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Brexit red tape prompts rethink on cross-Channel trade

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While British importers and exporters wrestle with the UK’s new EU trade border this January, some businesses have taken a more radical approach to addressing the challenges posed by life after Brexit: give up on cross-Channel trade altogether.

One such company is Aston Chemicals in Aylesbury, a medium-sized business that imports and distributes specialist chemicals for some of the world’s leading cosmetics brands. It dispatched its last ever load to Europe on December 18.

“It was emotional after 30 years of trading, and we hoped it wouldn’t come to this,” said Dani Loughran, Aston Chemicals’ managing director, “but the duplication of EU chemical regulations, the risk of tariffs because of rules of origin, border delays and increased freight and administration costs left us no choice.”

It is difficult to predict how many small and medium-sized UK companies will take similar steps when confronted with significant additional costs and bureaucracy imposed by the UK’s new trading arrangement with the EU.

The agreement, secured on Christmas Eve and which came into force on January 1, will require an estimated 215m extra customs declarations every year.

Trade groups expect some companies will wait and see how the new rules bed down, while others — such as Aston Chemicals — have already taken pre-emptive action, either giving up trading altogether or rejigging operating models to serve two markets separately. 

Aston Chemicals has now set up a subsidiary in Poland to deal with EU customers directly, instead of exporting to the EU from the UK

Aston will no longer send weekly truckloads of chemicals to the EU from Britain, but instead import all the chemicals for its EU customers directly into a subsidiary in Poland, effectively separating its EU and UK supply lines.

Ms Loughran said that as a result of booking the business in the EU the company will pay more tax there and employ fewer people in the UK, having already cut its UK warehouse staff headcount by one-third. 

Industry sentiment surveys in sectors that are likely to be affected, such as chemicals, pharmaceuticals, food and drink and manufacturing in integrated supply chains, show a widespread expectation that Brexit will have a significant long-term impact. The expectation is that the effects will not be as immediately obvious as the short-term port disruptions that the government has warned of, but will eventually change the way many businesses trade.

Make UK, the manufacturing lobby group, for example, found that its “balance of export orders” index — the proportion of companies expecting worldwide exports to rise or fall — was forecast to drop sharply to minus 14 per cent this quarter, while the balance on investment intentions was minus 11 per cent. 

The motor vehicles sector is also downbeat, with a forecast export order balance of minus 33 per cent in the first quarter of 2021, compared with plus 20 per cent for the same quarter last year after Boris Johnson’s election victory led to a short-lived investment boom.

Stephen Phipson, head of Make UK, said that many manufacturers had been wary of exporting in the first few weeks of the year as they wanted to see the impact of Brexit. But he predicted that borders would be under more strain in the coming weeks as stockpiles built up in the transition period, which maintained previous trading arrangements with the EU, ran out.

Similarly, a third-quarter business confidence survey by the Food and Drink Federation found that 59 per cent of those members who responded predicted a decrease in exports to the EU during 2021.

The biggest factor for many smaller UK companies is the range of “non-tariff barriers” that confronts them as a result of the UK becoming a so-called “third country” operating outside the EU’s common regulatory umbrella.

Renee Watson, founder and head of The Curiosity Box, estimates she is facing a bill of about £20,000 to conform to new UK safety standards

For Renee Watson, founder and head of explosions at The Curiosity Box, which makes science kits for children in Eynsham village, Oxfordshire, it is the cost of certifying her products separately for regulators in the UK and EU that may tip the balance.

It will cost £500 a product to obtain the new “UKCA” safety marks, which indicate conformity with UK safety standards and which — for now at least — essentially duplicate the EU’s existing CE mark, which confirms a product meets the bloc’s safety, health or environmental requirements.

With about 36 products to register she estimates she is facing a bill of about £20,000. “I wish I had that sitting in the bank,” she said. “But we need to make sure we are compliant and can absorb the costs as schools will not be able to afford it if we passed them on.”

For now the company has paused exporting until it has worked out whether it can carry the costs of different certification marks, including in Northern Ireland where a separate “UKNI” mark is required. 

Ms Watson said she feared the company may never resume trading in Northern Ireland — but she remains hopeful that EU exports would continue even if “deprioritised while the dust settled”.

