“ICEX Director Discusses New Subsidies and Spanish Foreign Sector Resilience Amid Brexit Challenges”

What balance do you make of last year’s export data?

The Spanish foreign sector really performed very well and at a time of great uncertainty and international shocks. Just think that just a year ago we thought we were already coming out of a period marked by the instability caused by the pandemic, and yet, a few days later, Russia began its invasion of Ukraine. Other elements were added to this, such as the protectionist reactions of some partners, the scares in the financial and banking markets… And, despite all this, the Spanish economy continued on its path of internationalization. In 2022, exports of goods increased 22.9% year-on-year and imports 33.4%, therefore the weight of the foreign sector in the economy increased. Specifically, exports of goods and services reached 41.7% of GDP, 6.8 percentage points more than the previous year, which means that the foreign sector contributed almost half of the growth of Spanish GDP.

To what do you attribute this good performance?

I think the foreign sector is showing enormous resilience. Look, exports from all sectors have grown compared to 2021 and also compared to 2019, but, above all, there is a very relevant piece of information, which is the increase in regular exporters. They grew by 2.3%, to 43,000 operators. What this indicates is that internationalized companies have been able to preserve their commercial relations during the years of greatest uncertainty. Especially if you take into account that regular exporters are those who have sold abroad without interruption for the last four years, which have been quite challenging four years, if you will, quite complicated.

I understand that means they are very competitive.

That they are competitive, that they already have experience and know-how that allows them to adapt to the most complicated conditions caused by the covid or the war in Ukraine with the problems that have occurred in logistics or supply chains.

In the case of Alicante, shipments rose by 13.69%, which is a lot, but less than the average, and in recent decades Alicante products have lost weight in the national group. Specifically, they have gone from representing 4% of national exports to only 1.8%. What’s wrong?

Well, you also have to look at where it started from. There are provinces that have always been very exporting and others that were not so much and that have grown a lot in exports, which have awakened. It is also true that pure and simple consumer products (such as those produced in Alicante) may have suffered a little more with the covid. Today, for example, I am going to visit the footwear industry, which is a very resilient and very competitive industry, but it is true that the covid has affected them more than other products, such as basic necessities, which have endured longer the pull.

Is the problem that we bet on sectors with low added value, as pointed out by some organizations in the province?

Well, it’s a very interesting question, but look, I’m going to visit the Pikolinos factory, which is a company that has invested a lot in technology and innovation, and there are other brands that are investing in sustainability. They are very competitive sectors and they are adapting very well to trends, but it is also true that there are other sectors that did not export as much before or other regions that were not traditional exporters and that are now joining in and that influences the statistics. But it is an interesting subject to analyze.

Is the size of the companies still a barrier to export?

On the one hand, it can be a barrier and that is precisely what the ICEX is for, to help smaller companies overcome that barrier. It is true that there are what we call market failures. For example, it is true that access to information is difficult and expensive, and above all, to quality information, as well as attendance at fairs, etc. That’s what Icex is for, to somehow reduce the impact that these market failures have on smaller companies. But, on the other hand, it can also be an advantage in terms of the ease of adapting to new trends or new markets. SMEs have greater agility when it comes to attacking one market or another with lower costs. The Spanish business fabric is made up mostly of small and medium-sized companies and, even so, they are knowing how to export and consolidate themselves as exporters.

He has visited Elche to report on the new aid that Icex has launched to alleviate the effects of Brexit. What consequences has the United Kingdom’s departure from the European Union had for exporters?

Well, although Brexit was somewhat covered over by the arrival of the covid, the truth is that it was a rather disruptive episode for European and Spanish companies, in particular, since the United Kingdom is one of our main markets. And, beware, I do not want to say that it will stop being one, the United Kingdom continues to be a very interesting market for companies, but, by changing the rules of the game, it forced to make some adjustments and the European Commission approved in October 2021 an aid regulation so that companies and the self-employed could adapt to this new situation. For example, at the beginning, with the return of the borders, bottlenecks were formed to pass the controls, which meant a rise in costs, although it was temporary, until the operation of customs was normalized. But, in addition, companies also had to register with a VAT number, they must comply with new regulations, new certifications and labels… What we are going to try is to alleviate part of these cost increases through aid .

What will these aids consist of?

What we want to achieve is that all those expenses in which the companies have had to incur, that they do not have such a significant impact on the income statement and that the companies continue exporting to the United Kingdom. We are going to subsidize up to 75% of the expenses that are eligible, with a cap of 200,000 euros per company.

The figures indicate that, for the moment, exports to the United Kingdom have not fallen with Brexit, on the contrary, they have increased.

It is true, because companies have made an extra effort and have assumed these higher costs. But the thing is that the United Kingdom continues to be a very attractive and interesting market for Spanish and Alicante companies, despite the withdrawal of the European Union.

And do you see him travel?

Yes of course. That is why we are making a lot of efforts to carry out promotional campaigns for the Spanish product there. For example, one of the things we are doing is supporting gastronomy, Spanish restaurants, because we consider that it is a way of introducing our products there.

In general terms, are exports to the European Union still weighing too heavily in Spanish international trade?

Well, the European Union is our main market, but I think that the Spanish foreign sector is quite diversified, and that has been another of the keys to continue growing in full uncertainty. That does not mean that we do not continue to make new efforts. For example, as a result of Brexit we are also helping companies to move towards other markets, such as the United States, which is the natural market for diversification from the United Kingdom.

What markets are you betting on now to promote this diversification?

We listen to the companies, which are the ones that decide which markets interest them the most, although we also advise them. As I said, right now the United States is a very interesting market, because of all the commitment it is making in infrastructure, but Japan is also a market that looks a lot at Spain and our renewable energy technologies, or is also very interested in all the developments in the agri-food industry, foodtech. Now that activity is picking up momentum in Asia again, look there. Nor should we lose sight of Latin America or Africa.

How do you see the Alicante economy right now?

Well, I think it is an economy that is making a great effort to modernize and diversify. There are very powerful industry associations here, the companies are serious and have a lot of experience in internationalization. I see that Alicante has a lot of potential and that we must continue with these internationalization efforts.

Lastly, what are your forecasts for 2023?

We want to be optimistic. I believe that we are going to continue improving the price competitiveness of our products, because the tensions on the logistics issue are already moderating and we are increasingly competing more in goods with a high technological content and high added value and we are leaving aside the competition clearly in price . All forecasts contemplate that our exports, both of goods and services, will continue to grow. It is true that perhaps we can see the pace moderate a bit, in line with the global economy, but I think the expectations are positive.