CIPS News


Trade deal trade-offs: Supply chain managers warn US deal could do more harm than good

CIPS 12 March 2020

Consumer prorection and food standards at risk

 

Trade deal trade-offs: Supply chain managers warn US deal could do more harm than good

  • ¾ of UK suppliers concerned about weakening UK standards in rush to negotiate deals
  • 10% of supply chain managers have managed to make progress on previously stalled contracts since the signing of the withdrawal agreement
  • Consumer protection and food standards at risk

A hasty trade deal with the United States could weaken food standards, lower worker protections and flood the market with cheap American imports according to the Chartered Institute of Procurement & Supply (CIPS).

A survey of 1,176 UK supply chain managers* by CIPS has found that more than half (54%) of those with international suppliers are concerned that a trade deal with the US will do more harm than good to the UK economy, with 77% concerned that UK standards will be sacrificed in the rush to negotiate a trade deal to keep supply chains moving.

The UK has some of the world’s strongest health, worker and product quality standards, but the supply chain profession is concerned these could be watered down to secure a deal by the end of the year. Standards which could be impacted range from a watering down of the EU e-commerce directive, which protects UK shoppers’ online rights, to UK farmers’ concerns that a trade deal with the US could lead to a deterioration of standards with respect to nutritional labelling, hormones in food, GMOs, milk quality and meat safety.

Dr John Glen, CIPS Economist, said:

“By the end of 2020 we may well have new trade deals with the EU and the US, but the question from the UK supply chain profession is loud and clear – at what cost?

“It is highly likely that negotiators from the USA and elsewhere will call on the UK to water down consumer protections and quality standards to open the door to foreign competitors.

“Balanced and beneficial trade deals for both sides of the negotiation table take time and the UK Government needs to ensure that the short-term rush to complete them does not distract from the long-term implications of any deal to consumers and business.”

In a month which has seen UK supply chains heavily impacted by the Coronavirus outbreak in China, 20% of respondents also warned that exposure to socio-political risks is the most significant threat posed by new trade deals.

Dr. Glen added:

“Future trade deals will provide access to new suppliers and customers, but British businesses will need to become far more sophisticated in the way they monitor for supply chain disruptions as they move outside the reliability of the single market.

“Businesses which can spot disruptions one or two hours before their competitors can save themselves hundreds of thousands of pounds and ensure the longevity of their operations. Every business in the UK should have an early warning system in place and keep their eye on the ball for any changes.”

With EU/UK trade negotiations due to start imminently, the findings highlight the urgency of an EU trade deal to UK businesses. Although 10%** of UK supply chain managers have managed to make progress on previously stalled contracts since the signing of the withdrawal agreement, 15% have come under renewed pressure to reduce their prices.

Notes to Editors:

* These findings were drawn from a survey of 1,176 UK supply chain managers. The data in the press release is all from UK respondents with international supply chains including some European suppliers, of which there were 873.

**These figures are net responses. 19% of respondents selected that contracts which were delayed have moved forward since the withdrawal agreement while 9% said previously planned projects were delayed (net 10%). 21% of respondents selected they had come under pressure to reduce prices since the withdrawal agreement, while 6% had been able to increase prices (net 15%).

About the survey

These findings were drawn from a survey of 1,176 UK supply chain managers. The survey ran from 3rd February to 18th February 2020.

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