Bulgaria and Brexit

What does Bulgaria export (2019)?

In front of the raw materials - honey, fuel, sunflower, there are no obstacles. Furniture, clothing, plastics - no tariffs and non-tariff barriers. Electronics, electrical engineering, machinery - no customs duties, but new certificates of conformity will probably need to be issued, depending on the date and time available. The rules of the World Trade Organization (WTO) on non-tariff barriers to trade will apply. Pharmaceutical products - there are no customs duties, but the registrations will be valid only until the end of their current term, after which a new registration procedure will be introduced. GMP inspection certificates are mutually recognized, but each country has the right to request an on-site inspection.

A specific niche is the export of food and beverages for refilling Bulgarian stores in the United Kingdom (UK). Exports vary considerably - between 40 and 70 million. € per year. Characteristically, the variety of goods is large and the batches - small. Although no customs duties are imposed, it is expected that their imports into the UK will become significantly more expensive, as each batch will be customs cleared separately, and will require a separate sanitary or phytosanitary certificate in accordance with the requirements of the OC. The exception is Northern Ireland, where EU-compliant goods will be available. The labeling of the goods must comply with the requirements of the OK.

Position - Volume   mil. €

Total   export - about 2.5% of all Bulgarian exports - 700

Electronics   and electrical engineering - 67

Pharmaceutical   products - 48

Machines  and apparatus - 44

Furniture, furnishing, lighting fixtures - 43

Honey and   copper products - 37

Oilseeds   seeds, mainly sunflower - 34

Clothes   – ready-made clothing and accessories - 33

Fuels - 31

Plastics   and products - 28

Clothes   – knitted - 27

What does Bulgaria (2019) import?

Similarly, there are no obstacles to the import of chemical products from the UK. Plastics - no tariffs and non-tariff barriers. Machinery, car electronics - no duties, but will probably need to issue new certificates of conformity. Pharmaceutical products - no customs duties, but registrations will be valid only until the end of their current term. Alcoholic beverages will be imported duty free, but according to the rules for importing excise goods from third countries. The case of toys should be investigated, as probably a significant part of them are of Asian origin, and the rules of origin and cumulation of origin have changed significantly.

Position - Volume mil. €

Total   import - about 1.4% of all Bulgarian imports - 460

Machines   and devices - 94

Road   Vehicles - 52

Electronics   and electrical engineering - 46

Pharmaceutical   products - 35

Alcoholic   beverages - 26

Plastics   and products - 17

Measuring   tools and instruments - 15

Toys - 11

Chemical   products - 10

What is Bulgaria losing?

Bulgaria and the UK are the two geographical ends of the EU. The intensity of economic relations is not as high as in a number of other Member States (Ireland, France and the Netherlands are considered to be most affected at this stage). With the exception of some British pharmaceutical products, none of the imports are extremely important. Anyway…

1. The OC was one of the corrections of the Brussels administration, which is increasingly mired in rules and procedures. A deepening of the bureaucracy can be expected under the pressure of 1) Poland, 2) Germany, and 3) France, most likely in that order. The voice of the "practical" Scandinavian countries and the Netherlands, which Austria has joined, will weaken. In general, transparency in the work of European structures will decrease in favor of the southern states.

2. The OC continues to be a symbol of innovative thought in Europe. This, together with the freedom of entrepreneurship, brought positives to the EU. After Brexit, the EU will fall even lower in the international rankings related to research and development and innovation. The EU is losing a lot of the pragmatism of British research. A number of Bulgarian research centers have close cooperation with those from the OK.

3. The UK was home to about half of all private investors in Europe. In recent years, the drastic gap with the continent has diminished at the expense of newly established EU investment funds in the form of various public-private partnerships. Such funds have also been set up in Bulgaria. In BIA we see some negatives of the form: Partially publicly funded funds incur costs to find and support innovative start-ups, and when one of the start-ups gains momentum, it is owned by an individual related to the fund, not the fund itself. fund. Ie the negatives are for a fund under PPP, and the positives (at least some of them) are privatized. There are transfers of private funds from the island to the mainland and their competition will speed up the treatment of children's diseases with public-private funds in the EU.

