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UK set to strengthen developing world ties, says Agility

[ July 19, 2017   //   ]

The UK will try to spark its economy through trade with emerging markets if it is unable to preserve its current relationship with its European Union trading partners, predicts freight forwarder Agility in its Mid-Year Emerging Markets Review.

With the EU’s chief negotiator saying that frictionless trade is “not possible” following Brexit, the more difficult the UK-EU divorce, the more likely the UK is to seek ambitious new trade deals with emerging markets countries, particularly Commonwealth countries in Southeast Asia and Africa, the Agility report indicates.

But Brexit also leaves key emerging markets exporters such as South Africa, Kenya, andTurkey and exposed because the value of the Pound has declined and the UK economy is expected to be smaller in the initial aftermath of the UK’s split with the EU.

The Agility report  prepared by analysis and research firm Transport Intelligence, further suggests that emerging market countries using the UK as a gateway to Ireland and other EU countries might need to find new distribution centres and routes to those markets. Meantime, UK exports to the EU could face burdensome checks and customs procedures unless the two form a new customs union and the UK retains EU product standards.

Chief executive of Agility Global Integrated Logistics, Essa Al-Saleh, says it is too soon to know how UK-EU negotiations will go, “but apart from the political hurdles, the UK’s desire for ‘frictionless’ trade with the EU faces complex technical obstacles – what to do about tariff-rate quotas, rules of origin, product standards and import duties. Anything that alters existing UK-EU arrangements probably means delays and added cost to the movement of goods.”

In addition to Brexit, the Agility report looks at the impact of India’s decision to replace more than a dozen state and federal levies with a single Goods and Services Tax (GST), which has set off a wave of change in India’s notoriously inefficient logistics sector as companies alter the way they store, move and account for goods. It is already prompting logistics providers and their customers to consolidate warehousing, revamp road freight strategies, and invest in system upgrades to improve the efficiency of their supply chains. It could cut logistics costs in India’s formal, organized logistics sector by 20%, encourage infrastructure investment, and provide a dramatic boost to the country’s surging economy, according to the Agility report.

www.agility.com/2017index

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