Ministerial Trade Board minutes: June 2020

Attendees and apologies

Chair: Stephen Pathirana SG

Attendance

• Ivan McKee MSP
• Eric Balish
•  Martin Bell
•  Karen Betts
•  Laura Birrell
• Russell Dalgleish
• Rachel Jones
• Afzal Khushi
• Kate Little
• Kevin Norris
• Linda Steedman
• James Withers

Also in attendance from SDI

• Neil Francis
• Charlie Smith
• Lynne Grieve

Scottish Government

• David McPhee
• Shane Ali
• Daniel Harrison
• Ben Goonesena
• William Gray
• Samantha Paterson

Items and actions

The note below is a reflection of the points raised by Members of the Trade Board during the meeting

Welcome, introductions and AOB

There were no apologies and no points raised for any other business

Minister’s reflections

Mr McKee thanked the trade board members and wider businesses for their continued support during the crisis, with recognition of the work between SG and businesses to understand the difficulties and how we may recover.  Mr McKee is keen for the trade board to use their expertise, to focus on where opportunities may exist in international markets, and what we need to do to rebound in our export markets.

Action – The Trade Board should engage with officials to feedback into this process.

Mr McKee stated that the analytical work around the upcoming Inward Investment plan has stood the test of the crisis, but work may need acceleration. The sectors for focus are clear and will become even more so as we emerge from this, with the FDI plan still being key. The Economic Advisory Group is coming to end of its work and we will see the fruits of their labour this month.

Item 1 – Impact of Covid-19 on international trade

Daniel Harrison gave an overview of the impact of Covid on international trade, with analysis of data provided by HMRC and ONS.

Overview: Year on year exports to both EU and non-EU are down for March 2020. Salmon exports badly hit – down 57%. Food and Drink sector affected severely with the majority of UK exporting businesses showing as negatively impacted.

Transportation restrictions and increased costs were identified as the main barriers for businesses. In terms of support, they have identified financial support, support with customs and tariffs, and transport costs support as being the key to helping them meet challenges. HMRC data for Scotland will be published on 11 June.

Key points raised

• How many companies surveyed by ONS? (18k businesses surveyed and around 6k responded).
• A number of trade board members had responded to the survey.
• The expectation is that the figures in the report will change as lockdown eases around the world, however there is uncertainty as to consumer confidence levels returning to pre COVID-19 levels, and when this might be.
• Retail sales are expected to dip, while Food and Drink is linked heavily with the Hospitality and Tourism Industry
• Companies will still be trying to export where possible, even if transport costs increase but this will impact on profitability and demand.

Item 2 – Current challenges on exporting (discussion) 

below reflects the views shared by TB members.

• A key priority for the whisky industry is the removal of the US tariff in place on single malt whisky. Rising costs are having a negative impact on productivity.
• Businesses across the retail sector may be pausing expansions. European sales are in some cases are 50 – 70% of where they were pre pandemic.
• Consumer confidence and caution is having a big impact.
• The Food and drink sector has done some forecasting which predicts that half of their £2bn export market (excluding scotch whisky) could be lost.
• Retail closures are having an impact as are routes to market – getting products to market has become too expensive or impossible. This makes the recovery piece really important.
• E-commerce mirrors international sales decline due to increased shipping costs. However, some are seeing UK growth which is covering some of the international sales drops.
• Many companies that have furloughed staff have kept their e-commerce teams. There have been a number of innovations in e-commerce strategies in order for businesses to survive.
• In some cases e-commerce sales have increased so much that dispatchers convey the products. A lot of energy has gone into coping with e-commerce demand within UK.

Item 3 – Improving exports post crisis 

below reflects the views shared by TB members.

• Growth in e-commerce presents an opportunity for retail exporters as large retail stores are building portfolios to meet e-commerce demand.
• For SMEs who are less mature exporters, they could be more fragile with a lower appetite for risk
• Those with the ambition to grow exports may have been worst hit.
• This emphasises the importance of what we were doing pre COVID-19 – It should be ramped up, including the in-market activity and Scotland the Brand. 
• A Trading Nation has the bones of this, but we need to accelerate and deepen the focus post crisis
• Brand Scotland combined with granular support on customs and tariffs, labelling etc. Need to accelerate with increased investment in exporting.
• the EU moved quickly to introduce wine industry support. Scotland needs to move swiftly on trade promotion as competitor markets will be doing this for their businesses and our visibility could be diminished.
• Industry needs to work with government to help get tourism and hospitality back on their feet, including young people who have lost their jobs.
• There are businesses looking to increase exports especially those to new markets – increasing support in this area is key.
• The banks have a key role to play in financing exporters. Government and industry need to engage with the banks to see how they can support exporters combined with the work of the UKG on Export Finance.
• As companies reach new markets translation costs will increase – Maybe could grants be made available for this?
• Scottish diaspora has looked to help Scotland – we should consider using them.
• Digital sales have opened up in new markets – could training be offered for companies looking to access key markets?

Item 4 – Trade Board Work Plan

• SG would like to engage with the trade board on the areas that should be key focus points in the coming months.
• Further discussion with the trade board included the following points:

• Dealing with the financial impact;
• Understanding how we capitalise on the e-commerce trends and growth;
• Should we focus on particular sectors?
• How should we structure the trade board going forward?
• Can we have a sub-group that deals with education exports and international students?
• Could the trade board monitor how plans are being delivered and offer guidance and advice?
• We need to look at Food and Drink as a sector but also a role for the trade board in having a group to look at access to market and barriers.
• Sub-groups may be an efficient use of the talent makeup of the board.

Action – Follow up with Trade Board members on plans regarding particular sub groups.