Brexit update on future trade
24 Jun 2020
On 12 June 2020, the government announced the approach to border controls on GB-EU trade in 2021 and it formally notified the EU that it will not accept or seek an extension to the Transition Period – for full details follow this link: Post Transition UK Border Planning but some highlights are below regarding imports:
In recognition of the unprecedented impact that coronavirus has had on all aspects of life, border controls are being introduced in stages, to give businesses more time to prepare. The stages are:
- From January 2021: Traders importing standard goods will need to prepare for basic customs requirements and will have up to six months to complete customs declarations. Tariff payments can be deferred until the customs declaration has been made. Traders moving controlled goods such as tobacco and toxic chemicals will be required to complete a customs declaration. Businesses will also need to consider how they account for VAT on imported goods. There will also be physical checks at the point of destination on all high-risk live animals and a proportion of low-risk live animals.
- From April 2021: All products of animal origin (POAO) and all regulated plants and plant products will also require pre-notification and the relevant health documentation.
- From July 2021: Traders moving all goods will have to make declarations at the point of importation and pay relevant tariffs. Full Safety and Security declarations will be required, while for Sanitary and Phytosanitary (SPS) commodities there will be an increase in physical checks and the taking of samples.
This approach does not apply to the flow of trade between Northern Ireland and Ireland, or between Northern Ireland and GB.
To support businesses with the new processes taking effect next year, the government has developed a new £50m package to boost the capacity of customs intermediaries – including customs brokers, freight forwarders and express parcel operators – providing businesses with further support. This funding will support intermediaries with recruitment, training and supplying IT equipment to help handle customs declarations.
Rules will also be changed to remove barriers for intermediaries taking on new clients. The government intends to remove the financial liability from intermediaries operating on behalf of their clients and allow parcel operators to continue declaring multiple consignments in a single customs declaration. This will help intermediaries increase their operations.
Additionally, the government has committed to building new border facilities in Great Britain for carrying out required checks, as well as providing targeted support to ports to build new infrastructure. They are consulting with ports across the UK to agree what infrastructure is required.
This announcement is another important step towards getting the country ready for the end of the Transition Period, but there is still more work to be done by both government and industry to ensure we are prepared for January 2021.
The central European position is slightly less encouraging from a UK export point of view. The EU has said that its member states will immediately enforce full customs and border controls on imports, regardless of whether there is a new trade agreement with the UK or a no deal Brexit. EU guidance by sector, updated in June 2020, can be found via this link: Post Transition EU Planning
The implication is that while it will be easy for UK companies to import in the early post-transition phase, exporting to the EU will be harder. There is likely to be more delay at the border, and the customer companies in Europe will have additional burdens related to goods from the UK.