For others such as Shane Burnett, the founder of Premium Plus UK, a Bournemouth-based dental medical devices maker, the decision has already been made. Last year he hastily opened a new subsidiary in Poland to handle his EU customers, which make up 65 per cent of his client base.

He said that strict EU rules on importing medical devices simply made it unviable to use the UK as a distribution hub for the products he imports from China. He has let four staff go in the UK as the business shifts across the Channel.

“It would cost a fortune to do all that paperwork because now each EU customer becomes an ‘importer’ and that’s financially unviable,” Mr Burnett said. “It makes much more sense to ship the whole lot into Poland in one big hit, do the customs and then distribute round the EU.”



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'It’s more than sport – every day we are fighting for our rights to be equal’

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French pro basketball player and podcaster Diandra Tchatchouang on her role beyond the court



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Emily Dean on how allyship amplifies the female experience on film

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When I was six years old, I decided to be an artist. When I was 12, I decided to be a filmmaker. And instead of saying no, you can’t do that, or it’s not possible, my mum bought me a video camera.

After several years of working in the industry, I’m working with a female director for the first time. And it’s been such a gratifying experience. Women express leadership in different ways. Maybe you don’t have to be the loudest person in the room. But you can have great ideas.

And the best thing about being mentored by women and being a mentor to women is that make friends with women.

There’s something so powerful the women coming alongside other women, especially in a group setting. Because it means that you can and back each other up. You can support each other’s decisions, and you can amplify each other’s voices.

It’s about seeing yourself in your work. Seeing some part of yourself reflected is really gratifying. It’s also important that we speak up for female characters. I want to see girls and women on screen who have the whole cacophony of experience of what it’s like to be female.

I want to see their flaws. I want to feel their struggles. I want to see their joy. That is so important to making a character feel real. And it took me a little while to settle into myself and realise, if the characters I like to come up with are not your everyday run of the mill characters you see in animation, that’s fine. Because this is who I am.

When you walk into a story room, when you’re working on a film, you have to leave your ego at the door. I think that can be interpreted like keep your ego out of the work. But I’d also say for women who are maybe more shy that leaving your ego at the door means you walk in. And your job is to focus on what’s best for the story and for the film.

The story needs you. The film needs you, and it needs your best ideas. It won’t thrive unless you speak up.



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Crimea ‘water war’ opens new front in Russia-Ukraine conflict

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When a cyclone drenched Crimea in rainfall last month, rivers burst their banks and thousands of people in the Russia-annexed peninsula had to be evacuated from the floods.

The silver lining to the deluge was that the rains also filled Crimea’s depleted reservoirs, temporarily alleviating a crisis brought on by an extended drought and a Ukrainian blockade of the Soviet-built canal that previously provided up to 85 per cent of the peninsula’s water supplies.

Moscow’s struggle to supply Crimea’s 2.4m residents with fresh water has become a flashpoint in an undeclared war, seven years after Russian troops seized Crimea from Ukraine. An even longer conflict between Kyiv and Russian-backed separatists in eastern Ukraine has claimed more than 14,000 lives.

Russia has accused Ukraine of “genocide” over the building of a concrete dam across the North Crimean Canal, in addition to the existing sandbag and earth dam that was built in 2014. Kyiv fears that Moscow is plotting a military incursion to secure water flows from the nearby Dnipro river.

Coupled with surging food prices and international isolation because of western sanctions, the water shortages threaten to undermine President Vladimir Putin’s promise of a better life for Crimeans under Russian rule.

Though state-run pollsters claim Putin remains more popular in Crimea than on average across Russia, the patriotic fervour that sent his approval ratings to record levels after the 2014 annexation has long since subsided.

Map showing Ukraine and the North Crimean Canal, Crimea

“The water reserves and fields have dried up,” said Viktor, 47, a Crimean who regularly travels to Ukraine for work. “Each year it’s getting worse and worse. We didn’t have this problem before annexation,” he said, adding that most Crimeans blamed Ukraine for the crisis.

A $3.7bn bridge across the Kerch Strait linking Crimea with mainland Russia has become a conduit for trucks ferrying water for locals to take away in plastic containers. Popular Black Sea tourist resorts can turn on their taps for just a few hours a day during peak droughts, while the canal has filled with grass and weeds.

Crimea’s agricultural output has fallen owing to a lack of irrigation, making it all but impossible to grow water-intensive crops such as rice.