These three negative trends seem distant to Bulgaria, but in fact determine the macro framework of our development. There are other potentially negative factors, but these are the most significant in the long run, probably in that order.

General rules of the agreement

Since the conclusion of the deal, the public has been flooded with information about agreements, procedures and general provisions. We will try to weed out what concerns most Bulgarian economic operators.

· Lack of tariff and quota restrictions.

· The rules for charging VAT are the same as for trade with third countries.

· The rules of origin of goods are changed. Goods and materials of EU origin invested in British production will be considered British when exported to the EU and vice versa. The UK has failed to negotiate that resources originating from countries such as China, Turkey and Japan be treated on an equal footing with those in the EU. This provides a competitive advantage to Bulgarian goods such as electronics, electrical engineering, machinery, automotive parts and batteries. The UK has reached a six-year grace period for zero duties on electric vehicles, after which a 10% duty will be required if the content of third-party components exceeds 55%. The EC has developed a tool for self-assessment of the origin of ROSA goods, which is recommended to be used in the initial period after the entry into force of the agreement.

· An agreement has also been reached on resolving future disputes over trade rules and standards. For this purpose, a procedure for dealing with such cases has been agreed, and the establishment of a bilateral steering committee is expected.

· An agreement has been reached on the application of minimum environmental, social and labor standards, which does not provide for the automatic imposition of tariff sanctions in the event of non-compliance.

· The validity of existing transport arrangements continues. The cabotage rights of British carriers are limited, which may be a good opportunity for Bulgarian transport companies to occupy this niche market.

· The services are not included in the scope of the agreement. The British economy is highly dependent on services, as 80% of the country's GDP is generated by this sector. The UK became the first country in the world to export services in excess of goods.

· After January 1, registering companies and opening bank accounts in the UK for Bulgarian entrepreneurs is becoming significantly more complicated.

· The UC retains its participation in the EU's Horizon and Copernicus programs, as well as its membership in Euroatom. A significant loss for Bulgarian education is the withdrawal of the OC from the Erasmus program, with the exception of universities in Northern Ireland.

· The agreement also covers data transfer.

The agreement reached will enable Bulgarian companies to continue exporting to the UK, but the introduction of new export procedures will make the process more expensive. Some sectors, such as services and information technology, will remain attractive to British investors after Brexit.

Problems

· It is estimated that trade flows after 1.1.2021 are about 50% of normal. Although many European companies are refraining from working for and from the OK, signals of problems have already emerged. The BBC reports major delays - up to 48 hours, in ports due to the sharp increase in documentary work. The busiest section is Calais - Dover. Truck drivers complain about the lack of any conditions for surviving the forced stay - toilets, water, food.

· It turns out that many traders outside Europe are not familiar with the new rules. Their goods have entered the UK, but do not have the necessary documents to continue for EU countries.

· Couriers such as DPD cut off supplies to and from the EU.

· Almost all shipments of goods requiring refrigerated trucks have been stopped.

· The transport of live animals, mainly pigs, has been stopped.

· Economic operators whose activities involve the transfer of sensitive data complain that a number of details are unclear and are forced to suspend operations in order not to be infringed.

· The Marks & Spencer chain has stopped deliveries to its stores in Northern Ireland due to the so-called red tape - new rules for the movement of goods between Northern Ireland and Great Britain. The chain also reported problems with its supplies to the Czech Republic and France.

· In addition: of the approximately 1,500 trucks that try to leave the UK every day and enter the EU, around 700 have been returned due to a lack of Covid driver testing.

For more information

The British Embassy in Sofia has made efforts to inform the public about the consequences of Brexit.

If you want an individual consultation on a specific case, you can contact:

- Dimitar Anev from the Trade Office at the British Embassy in Sofia, tel. 0892 289 499, Email: Dimitar.Anev@fcdo.gov.uk

- BIA, Foreign Economic Cooperation Directorate, tel. 02 932 09 54, 02 932 09 34, Email: ierc@bia-bg.com

The text of the agreement can be found here .