry into the services industry in the UK.  None of these would be popular for British voters, but Biden’s trade representative will be well-positioned to insist on key concessions.

Number Two: Biden’s team has committed early in the presidency to implement a “worker-centered trade policy” and that will color all of the legislation and trade deals that his administration will touch.  The intent of the policy is to ensure that future trade deals (including any potential participation in the CPTPP) do not harm American workers by giving the U.S. market access to foreign goods that were produced by underpaid and under-protected workers.  The flip side of this approach should be easier U.S. market entry from countries with decent labor (and environmental) standards, as the administration formulates a way to preference the ‘right’ type of imports.

The number one issue that will differ under the Biden administration is a desire to improve ties and trade opportunities with reliable partners. The tension with China will remain and potentially even deepen, but the Biden administration – stocked with committed ‘globalists’ – is going proactively tie other partners (especially fellow democracies) closer to the U.S. through increased trade and investment opportunities. Outside of North America, this will benefit Japan, South Korea, Australia, New Zealand, Israel and the European Union most of all. Rather than adjustments to existing trade deals (some of which, like the USJTA and USMCA, were just recently completed), the Biden administration will look to use bilateral investment deals to promote greater trade ties with trusted partners, especially in areas such as renewable energy and defense technology.

On the outside looking in will be Saudi Arabia, Turkey, Russia and other countries that will find in the Biden administration a trade team that is willing to substantively weigh human rights abuses and the dangers of populist leaders when assessing trade deals, money-laundering regulations, sanctions and access to the U.S. market and technology. While this shift in approach and tone will not immediately push international trade traffic into new patterns, it will lay the groundwork for a transition to more benign trade policies and less regulation for businesses working with preferred partners.  The foundations of global trade will shift just enough to push some companies, already weakened and weary by the pandemic recession, into a difficult scramble to quickly move operations and find new partners.

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Kirk Samson is the owner of Samson Atlantic LLC, a Chicago-based international business consulting company which offers market entry research, political risk assessment, and international negotiations assistance.  Mr. Samson is a former U.S. diplomat and international law advisor.

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Archives, Banking, Global Trade Daily

The European Legislation That’s Giving Businesses a Better Deal with Banks

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New legislation has been rolled out across Europe with the aim of increasing competition in the financial services market – and America is taking note.

‘Open Banking’ legislation forces the big financial institutions who dominated the market place to share data belonging to businesses and individuals with their competitors. This happens only when the customer has requested it – and is designed to help the customer to get a better deal when managing their money.

Using these Open Banking provisions, third-party financial institutions can access things such as balances, transaction information, spending details, borrowing and overdraft use. It means those institutions can then analyze the data and use it to offer linked services and offers. Only specific data that is required to enable a particular service is shared and only when the customer has consented. That consent can be withdrawn at any time.

Across Europe, legislation – in the form of the Second Payment Services Directive (PSD2) – is now in place to require banks to engage with Open Banking and enable customers to consent to the sharing of their data in this way and sign up for services that require it.

Though the concept of financial firms sharing customer data to enable products has been around for a while in Europe and the US, the European Union’s PSD2 legislation has arguably been a driver in making the way it is done more secure and raising the profile of the opportunities it creates across the globe.

Open Banking is certainly allowing individuals and businesses to access a wider variety of financial services.

Mastercard firm Finicity, with corporate headquarters in Utah, is an established Open Banking provider and recently announced a data access agreement with Brex, a finance management system for businesses.

Finicity CEO and co-founder Steve Smith said: “Finicity has been collaborating in earnest with financial institutions in signing data access agreements with banks and other traditional financial institutions.

“With our agreement with Brex, we are now extending our approach to fintechs. We look forward to working with Brex in pioneering the way financial data is utilized to help businesses grow and achieve their goals.”

The growth of Open Banking is undeniable.

In the UK alone, more than two million customers were said to be accessing Open Banking services by September 2020, according to the Open Banking Implementation Entity (OBIE).

