Global Business Center

Brexit and the SME

Thames - United Kingdom - View of ParliamentBrexit is Coming 

By Alex Simon, SBDC EAN Trade Counselor

What's going on with Brexit? Is it happening or isn't it? It is hard to say. The news has been full of coverage this week as the British Prime Minister, Theresa May, postponed the parliamentary vote and left her country embroiled in uncertainty. 

Brexit is scheduled to occur on March 29, 2019. So, while the terms are still being negotiated and some observers even doubt whether it will come to pass, the U.S. government is still behaving as if it were guaranteed. 

According to the Office of the United States Trade Representative, the United Kingdom is the third largest destination for US SME exports ranked by overall quantity. The United Kingdom is the fourth largest destination for US SME exports ranked by value. 

Brexit with FlagsSuffice to say, what the economic agreements between the U.S. and the U.K. look like post-Brexit could have a significant impact on SMEs. For this reason, the United States International Trade Commission (USITC) in conjunction with the SBA is conducting a nationwide study on the current business dealings of SMEs with the United Kingdom, what barriers they face, and what they are concerned about in a post-Brexit world. 

I attended the USITC's listening session in Cleveland last week to learn more about what challenges and concerns northeast Ohio companies face when exporting to the UK. Here are my three takeaways from the session. 

  1. Fear of Tariff Volatility – It is no secret that the current US administration has taken a protectionist approach to international trade, and tariffs enacted against other countries have directly impacted small businesses. Many of the northeast Ohio companies in attendance expressed concern that the U.S. would not reach an amicable agreement with the U.K. after Brexit and that tariffs would be enacted which would make their products uncompetitive in the U.K. market. 
  2. Brexit has largely left U.K. portion of business intact (for now) – The Brexit referendum occurred in June 2016 and negotiations of the terms have been underway for the last two years. In spite of this political volatility in the U.K., the SMEs in attendance have not seen a decline in business. However, they did express concern that once Brexit is formalized, their business would be negatively impacted. 
  3. Regulatory Concerns– The SMEs in attendance all expressed that one of the greatest barriers with doing business in the United Kingdom was regulatory concerns and making sure that their products were compliant in the European Union (and by extension the UK). Many products, for example, require a CE mark. In order to get this certification, companies have pay for their product to undergo various tests depending on the product type and industry. SMEs are concerned that the UK will develop regulations and testing requirements in addition to/separate from the existing EU regulations. 
How the SBDC EAN Can Help 

Small Business Development Center Export Assistance NetworkIf you're an SME who relates to any of the above concerns, our team at the SBDC EAN is ready to help. We receive regular updates from the state and federal government about latest developments in international trade and can answer questions you might have about how Brexit or other issues impacting your business. 

Powered by SBA - Small Business AdministrationWe also have a number of resources that we can connect SMEs with who relate to some of the concerns and hurdles noted above. For example, did you know that the IMAGE grant can provide up to $3,000 in reimbursement for compliance testing for companies trying to enter a new market?  

Megaphone IconIf you represent an SME exporting to the UK and would like to share your experience and concerns with the USITC, they are open to interviewing you. Interviews are available until February, and it is a great opportunity to make your voice heard. Contact UKSME@usitc.gov for more information. 

GlobalReach SeriesFor any companies interested in learning about the latest developments in international trade, we hope you will join us on January 31st for our next GlobalReach event