CTI Blog

CTI Blog - If the PM is serious about solving the housing crisis, she must scrap Chequers & broker an improved deal that ensures timber can clear customs freely

This article is by Martin Whitfield, MP for East Lothian and Chair of the Timber Industries APPG

 

Earlier this month, Theresa May reaffirmed to the Conservative Party Conference her ‘personal mission’ to fix our housing crisis. Yet in the same speech, she reiterated her commitment to her Chequers Plan, which would crash the UK out of the Customs Union and Single Market after we leave the EU. In fact, the Chequers plan will fundamentally fail to retain any customs arrangements with the European Union. 
 
Without frictionless trade, I believe we face a clear challenge to build the number of homes the Prime Minister has committed to providing over this parliament.
 
This challenge exists because the supply of timber is essential to meeting housing demands. This sector, which contributes £10bn to the UK economy each year is still hugely reliant on trade with EU countries. Incredibly, 90% of the timber used to build homes in the UK is imported from across Europe. 
 
Whilst we do grow and harvest timber in this country, we simply don’t have enough to fill the void that will be left after Brexit. Even if we had the space, the time it takes to grow the trees does not meet the immediate housebuilding demands we face.  
 
Timber businesses across the country, including those in my own constituency of East Lothian, have strong relationships with several European countries and have built successful enterprises which employ over 200,000 people across the UK. This workforce is reliant on these imports. 

Our current relationship is remarkably simple; timber entering the UK from the EU clears ports immediately with no need for customs checks to be carried out. These materials are instantly available to be used or sold. Leaving the EU threatens the simplicity and efficiency of this arrangement. 
 
The realities of a poor deal or even no-deal after we leave is that these imports will be sitting in custom checks for weeks. A clear practical challenge which would face the industry is this; whilst the timber was being checked through customs, it could not be used or sold, and would need to be stored by the company. This is placing a significant logistical and financial burden on businesses, many of which are SMEs, many of which will not easily absorb these additional costs. 
 
Housebuilding and timber go hand in hand. The sector is already stepping up the challenge with new factories, skills-training and solutions. Current output stands at around 60,000 homes per year. This could grow to over 100,000 by 2020 using existing capacity. We have a great deal to be positive about within this sector, but the government is putting this progress at risk. 
 
As Chair of the All-Party Parliamentary Group for the Timber Industries, I am going to make the case today that our housing needs are reliant on continued access to the Customs Union and Single Market. If the Prime Minister is serious about solving the housing crisis, she must start by scrapping Chequers and broker an improved deal that ensures timber can clear customs freely after we leave.

 

[News URL: http://cti-timber.org/content/cti-blog-if-government-wants-build-more-houses-it-needs-workable-brexit-deal]

CIT Blog - Keeping reputation through responsible sourcing

This blog post is by TTF Managing Director and Member of CTI Board of Directors David Hopkins. It originally featured in the CTI Newsletter Winter 2017-18.

 

The recent legal cases concerning breaches of the European Timber Regulation (EUTR), in the UK and in Holland, are a stark reminder of the timber sector’s obligations in moral and legal terms. The two cases involved companies at different points of the supply chain, with differing cases against them, and markedly differing levels of punishment.

The first involved high street furniture chain Lombok. It was charged with not having conducted sufficient due diligence over the importation of a single item of furniture – a sideboard from India. There was no allegation that the item itself contained illegally harvested material. The charge was simply that insufficient due diligence had been conducted to confidently state it was of “negligible risk” – a clear legal requirement before placing goods on the market.

The second case, in Holland, did involve illegally harvested material. The Dutch authorities have ruled that Boogaerdt Hout placed illegally sourced teak from Myanmar onto the market. The company has been given two months to clear the material out of its supply chain or face fines of EUR20,000 per cubic metre. This follows a similar case in Sweden last year concerning Teak from Myanmar.

Both show the importance of conducting strict due diligence throughout timber supply chains. Without this in place how can one safely say there is, or is not, “negligible risk” to the materials we place on the market.

If we cannot say there is negligible risk, then we cannot say the timber we are selling is safe, and the reputation of the entire timber sector is called into question. In the minds of much of the public all timber is the same. Even Kevin McCloud made this mistake with his comments at UK Construction Week, despite the construction sector largely being served by certified European timber.

The real crime here though is that, as 21st century business regulation goes, compliance with the EUTR is relatively straightforward. It is a flexible, business friendly approach which allows companies to make their own judgements on their own supply chains. It doesn’t prevent trade, it enables it on a level playing field basis.