Apps and services using Open Banking have made a wide variety of business banking services easier or more affordable.

Open Banking makes it feasible for a service provider to create an app that links directly to a business account to assess how much tax is payable and to move those funds into a tax account, for example.

In one of its simplest forms, Open Banking allows accountants, financial personnel, and business managers to set up and access a dashboard where accounts held across a multitude of different institutions can be viewed and managed in one place.

Disrupter services are also forcing intensified competition on things like fees and charges for overseas spending and transaction costs.

One aspect of Open Banking allows merchants to tap into new streamlined options for accepting payments and making refunds directly between customer accounts without the need for credit or debit cards.

Kieran Hines, Senior Banking Analyst at financial services technology research, advisory and consulting firm Celent, said: “Open Banking on the face of it is a quite alien concept. If you say to people ‘there is this great new concept where third parties can access your bank account information’, people are naturally quite hesitant and tend to reject the concept.

“What we will see happening, and to some extent is already happening, is that people will engage with Open Banking services because they provide value. Customers will be less and less aware of the realities of what happens to power these services and more interested in taking advantage of what they can offer.

“In the same way that people don’t need to know how an ATM works in order to use it. What we need to know with Open Banking is ‘if I provide consent to this mobile app to see my data, they can give me something better than I have now’.

“Over time, Open Banking will become something that is just part of the experience customers have and they’ll be aware of how that can be used to improve the services they receive.”

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Archives, EU Trade, Global Logistics, Global Trade Daily

How to Mitigate the Burden of Brexit Disruption

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It’s difficult to believe, but after nearly six years of debate and disruption, the end of the Brexit saga is close at hand. There are less than two months left until the official departure of the UK from the EU, and with each passing day the possibility of a mutually agreeable free trade arrangement between the two parties becomes less likely.

For businesses engaged in trade across the English Channel and the Irish Sea, this is likely to mean significant disorder in the form of long queues at customs checkpoints, a deluge of new documentation with which to reckon and the expense of new taxes and tariffs. Just as an example, the total volume of customs declarations is due to rise by 20% after Brexit Day.

For their part, the governments in London and Brussels are doing what they can to provide relief to those businesses that will inevitably experience adversity with the onset of Brexit. As part of this, the British government has introduced a new process called Entry in Declarants Records or EIDR. It is being made available only to those businesses that do not trade in controlled goods, such as food, chemicals, medicines, etc.

Why It Matters to Trading Businesses

As noted above, businesses engaged in trade will face a series of setbacks as the UK and EU part ways, the foremost of which will be border delays. The EIDR allows businesses to import goods into the UK without providing a full or even partial customs declaration at the point of import. That means quicker and easier release of shipments and, in turn, shorter delays. It also allows for the deferral of Value-Added Taxes (VATs) using the introduction of Postponed Accounting for VAT (PVA) and duties, as well as the deferral of supplementary declarations for individual or bulk shipments. This not only provides financial relief in the short term, but also a smoother transition into the customs regime.

What’s the Catch?

It’s not so much that there’s a catch, but there are limitations and requirements. EIDR allows traders to obtain the release of goods from a third country to a customs procedure and can be used to enter goods into:

-Free circulation;

-Customs warehousing;

-Processing;

-Specific use or;

-For export/re-export purposes

However, in order to import goods through EIDR, businesses are required to use the Customs Freight Simplified Procedure (CFSP) to complete the reporting process through the submission of a supplementary declaration. EIDR will be accessible to traders without the need for authorization until June 30, 2021.

A supplementary declaration must be completed up to six months after the date the goods were imported. If a Trader elects to use EIDR after this date, an application to HM Revenue and Customs (HMRC) will be required.

If those last two paragraphs left you shaking your head and craving alphabet soup, the good news is EIDR doesn’t require the documentation to be submitted directly by the importer, so trading businesses can lean on their customs brokers for the heavy lifting on documentation and process.

What are the Limitations?

