The importance of trade deals and how to take advantage of them

By Duncan Heron, below, VP of Marketing, DHL Express

In an increasingly interconnected world, international trade is key for almost every industry. For the UK, trade deals have taken on new significance in the aftermath of Brexit. These agreements offer a way for UK SMEs to diversify their revenue streams and thrive in an ever-competitive market. Trade agreements help to level the playing field by eliminating or reducing trade barriers, making it easier to compete with businesses in country, and with larger corporations who generally have greater resources. Here we explore the importance of trade deals for small businesses, the benefits they bring, as well as our top tips for trading.

Why trade internationally? 

Trade deals open doors to new markets. They eliminate or reduce trade barriers such as tariffs and quotas, making it easier and more cost-effective for UK SMEs to sell in foreign markets. This access to a broader customer base can really accelerate growth, especially for businesses that may have previously only focussed on their home market.

Not only is international trade a growth opportunity but it reduces reliance on a single market which can leave SMEs exposed. For a small business just trading in the UK, when there’s a local slowdown in spending, that can have a huge impact, whereas a business with customers in two or three other markets, is better shielded from a local downturn.

International trade also has an amazing way of sparking new ideas and innovation. Exposure to different, cultures, markets and consumer preferences can spark creativity and encourage SMEs to adapt and improve their products or services.

The UK’s new trade deal with Australia and New Zealand 

Earlier this year the UK trade agreements with Australia and New Zealand came into force, which were the first entirely new trade deals that the UK negotiated in the post-Brexit era. Both agreements allow for zero-tariff trade on the vast majority of goods, removal of regulatory compliance barriers, and co-operation on digital trade to boost services exports and e-commerce sales of goods. Let’s take a look at three benefits that have come with the new deals.

1. Increased focus on SMEs

Both Free Trade Agreements (FTAs) with Australia and New Zealand recognise the importance of SMEs to economic growth and are particularly supportive of SMEs in trade. The agreements include provisions that make procurement more accessible for SMEs, such as by making tender documents available free of charge and simplifying various admin processes.

2. Quicker customs process

New commitments and minimised paperwork will ensure goods exit customs more quickly. Providing all customs requirements have been met, the UK, New Zealand and Australian customs authorities will release goods as soon as possible following arrival, or as a maximum within 48 hours. This will allow UK traders to have more certainty around when they can expect their goods to be released by customs authorities.

3. Boost to e-commerce

The deals recognise the significance of digital trade for growth across all sectors of the economy. Consumers and suppliers alike will benefit from commitments to minimise spam and false product descriptions in online marketplaces. This greater consumer protection will give shoppers in all three markets more confidence when sourcing cross-border products.

Top tips for trading internationally

1. Keep on top of new changes

It’s important to keep track of changes that are happening in trade.  Maybe customs issues, high tariffs or too much red tape stopped you trading internationally before. A lot of these issues will be reduced or removed under the FTAs – for example businesses will now not have to complete an origin declaration when exporting to New Zealand if their goods are less than £1,000 in value.

2. Use guidance from trusted partners

Each market will have different customs procedures, documentation requirements and regulations. To avoid delays in shipping, it’s important to understand the differences. Work with a logistics provider that has experience and expertise with customs processes so that your shipments are cleared quickly and efficiently. Australia, NZ, Japan and Singapore are among the countries that the UK has recently signed trade agreements with and DHL Express can provide insight and guidance on the specific industries, opportunities, customs, and export checklists to be aware of.


3. Know who you are selling to and when

Shopper behaviour can vary greatly between markets. For example, what time of year you should focus on pushing your products or services can depend on popular holidays and events in each individual country. For example, Japan has a Winter Clearance Sale that occurs in February, Germany has Glamour shopping week in April and October, and China has two major shopping festivals in June and November. Other differences to look out for are preferred e-commerce platforms, payment options, delivery, and mobile phone usage.

4. Utilise logistics as a way to be competitive

Competition for online customers is fierce so businesses and consumers can afford to be picky when buying products from overseas. Offering express shipping, sustainable methods, flexible delivery choices, returns availability and more can allow you to stand out from the crowd and enhance the total shopping experience.

Trade deals can open really important doors for small businesses. As the UK continues to negotiate and establish trade deals worldwide, business decision-makers should ready themselves with the knowledge tools and confidence needed to take advantage and start on a journey of long-term global growth.