Construction of the canal began in 1957 after the Soviet Union transferred the arid peninsula to the Ukrainian Soviet Socialist Republic to manage rebuilding after the second world war. The waterway allowed for the cultivation of arable land and helped transform Crimea into a haven for tourists.

“The canal symbolises the stupidity of the Kremlin in occupying Crimea. They didn’t weigh the consequences at a moment of electoral euphoria that was fed by their own propaganda,” said Oleksiy Reznikov, Ukraine’s deputy prime minister in charge of reintegration policies for the occupied territories.

“Why didn’t you think about water?” he asked.

The North Crimean Canal is seen with a low level of water
The severely depleted North Crimean Canal previously provided up to 85% of the peninsula’s water supplies © Pierre Crom/Getty

Workers collect potatoes on the North Crimean Canal
Workers collect potatoes on the North Crimean Canal. Ukraine blocked the irrigation channel after Russia’s 2014 annexation of Crimea © Pierre Crom/Getty

Russia, while pressing Ukraine to reopen the waterway, has launched a Rbs50bn ($680m) programme to bolster Crimea’s supplies, repairing crumbling infrastructure, drilling wells, adding storage and desalination capacity.

Russian prosecutors last week filed a lawsuit in the European Court of Human Rights accusing Ukraine of “flagrant violations” over the issue. Crimea’s governor plans to file a separate complaint demanding up to Rbs1.5tn in compensation.

“Kyiv has essentially used Crimea’s infrastructure dependence on Ukraine, which came about in the Soviet era, as a weapon of mass destruction against all Crimeans. The water blockade is an act of state terrorism and ecocide, but the international community is failing to notice the Kyiv regime’s crimes,” Sergei Aksyonov, the peninsula’s governor, said in written comments to the Financial Times.

Reznikov said Russia, as the occupation force, was responsible under the Geneva Conventions for securing water and other basic needs for local the population. Ukraine has filed its own multi-billion-dollar claims against Russia, citing losses caused by what it describes as an illegal land grab.

With tensions rising, Russia deployed tens of thousands of troops and advanced weapons to Crimea this spring, as well as to the border of the two breakaway eastern regions where Moscow-backed separatists have battled government troops into an eighth year.

Col Kyrylo Budanov, chief of Ukraine’s army intelligence unit, said Russia was looking to seize the canal as well as adjacent territory to connect Crimea with the breakaway regions. Russian troops could advance on Nova Kakhovka, the Dnipro river town where the canal begins.

Some Crimean Tatars, an indigenous ethnic group whose members largely opposed Russia’s annexation, have set up a makeshift camp near the dams to make sure the water flow does not resume.

A Crimean Tatar activist on the North Crimean Canal
A Crimean Tatar activist enters his base on the North Crimean Canal. Tatars have set up camp to make sure the water flow does not resume © Pierre Crom/Getty

A Ukraine military vehicle drives past a Soviet monument marking the entrance to Brylivka
A Ukraine military vehicle drives past a Soviet monument marking the entrance to Brylivka, a village on the North Crimean Canal © Pierre Crom/Getty

“It will be a full-scale war,” said a 55-year-old activist who gave his name as Alibaba. He said he and his fellow activists were willing to take up arms to defend the blockaded canal. “There will be nowhere to hide in these fields. Let them try,” he added.

At the Kalanchak border crossing near the new dam, Russian and Ukrainian troops have dug trench positions a few hundred meters apart.

Tensions have also flared in the Black Sea, not just with Ukraine but also with western navies. Russia fired warning shots in the path of a British destroyer sailing through contested waters off Crimea last month. Sevastopol, Crimea’s largest city, is home to Russia’s Black Sea fleet.

Moscow has insisted it would not go to war over Crimea’s water supplies, even as it conceded that Ukraine was unlikely to restore them. “All these hysterical statements from Ukrainian politicians are completely baseless — they’re just stupid, aggressive propaganda aimed at inciting hatred between the Russian and Ukrainian people. There won’t be any ‘water war’,” Crimea governor Aksyonov said.

Reznikov, the Ukrainian minister, said Kyiv was ready to provide Crimea with humanitarian assistance, including drinking water, which it already does for the separatist-run eastern territories, but no request had been made.

“For Russia to admit they’re weak is very difficult . . . it would amount to an admission that they made the wrong decision,” he said.



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