Goods that cannot be declared using EIDR includes but is not limited to:

-Items on the Controlled Goods List – which also includes but is not limited to Excise goods, Fisheries, Endangered species, Anti-dumping duty and countervailing duties.

-ATA Carnet

-Personal Effects

-Special procedures e.g. Inwards Processing (IP) by import declaration.

What are an Importer’s Responsibilities?

Like all other documentation and duty deferral programs around the world, the EIDR will require importers to apply diligent record-keeping to ensure they are able to document their transactions and keep logs of relevant information in the event they are audited or a miscalculation occurs.

All businesses using EIDR to trade goods must:

-Maintain records for no less than 4 years.

-Ensure records are backed up and kept secure.

-Obtain the use of a CSFP software package or the services of a CFSP authorized customs agent.

-Maintain a clear audit trail of temporary imported goods.

Although EIDR will allow faster release of goods, use of simpler customs declarations and provide potential cashflow benefits to traders; these benefits could be outweighed by fees and software costs.

Make it a Supply Chain Conversation

Businesses would be well served to discuss with their trade partners and supply chain vendors precisely how they intend to operate in the post-Brexit period. In addition, they should work with their vendors, including freight forwarders, customs and freight brokers and trade consultants to conduct a thorough cost analysis to enable an informed decision on the process to be used.

Doing this today has the potential to mitigate border disruption, reduce landed costs and lessen the burden of documentation requirements, allowing businesses to focus more on what they do best and less on the minutiae of customs processes.

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David Merritt is a director in the Global Trade Consulting division of trade services firm Livingston International. He can be reached at dmerritt@livingstonintl.com.

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Archives, EU Trade, Global Trade Daily

Sweet Dream or a Logistical Nightmare?

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Uncertain; unforeseen; unprecedented; unexpected: 2020 has been the most turbulent of years, politically, socially, and medically.

Amongst it all, the UK’s negotiations with the EU have continued. The current transition period ends on 31 December 2020, at which point the UK will leave the EU’s Single Market and Customs Union. At present, it’s not clear what the UK’s new independent trade policy will entail, but the logistics industry will be acutely aware of the potential impact of a ‘No-Deal Brexit’ on the availability of workers, not to mention customs issues and the sheer volume of administration that all add time to an already time-sensitive industry. Michael Gove, Minister for the Cabinet Office, has publicly estimated a worst-case scenario of lorry drivers being delayed at the Dover-Calais crossing for up to two days.  

Logistics companies are being advised to prepare thoroughly and carefully to avoid delays and to ensure the timely passage of goods in to and out of Europe, but also to cushion the blows of duties that may be incurred alongside increases in the cost of materials combined with currency devaluation. Companies that have previously relied on ‘just-in-time’ deliveries of goods and stock from the EU, where parts may arrive a matter of hours prior to being used, are now having to look for other ways of securing their supply chain.

Many are stockpiling goods, increasing demand for storage spaces of an appropriate type and in suitable locations. An acute shortage of warehouse facilities in major cities means that competition for suitable space is intense and the government’s focus on building more residential properties has led to concerns that urban logistics spaces will lose out to housing.

As if this wasn’t enough, there’s also Covid-19, which has led to an enormous increase in online commerce. This has meant, in turn, greater pressure on the existing logistics networks and heightened competition, particularly when it comes to replenishing stocks for retailers, storage of goods, and meeting increasingly high customer expectations. This is relevant for businesses of all shapes and sizes, from the biggest players in the market to SMEs, and companies are being forced – or incentivized, depending on how you look at it – to reposition their networks to make sure they are not only up to standard but are also resilient.

It’s not all bad news. As ever, with the biggest challenges come the biggest opportunities and the logistics market is seeing an influx of investment in urban logistics expansion, with a particular focus on last-mile warehouse markets in key metropolitan areas and what are sometimes known as gateway cities – anything that can get the suppliers closer to the consumer. Even the quickest of glances at current industry headlines show deal after deal as investors snap up properties close to consumers and key infrastructures such as airports, strategically important highways, and ports. It’s not just existing development sites either, as assets with the potential to be repositioned are being considered by logistics companies (and their investors) in an effort to ensure distribution networks are as efficient and fit for purpose as possible – although the urban infill market remains a favorite.

