Do you remember a story called Brexit? It has not been over yet. While the UK needs to fight with the coronavirus pandemic, we also have to keep our eyes on the future and carry on preparations. Now our attention diverts to the trade talks. Our message is ‘keep calm and carry on’…preparing. Expect Customs formalities from 1st January 2021 and prepare as such.
EVERYTHING CHANGES, NOTHING CHANGES
We received a lot of worried calls about the 31st January leaving date. Many thought the paperwork started from 1st February. It did not! We are now in a transition period during which time the UK Government will negotiate with the EU (and others) and those negotiations will decide what tariffs and processes apply from midnight on 31st December 2020. It should be noted that UK Gov now refers to EU as ‘rest of world’ and bunches them in the same category as USA, Australia, New Zealand, Canada etc The mood has changed and the need for some form of frictionless deal by end of the year is firmly in the ‘nice to have’ column and a long way from the ‘essential’ column. They are adamant that the transition period will not be extended.
NO DEAL IS HISTORY!
The concept of NO DEAL is dead. There might not be a suitable trade agreement (with the EU) by the end of the year but Government is not referring to that as no deal but rather as a ‘work in progress’. The border process is very likely to be similar to the previous NO DEAL version, only worse! Many of the easements that were introduced as a survival tactic for the cliff-edge exit are now off the table. TSP (Transitional Simplified Procedure), lack of UK border inspections for food, feed and plants, temporary tariffs and perhaps even postponed VAT accounting (to be confirmed) are all shelved. Do NOT rely on them because, right now, they no longer exist. Remember, keep calm…. Plan for border friction and make sure your systems are capable of meeting the challenge. We are with Customs and various Border Agencies for an all-day event on the 10th February, the message is : autonomy over alignment (not good for a comprehensive trade deal) and expect friction. Will update you after that meeting (assuming we don’t also see the return of the dreaded Government NDA!)
Whilst we are well placed to handle import and export Customs declarations, (UK, Ireland and rest of EU), we still have an issue with TRANSIT and will be working hard to prevent this potential banana skin. Transit is likely to be very important but it has the potential to create authentication queues in the UK. We have the power to fix it, so our message to the Future Borders Group is….. help us fix it! You should be concentrating on being ‘border ready’ and never intending to approach the port to get your paperwork, that’s what the under-prepared will be doing and you don’t want to be there! We did a piece on transit with Sky news last year – it is still relevant and well worth a second watch. https://news.sky.com/story/lorries-face-huge-queues-in-a-no-deal-brexit-industry-11684363
Make sure you know your incoterms. Make it job number one. On the whole, you don’t need to panic but be careful with ex works or delivered duty paid (remember, delivered may become delivered duty paid if the buyer is not so keen on paying the duty!). These are very common terms but have major draw-backs when it comes to (a) Customs representation, (b) VAT registration in the buyers country and (c) the duty itself (which might actually be less than you thought). You need to understand the implications of incoterms and how they apply to you. Get in touch if you need some help, we’ve done webinars and many talks around the subject and have never failed to help. Better still, pop along to the event on Tuesday, see below.
CUSTOMS CLEARANCE CONSORTIUM
We’ve been busy. Our teams are now trained to UK Customs Academy level 4 and are helping clients prepare for whatever shape our eventual exit becomes. Paperwork is very very likely. There is not a trade deal in the world that does not require paperwork (mostly to prove eligibility). If you are holding out in the hope Boris can pull a rabbit from the hat, you’re probably going to have a long wait. Prepare for paperwork. We have and many of our systems are now being fully automated and integrated. Want to know what we need to prepare Customs paperwork? Give it a try : https://www.mybrexit.uk/what-do-i-need-to-do We’ll validate your data and let you know if any problems.
Covid-19 and Brexit preparations
As regards CV-19 and possible delay to EU negotiations. I think the UK asking for a delay to the next phase is not the same as pushing the transition period beyond 31st Dec 2020. The schedule was already too tight and has probably never been achievable in real terms. This leaves two main issues : (1) tariffs and (2) processes.
As regards (1), if both parties agree to approach WTO then ART XXIV could work, to suspend tariffs until negotiations are finalised (ie break WTO MFN rules).
As regards (2) The start of the processes is not set in stone. Sure, it looks like 1st January 2021 but no reason why you cannot have an ‘implementation’ period so paperwork can run in parallel for a while. UK Gov have been very careful not to use the word ‘implementation’ (favouring ‘transition’), probably as they have a need for the ‘implementation’ word later… Just my view but I’m pretty close to the action.
Photo: Wikimedia Commons