The UK Government this week published two important positions papers for its negotiations with the EU on Future Customs Arrangements and on Northern Ireland and Ireland. It’s not clear at this point how many of these proposals will be agreed by the EU – they have been criticised by many, including the European Commission, UK opposition parties, and the IFA.
Future Customs Arrangements
This paper published Tuesday highlights the UK’s starting position for the negotiation through two broad options:
1. A highly streamlined customs arrangement between the UK and the EU, adopting technology-based solutions to make it easier for businesses to comply with new customs procedures. The UK government would try to cut paperwork, use vehicle recognition software and “trusted trader schemes” to allow fewer vehicle checks.
2. A new customs partnership aligning the UK’s approach to the customs border with the EU. However, the UK would be free to strike trade deals with third countries.
Northern Ireland & Ireland
Wednesday’s paper aims to avoid any physical border infrastructure in either the UK or Ireland. For small business, the UK suggests a cross-border trade exemption so that smaller traders can continue to operate as they do now. For larger business the UK suggests negotiating mutual recognition of Authorised Economic Operators (AEOs), enabling faster clearance of goods. The paper also highlights the EU and Switzerland’s common veterinary area, allowing for the free flow of agri-food products across borders. One option proposed is regulatory equivalence on agri-food measures. An agreement on regulatory cooperation and dispute resolution mechanisms could ensure this.
Ultimately, the papers suggest that trade will “operate largely in the same way it does today”. However, the EU has indicated it won’t accept this if the UK insists on leaving the European Customs Union.
How to prepare using the Brexit Barometer
The third round of UK-EU negotiations begin on 28th August but it is unlikely much clarity will be provided on future customs and border arrangements in the coming weeks. In the meantime, food and beverage companies can prepare for any possible changes to UK trade rules by following some of the practical steps recommended by Bord Bia’s Brexit Barometer Supporting Document:
Additional Compliance:
- Assign responsibility to someone within your business to develop an understanding of customs and VAT requirements that may apply post-Brexit. Assess whether additional resources and/or training is required.
- Draft a plan and timetable for how your business will tackle the challenge of having to comply with customs requirements.
Customs Clearance and VAT Payments:
- Determine who in your supply chain will be responsible for oversight of customs clearance and payment of import VAT, and in which country.
- Examine your existing contracts in order to ascertain whether they assign responsibility for customs clearance. If possible, assess whether it’s possible to assign responsibility from your business towards suppliers/customers, e.g. distributors in the UK to be the importer of record.
Economic Operator Registration and Identification
- Determine how many of your products require tariff classification codes to be assigned and clarify how challenging customs classification of your products will be.
These actions will also be of benefit to companies considering diversifying to international markets.