We at Bird & Bird have seen an increase in clients wishing to consolidate existing land stock and develop it into potentially more lucrative warehousing in response to the increased demand for storage space, and also from landlords looking to reclaim potentially high-value warehouse space. We expect to see a significant increase in requests for advice relating to the construction of warehouses with advanced technological capacity, with the aim of driving down operational costs and maximizing the use of space particularly in high value, low capacity areas.

Time to throw yet another straw onto the proverbial camel’s back. What about sustainability in an industry that is ultimately based around consumer desires? Can logistics ever be ‘green’?

It’s an interesting and ever-more pressing question. The logistics industry needs to grapple not only with consumer pressure to provide an environmentally responsible service and the fact that investors are increasingly considering sustainability as part of their investment decisions but also with the drive from the government.

The UK Parliament passed legislation in 2019 that requires all greenhouse gas emissions produced by the UK to be brought to net-zero by 2050 when compared to the levels recorded in 1990 (not to be confused with a ‘gross-zero’ target which would require reducing all emissions to zero). Innovation, off-setting, and the use of modern methods is a key part of this process, as the built environment is widely acknowledged as being critical to reductions in emissions goals. However, new buildings make up a fairly small percentage of the challenge and the focus has to remain on existing stock and how to remodel or retrofit it to make it more sustainable – whether that is by way of solar paneling, greater automation, or the use of robotics.

It’s worth noting that where construction can be carried out off-site, employers are often seeing an improvement in energy costs and reduced waste. Sustainable technology and ensuring a sustainable supply chain are other areas worth investing in.

This is a time of huge change and uncertainty. As with any challenge, the best defense is preparation, and making sure you have a competitive edge in an already competitive industry is key, as is staying on top of the consumer trends and trade negotiations which could have a significant impact on day-to-day management and the meeting of supply contracts. With consumerism ever on the rise, the demand for warehousing doesn’t seem to be an appetite that is going to be sated any time soon, whether there is a no-deal Brexit or not. Investors in logistics and industrial real estate are clearly already aware of this.

This is a chance for the logistics industry to recalibrate and position itself accordingly. It’s worth looking ahead too – whilst the Covid-19 pandemic will be over at some point (hopefully sooner rather than later) that does not mean the consumer habits picked up during the pandemic are going away and longer-term trends, such as the increasing urbanization of populations, the continued maturation of emerging economies, and increased consumer awareness of environmental concerns, will continue to dominate the narrative for many years to come.

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Archives, EU Trade, Global Trade Daily

Simplifying Customs Procedures in the Post-Brexit Period

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Anyone who has ever arrived at an airport outside of his or her home country knows all too well the chaotic, tedious, and time-consuming process of going through customs and immigration.

Now imagine that, instead of people, the lineup was made up of tractor-trailers full of time-sensitive goods and was several kilometers long because there aren’t enough customs officials to process the backlog of required paperwork. Somewhere far away from the lineup is a business owner impatiently waiting for those goods and becoming far more open to the idea of finding a new supplier. Now you’ve got a sense of what the borders of the UK and EU will be like come January 1, 2021. The total volume of import and export declarations entries is anticipated to balloon to approximately 400 million annually after Brexit, adding about £13 billion a year in cost to businesses. What’s more, British officials estimate only about one in three small-to-medium-sized businesses are prepared for the customs changes compared with about 70% of large businesses.

The good news is that for those businesses engaged in trade across the English Channel (small or large), there will be some relief in the form of a fast pass. It doesn’t let you skip the queue, but it does allow you to join it with far less fuss.

With the Brexit deadline fast approaching, this is the time for traders to embrace the UK’s customs simplifications for their future business activities.

What is CFSP?

