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Barriers to SME Exports to United Kingdom Cataloged in ITC Report

Tuesday, October 08, 2019
Sandler, Travis & Rosenberg Trade Report

Small and medium-sized enterprises have identified a number of trade-related barriers that they believe have a disproportionate impact on their exports to the United Kingdom, according to a new International Trade Commission report. This report also includes suggestions for actions that would help address some of the identified barriers and enhance the participation of U.S. SMEs in U.S.-UK trade.

The UK is the largest single-country export market for U.S. services exports, the fifth-largest destination for U.S. goods exports, and the fourth-largest goods export market for U.S. SMEs after Mexico, Canada, and China, the report states, SMEs exported $20.4 billion worth of goods to the UK in 2016, which accounted for 39 percent of the known value of U.S. goods exports to the UK. Top categories of U.S. manufactured goods exported to the UK by SMEs included chemicals, machinery and equipment, computers and electronics, and transportation equipment. Top food and agricultural products exported to the UK by SMEs include processed foods; wine, beer, and distilled spirits; fresh fruits and vegetables; edible nuts; and seafood products.

However, U.S. SMEs have identified a large number of trade-related barriers that they perceive as disproportionately affecting them as compared to larger U.S. firms, including tariffs and taxes, customs procedures, intellectual property measures, and temporary entry provisions. There are several possible reasons for this perception, the report notes, including that SME exports tend to be more concentrated in sectors with high tariff rates or in goods whose demand is more sensitive to price changes. For the other barriers SMEs tend to be disadvantaged because they often incur high fixed costs regardless of the quantity of goods shipped while larger firms are able to spread their fixed costs more easily over their larger sales volume.

Some suggested solutions included eliminating the UK’s retaliatory tariffs duties on certain products originating in the U.S., adopting higher de minimis thresholds, developing simplified trusted trader programs to streamline customs procedures, harmonizing intellectual property rules to allow for more efficiency, and eliminating the condition that UK residents approve visa allotments.

In addition, standards, technical regulations, and conformity assessment procedures were most often cited by SMEs as limiting their exports to the UK. The most frequently cited is that the UK often does not recognize the standards set by U.S. standards bodies, which forces many U.S. firms to seek dual U.S. and UK certifications before they can export their products. SMEs also expressed concerns with the costs and administrative burden of complying with UK and EU standards as well as the fact that U.S. firms are usually not given the opportunity to participate in the development of EU/UK standards.

To alleviate these obstacles, SMEs suggested the regulatory harmonization of common U.S.-UK standards, the mutual recognition of each other’s accreditation bodies and conformity assessment procedures, and an increase in the accessibility of information about UK’s standards and regulations.

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