Coombe Castle have won the Queen’s Award for Enterprise: International Trade for the fourth time in 2018. This is a photo of Darren receiving the award from the Lord Lieutenant
The Lord Lieutenant of Wiltshire, Sarah Troughton, presenting Darren Larvin with the Queens Award for Enterprise in July 2018 © David Betteridge/Coombe Castle

Having to trade on World Trade Organisation terms after Brexit would “essentially kill the business”, said Darren Larvin.

Mr Larvin exports cream cheese, butter and crème fraîche from his company in Melksham in the south-west of England. Coombe Castle has a turnover of £20m and sells most of its products overseas. Its main markets outside Europe are Canada and the US.

Coombe Castle’s sales to Canada rely heavily on the preferential access that the UK has as part of the EU’s trade deal with Ottawa. Mr Larvin believes that the price of his exports will more than double if trade with Canada shifts back to ordinary WTO rules without the quotas for low-tariff sales negotiated by Brussels.

“We have stopped taking orders and a third of the business is on hold as a result of the uncertainty,” he said.

The UK’s slow progress in rolling over the EU’s 40 preferential trade deals, covering 71 countries, matters whether or not Theresa May manages to reach an agreement with the bloc on Britain’s exit deal.

Provisions in the draft withdrawal treaty say that Britain should continue to enjoy the benefits as well as the obligations of trade deals with third parties, but it is up to individual countries outside the EU to sign up to this approach.

Japan, for example, says it will trade with the UK under current terms for the length of Britain’s transition period — which could run until the end of 2022 — if London and Brussels agree an exit deal. But not all countries are so forthcoming.

Mr Larvin is unusual in registering his concern over the issue. According to trade organisations, most small companies do not know how seriously they would be affected if the UK fails to conclude agreements to duplicate access in so-called “third countries” in time for Brexit.

On Wednesday, the Department for International Trade briefed 30 business representatives — ranging from organisations such as the Society for Motor Manufacturers and Traders to big manufacturers — on its failure so far to replicate “most” of the EU’s trade deals with other countries around the world.

Officials told the assembled business representatives that while agreements with Switzerland, Israel and some African nations would be wrapped up before Brexit — scheduled to take place on March 29 — there was no certainty that EU deals with other countries could be rolled over or duplicated in time.

John Allan, president of the CBI, warned that many British companies were unaware of this “looming danger.

“From rapidly growing creative firms trading with South Korea to specialist machinery firms trading with Mexico, these EU Free Trade Agreements have supported firms of all sizes to grow and could be lost overnight,” he said.

The CBI said individual businesses that trade with markets outside Europe could potentially have “tariffs worth hundreds of millions of pounds slapped on them instantaneously”.

“Car companies risk being dropped from complex global supply chains that support these deals, and services firms risk losing vital protections that allow them to operate abroad,” Mr Allan said.

Mike Cherry, who chairs the Federation of Small Businesses, said many small traders have been left with “little clue” as to what trading landscape they will face whether or not a deal is secured.

“The admission from DIT will have many wondering what they have been doing for the last two years,” he said.

Other entrepreneurs share these worries. Conrad Whiteley, international sales manager for Beyond the Bean, which produces syrups for coffee and smoothies, is particularly worried about the UK’s trading arrangements with South Korea.

Conrad Whiteley from Beyond the Bean. They produce coffee related products (anything that isn’t coffee that is sold in a coffee shop – eg. Syrups) and sell globally. They have seen major growth into South Korea, via the new EU-South Korea FTA and are very worried about that disappearing, and are now considering routing production direct from France to retain current preferential access. Conrad Whiteley Mob: 07375 513 651
Conrad Whiteley of Beyond the Bean © Beyond the Bean

“We have invested eight years in South Korea . . . we have a lot of competition from Asian suppliers in the area and the FTA helped to maintain our competitiveness,” he said.

“We could potentially lose this overnight and reverting to WTO tariffs would basically kill that market.”

A spokeswoman for the South Korean trade ministry said: “It is too early to tell our stance on the Korea-EU FTA deal as there are uncertainties over Brexit.”

Beyond the Bean is one of many companies which has already sent product shipments out, without knowing what tariffs they may end up being subject to when they arrive at their destination.

“There is a big void in time in which businesses may be affected by sudden changes,” Mr Whiteley warned.

Participants in Wednesday’s meeting were told its content was confidential, meaning that organisations are not able to brief their members in detail on the government’s lack of preparedness.

Emma Jones, who runs small business network Enterprise Nation, said that small companies will find another route to survive even if trade deals are not extended.

“We increasingly feel that what the country will have left to rely on is the stamina and inventiveness of entrepreneurs,’ she said.

But Mr Larvin at Coombe Castles said that if a trade deal was successfully negotiated by the government in time for 29 March, his business would still face disruption. “These deals need to be in place now. Without them we will not be able to access the markets.”

Additional reporting by Jung-a Song in Seoul

Get alerts on Brexit when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.
Reuse this content (opens in new window)

Follow the topics in this article