CFSP was first introduced in 2001 to enable the import of shipments by traders from third countries to be completed in two stages – an initial declaration with reduced content is submitted at the port, and a second supplementary declaration containing full data is submitted weeks later (or months later in the case of phase one of the Brexit import declaration program). The use of CFSP provides a trader with greater certainty of the receipt of goods and cash flow savings.

During the first phase of Brexit, traders of non-controlled goods who wish to defer the finalization of their import declaration for six months may elect to use Entry in the Declarant’s Records (EIDR) rather than the submission of a full or initial port declaration. This process allows importers to use their commercial records to have goods clear customs without being required to complete a full custom import declaration or the initial CFSP declaration. However, the commercial records must be supplemented with additional information required by H.M. Revenue and customs using a Supplementary Declaration via CFSP within six months of the date of import.

An importer who uses the CFSP deferred declaration process can also participate in the Postponed Value-Added Tax (VAT) accounting scheme.

Who can apply for it?

A customs broker can be authorized for CFSP and provide this on an importer’s behalf; however, more complex import operations would benefit from an importer obtaining his or her own authorization.

If an importer decides to become authorized for CFSP in their own right, an application in advance of importing must be submitted and approved and 120 days should be allowed for the approval of the application. One key factor for importers to consider when applying for CFSP is that it is not merely a matter of applying for and being granted authorization. Applicants will also require software to produce supplementary declarations to the authorities.

To be eligible for CFSP, an importer must:

-Fulfill a set of criteria and comply with any additional criteria for the simplified procedure(s) required for his or her business model.

-Maintain and retain records for all shipments processed under CFSP.

-Keep a clear audit trail, and ensure all records are backed up and kept secure.

The requirements of CFSP for an importer in their own right can be costly and time-consuming, and as such should be weighed against an intermediary completing such activities on an importer’s behalf and using their CFSP authorization.

It is imperative that controls are in place by importers to validate customs declarations made on their behalf to ensure errors are captured and corrected.

Although CFSP will allow faster release of goods, use of simpler customs declarations, and cashflow benefits to importers; these can be outweighed by the additional fees and software costs. Importers looking to make an informed decision regarding whether or not CFSP is worthwhile for their businesses should conduct a thorough cost and business-process analysis and an equally thorough review of services and cost benefits.

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David Merritt is a director in the Global Trade Consulting division of trade services firm Livingston International. He can be reached at dmerritt@livingstonintl.com.

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Archives, EU Trade, Global Trade Daily, International Trade

THE ROAD TO BREXIT

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As Scott Miller wrote in one of our earliest articles, How Will Brexit Affect the UK’s Trade Relationships, the outcome of the UK’s exit from the European Union (EU) single market and customs union has broad implications for the UK economy and its terms of trade with the rest of the world.

On March 29, 2017, the UK’s notification of its intention to withdraw from the EU under Article 50 of the Lisbon Treaty triggered a statutory two-year clock for completion. That deadline was ultimately extended until January 31, 2020, when a transitional period began.

TradeVistas originally offered this timeline to summarize key events and milestones between 2015 and the first quarter of 2019, including the resignation of Prime Minister Theresa May and first term of Prime Minister Boris Johnson. It has since been expanded to reference the ongoing negotiations that continue in hopes of avoiding a “hard Brexit” on December 31, 2020, reverting to trade rules in the WTO.

For more narrative on how events have unfolded and why, we recommend the writing of Amanda Sloat at Brookings, who has followed the issue closely.

Download the infographic below updated as of October 16, 2020.

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Andrea Durkin is the Editor-in-Chief of TradeVistas and Founder of Sparkplug, LLC. Ms. Durkin previously served as a U.S. Government trade negotiator and has proudly taught international trade policy and negotiations for the last fifteen years as an Adjunct Professor at Georgetown University’s Master of Science in Foreign Service program.

This article originally appeared on TradeVistas.org. Republished with permission.

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Free Trade Agreements, Global Trade Daily

Free Trade Agreements: Is There a Trade Lane Left Without One?