It’s why we are lobbying the Government to maintain the EUTR post-Brexit, and through the CTI’s All Party Parliamentary Group on Timber Industries, have got several politicians to ask questions in the house confirming the government’s future commitment.

We want to keep the reputation of the timber sector very high. The way to do that is to engage fully with the process of due diligence, make it simple and effective and be proud to demonstrate and articulate what we’re doing. The TTF will be reviewing its own Responsible Purchasing Policy (RPP) processes and mechanisms again in 2018 and working with Government and the Timber Industries APPG to ensure that regulation is something that we help design ourselves, rather than something which is imposed.

 

[News URL: http://cti-timber.org/content/cit-blog-keeping-reputation-through-responsible-sourcing]

CTI Blog - Brexit: The future of trade and the EUTR

This guest blog post is by David Hopkins, CTI Director and Managing Director of the Timber Trade Federation (TTF)

 

The triggering of Article 50 this week has started the long process of negotiation and withdrawal from the EU which could have major implications for the timber industry.

It was good to see, therefore, that the formal letter dispatched by hand to President Tusk was far more conciliatory and constructive in tone than much of the triumphalist rhetoric which has been circulating in recent weeks and months.

Whichever side of the debate one sits on, it is hard to deny that this will be a complicated affair, with emotions running high from all participants. It is in the UK best interest to acknowledge this and approach the talks positively, calmly and with everyone’s best interests at heart.

Certainly, the TTF view is that we should focus efforts on making this transition as smooth as possible for our trade. To do this, the most important part of the future arrangements with the EU must be to negotiate a mutually beneficial customs arrangement to ensure the same trading access as is currently the case. This would include ensuring the same regulatory environments for our industries and supply chains. 

Our view is that, if we cannot complete this process within the two year time frame – which seems a very tight window given the complexity of the negotiations - then a transitional arrangement must be agreed.

To be clear, it is not just tariffs that are the issue. Timber attracts relatively low tariff levels even under WTO rules. But, the potential to slow down trade due to suddenly having to make customs declarations and border inspections on all goods entering the UK would significantly slow down trade – especially as HMRC and other agencies are unlikely to have the staff or the know-how to make this work.

As our largest timber trading partner and an EU member state, Sweden’s views on the future of UK-Sweden trading relations must be taken into consideration. On March 15, Sweden’s National Board of Trade published a report summarising potential likely options for trade procedures between the EU and the UK. The report concludes that it is likely that any alternative situation negotiated will be less favourable than the current, with increased administrative requirements, higher costs and ‘reduced predictability in the flow of goods’.

Since this is an issue which will affect many industries in the UK, it should be given careful consideration. The exit negotiations must take these potential future burdens into consideration to ensure that trade can continue, freely and unhindered after we have left the EU in whatever form.

The next step within the UK following the triggering of Article 50 will be the implementation of ‘The Great Repeal Bill’ to repeal the EU Communities Act 1972 and begin transferring EU law into UK law for the interim period. With this in mind, there are a number of key items of EU legislation affecting the UK timber trade which will need to be addressed, mostly notably the EU Timber Regulation (EUTR).

The TTF and its membership believe strongly in the value and effectiveness of EUTR and advocate its retention post-Brexit.

The wording of the Article 50 letter stated: “We should…prioritise how we manage the evolution of our regulatory frameworks to maintain a fair and open trading environment, and how we resolve disputes.”  This is to be welcomed and supported and should not be undermined for supposed short term gain.

The timber industry is not alone in wanting to maintain the current regulatory status quo with Europe. The CBI, Chemical Industries Association, Institute of Directors, the City of London and many others have called for much the same thing. The regulatory regimes are priced into most of their business models and they see little to gain from undermining them.

TTF has already begun a programme of meeting with ministers and civil servants from key government departments such as Defra, BEIS and DfID about potential impacts to the timber trade. It is our view that the timber sector can show a very positive picture of free trade with nations across the globe, based on a common set of principles and regulatory regime.

As the talks continue, we will keep members updated and will be running regular MP visits to members businesses around the country.

We applaud the Prime Minister’s view that the UK should be seen as an innovative modern, global leader in international trade and want to ensure this is the outcome that prevails.

However, if the UK does want to be seen as a modern leader in global commerce, rather than a hand-delivered letter to Brussels, should Mrs May not have just sent an email? 

 

[News URL: http://cti-timber.org/content/cti-blog-brexit-future-trade-and-eutr]