Brexit Deal: What It Means For Importers
Posted on January 14, 2021
The United Kingdom has not been a member of the European Union since January 2020, one year ago. However, the effects of the change were not immediately felt as all parties agreed upon a transition period of 11 months. That time expired with the dawning of January 1, 2021.
During the nearly four years since the British people voted to leave the EU, British politicians have struggled to find an exit plan that satisfied their national goals and was also acceptable to the EU. Finally, on Christmas Eve 2020, an agreement was reached, narrowly avoiding a “No Deal” Brexit, which would likely have had catastrophic effect on the British economy. The EU is the UK’s largest trading partner, representing 43% of all UK exports and 52% of the imports in 2019.
The last-minute Brexit plan does not leave all parties happy and leaves some important questions to be dealt with at a later date, but it puts several important measures in place.
Trade in goods
- Market access: No tariffs or quotas on goods moving between the UK and the EU. However, the pre-Brexit called IntraEU Domestic transactions have now become international transactions.
- Rules of origin: New rules require the UK to self-certify the origin of its exports to the EU and vice versa. This ensures that the trade preferences granted under the Agreement benefit EU and UK operators rather than third countries. Certain products that contain a high threshold of inputs from outside the EU and UK may face new tariffs.
- Health and safety: Both parties will require agri-food exporters to provide health certificates and undergo sanitary and phyto-sanitary controls at border inspection posts.
- Testing and certification: The absence of a mutual recognition agreement means the regulatory bodies will not be able to certify products for sale in the other area, potentially a big barrier to trade.
- Trade remedies: The EU and UK may pursue tariffs and other sanctions according to rules established at the World Trade Organization.
- Both sides pledge to limit customs red tape, including through programs for trusted traders known as Authorized Economic Operators.
- However, there will be extra checks at borders, such as safety checks and customs declarations, so businesses that rely on transporting goods to and from the UK/EU will need to be ready.
- Both exporting and importing traders will need to have the EORI number and make sure to prepare all necessary documents for shipping. UK businesses will lose its EU registration condition to import and comply with taxes, meaning that they will need to find an importer to continue with their services. EU businesses will need the same to fulfil UK customers.
- EU and UK hauliers will be able to carry cargo to and from any point of the other party’s territory, provided they meet agreed high standards on safety and working conditions.
- They will also be able to perform two extra operations within the other party’s territory (of which maximum 1 cabotage operation for UK hauliers).
- Both sides commit to “good and efficient management of visa and border arrangements for road hauliers, in particular across the UK-EU” and to “appropriately facilitate the entry and stay of” truckers.
- Exit summary declaration (EXS) either as part of export declaration or standalone EXS will be needed for the border crossing. In addition, related Entry summary declaration (ENS) will be required in the incoming country (from July 1st into UK).
- Due to the above administrative burdens, delays at the terminals and ports are expected especially in south-east England. Certain contingency plans have been introduced to minimalize the congestions (see https://www.kentprepared.org.uk/end-of-transition-plans).
- UK airlines will no longer be considered as EU carriers and will lose existing traffic rights in the EU.
- EU and UK carriers will be able to perform unlimited carriage of passengers and cargo between points in the EU and points in the UK (‘3rd & 4th freedoms’).
- Onward carriage (‘5th freedom’) will be possible for the carriage of cargo to/from a third country (e.g. Paris-London-New York), if Member States agree to this bilaterally and reciprocally with the UK.
- The Agreement also ensures cooperation on safety, security, and air traffic management.
- The UK and EU agreed that short-term business visitors will not need to hold work permits or undergo economic needs tests.
- “Managers and specialists” will be allowed to stay for up to three years and trainees for up to a year in the UK. People visiting to set up businesses will be permitted to remain for as long as 90 days in any six-month period without a visa, according to the deal.
The news of no tariffs or quotas will be welcome to many importers. However, the import process will still be significantly impacted as importers must file declarations with Customs, where previously movements between the UK and the EU were considered “domestic” and did not require declaration. If businesses are not prepared to meet the new requirements, there could be disruption at the border.
The treaty has been signed by UK PM and EU chiefs and approved by UK Parliament, but still needs to be ratified by EU Parliament by end of February. The trade community needs to be aware of these upcoming changes in 2021 and proactively engage solutions, while also remaining patient as the world adjusts to the post-Brexit environment.
For more information about how to navigate Brexit, please reach out to firstname.lastname@example.org.
Contributors: Taylor DeMichael, Petr Kokaisl, Harmony Lange, Nicolas Alderete
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