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Since the first Free Trade Agreement (FTA) in 1860, a lot has happened. A solid 160 years will do that for you. On the FTA front specifically, the focus has also shifted: what used to be an opportunity for significant duty reduction and, therefore, a more competitive position in the FTA partner’s home market has turned into a tool for faster access to the market and control of a trading relationship. With the applied, weighted, mean duty rates globally down to 2.59% from 8.57% in 1994 (Source: macrotrends.net based on World Trade Organization (WTO) data), the importance of duty rate reduction has been marginalized—so why is there still such a strong movement towards adding more FTAs to an already considerable total worldwide?

Some Recent Developments

Trade agreements are not only about duty rates anymore; the collaboration and facilitation part is just as, if not more, important. That means trading partners make efforts to reduce the paperwork on the trade lane, give priority to incoming shipments, and collaborate on data exchange and simplification of procedures. In today’s economies, these elements are just as crucial as a few duty points. In addition to the facilitation, environmental clauses are included in new FTAs. Got to start somewhere. Customs unions (like the EU) take it one step further—they usually allow for goods to move freely between member states and have a single common tariff for the outside world.

In a similar fashion, the FTA accounts for financial and administrative arrangements that are not limited to duty rates and import documents. In a broader scope, abolishing of export subsidies, transparency with added value calculations, investigative cooperations, etc. are part of the package and simplify the use and verification of FTA claims.

Perhaps not a trend (yet?), but the Pan-Euro-Mediterranean is loosening its Rules of Origin (likely in effect in 2021). Rules of Origin set forth the requirements that need to be met to benefit from FTA arrangements (i.e., qualify for preferential treatment). Typically, Rules of Origin encompass a required tariff shift (i.e., a substantial transformation needs to take place) and/or a value-added component (i.e., the value add of locally sourced parts, materials, labor, etc. needs to exceed a specific threshold). The value-added thresholds have historically been relatively high (60% and up) and loosening those requirements will simply allow more products to qualify, which will give developing countries especially more opportunities to qualify their exports for preferential treatment.

Per the WTO, over 300 Regional Trade Agreements (RTA) are currently in force. This number only reflects agreements that include preferential duty rate schemes, as agreements such as bilateral investment treaties or Joint Commissions would increase this number two- or three-fold. The RTA number includes bilateral/local agreements as well as ‘monster trade pacts’ such as the EU, USMCA or ASEAN – China agreements. It has been a steady growth of FTAs since the 1990s, with a peak in the action between 2003 and 2011. And (see below) there is no end in sight.

What’s Next?

Go big or go home is what the EU is thinking. Agreements are in place with around 40 countries, ratification in progress for agreements with around 30 countries, and agreements with another 20 countries are waiting to be signed. For any countries left behind, it seems that there are ongoing negotiations (e.g., Australia, New Zealand) or plans to negotiate. Don’t despair.

Never-ending speculation on a Trans Atlantic agreement (US – EU) or a Trans-Pacific Partnership (TPP) including the US will not be put to rest until actually completed and in force (the US withdrew from the TPP in 2017). The US currently has 14 FTAs with 20 countries, re-did the USMCA in 2020, and negotiations with Kenya and Taiwan seem to be in the works.

Lastly, with Brexit in its final stages, the UK is also breaking off FTA relationships with EU partners. That means the UK will have to create separate FTAs with these countries. Practically, not all of the EU FTAs will have a UK equivalent by January 1, 2021, and some may never be in place. This means regular (Most Favored Nations – MFN) rates will apply come January 1 unless another preferential program (like the Generalized System of Preferences) applies. But with the UK exit comes an opportunity for Britain to conclude agreements the EU has not been able to pull off. Perhaps a US – UK FTA is nearer than thought. Let’s check the odds on that!

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Anne van de Heetkamp is VP of Product Management and Global Trade Content at Descartes and is an international trade expert with 20+ years of industry experience. Previously he served as Director for global trade compliance/management company, TradeBeam.