Implications of Brexit on demand for tropical wood in the UK

The long term effects of Brexit on UK imports of tropical wood products are still far from certain. At present, even the short term effects are obscured by the unprecedented disruption to supply chains, shipping operations and markets during the COVID pandemic.

However, it seems likely that, despite the agreement of a trade and co-operation agreement with the EU, the relative competitiveness of EU-based suppliers of wood and wood furniture products that previously benefitted from completely frictionless trade will be reduced in the UK market. Tropical suppliers will be competing on a more level playing field in this market.

Furthermore, the early signs of serious disruption in the trade between UK distributors and large hardwood traders in continental Europe, notably in Belgium and the Netherlands, has some potential to encourage (once again more direct imports of tropical woods into the UK.

On the other hand, the ability of UK importers themselves to distribute tropical wood products across the EU is now much diminished. Furthermore, the potential gains due to tropical suppliers increased competitiveness in the UK may well be insufficient to offset the longer term drag on economic growth now that the UK has left the single market.

The UK government’s own 2018 analysis of the impacts of various different UK-EU trading relations following Brexit suggests that in the scenario closest to the actual outcome – a free trade agreement with tariffs on goods and non-tariff barriers equal to those in an average trade deal with the EU – the UK economy will be between 4.9% and 6.7% smaller fifteen years from now compared to continued EU membership.