By Martin Meacock, Descartes, Director Product Management, Customs Europe 

With only just over a month until the United Kingdom leaves the European Union, companies struggle to get ready as Brexit deadlines come and go.

Regardless of whether the UK agrees a Trade Agreement or not, Customs declarations will be required for goods moving between the UK and the EU.

But a Trade Agreement, whether it is fully free or limited in scope, can have an impact not only on the amounts of duties paid but reciprocal recognition on standards and other non-tariff barriers such as sanitary or phytosanitary controls (SPS). 

Without an agreement then, the UK will be trading with the EU on World Trade Organization (WTO) terms which means the full bound or MFN rates of duties will be applied on import, increasing costs for importers or otherwise impacting profitability of exporters. 

Ongoing Brexit Negotiations between the UK and other countries 

The UK continues to negotiate with a number of countries to replace existing EU based trade agreements. The UK’s priorities were with the EU, the U.S., Australia, New Zealand and Japan. Whilst an agreement with Japan has been reached, the others are still ongoing, especially the critical agreement with the EU, and it will be interesting to see how the U.S. presidential elections will impact any future U.S.-UK trade agreement. 

Additional key agreements are yet to be made with other major trading partners such as Turkey which currently has a Customs Union agreement with the EU, allowing goods for which duty is paid in Turkey to move duty free into the EU under cover of an ATR1 certificate. As the UK will no longer be part of the EU Customs Union, by effect, then it cannot also be in a Customs Union with Turkey and so ATR1s would cease to be applicable for goods moving to the UK unless Britain agrees to a replacement arrangement or otherwise influenced by an agreement the UK reaches with the EU. Any agreement could also impact rollover accords with EFTA countries such as Norway and Switzerland and impact to what extent UK goods or parts can be used in the EU for exports under existing EU trade agreements. 

Support for least developed developing countries 

It has been announced that the UK will implement a Generalised Scheme of Preferences (GSP) which will cover all the same countries that are currently eligible for trade preferences under the EU’s GSP. 

Similar to the EU scheme, the UK’s Generalised Scheme of Preferences has three Frameworks: 

  • The Least Developed Countries Framework will give duty-free, quota-free access for all 47 countries classified by the UN as Least Developed Countries.
  • The General Framework will reduce tariffs on certain product lines to Low-Income and Lower-Middle Income countries.
  • The Enhanced Framework will remove tariffs on certain product lines for eight economically-vulnerable Low-Income and Lower-Middle Income Countries which meet conditions related to sustainable development.

Details of countries that fall into each category can be found here – 

Regardless of a separate FTA with the EU, the UK will have similar cumulation arrangements as the EU. The types of cumulation available are 

  • Bilateral (between the UK and GSP country)
  • Regional (between groups of GSP countries) and
  • Extended (for certain goods with the EU, Norway and Switzerland which means the UK will continue to permit materials from the EU, Norway and Switzerland to be further processed or incorporated in a finished product in a GSP beneficiary country.)

The UK GSP will also replicate the EU non-manipulation rule which means subject to evidence being requested, goods entering the UK via the EU, as a transit country, may still be eligible for GSP preferences providing they have not been “manipulated” or processed. Non manipulation means they should not have been “altered, transformed in any way or subjected to operations other than operations to preserve them in good condition or the adding or affixing of marks, labels, seals or any other documentation to ensure compliance with specific domestic requirements” and whilst they can be stored or consignments split that can only be done where the goods have remained under customs supervision in the country or countries of transit. 

In terms of claiming GSP, the UK will accept a GSP Form A (although it does not need to be stamped or signed by an authority designated by the GSP country and can be a copy) or an origin declaration or UK Customs will accept a Registered Exporter System (REX) statement of origin only for 12 months after 31 December 2020, whether a replacement REX system will be available thereafter waits to be seen. 

Northern Ireland 

Readers may have heard of the need to avoid a hard border between Northern Ireland which is part of the United Kingdom and the Republic of Ireland which will remain part of the EU. 

To achieve this, the UK-EU Withdrawal Agreement included a Northern Ireland Protocol. To meet that, there are some key points:

  • For goods moving between Great Britain and Northern Ireland, a customs declaration is required.
  • That declaration will be on the new Customs Declaration Service not the current UK CHIEF system.
  • That declaration will need to comply with European Union Customs Code (UCC) rules.

The amount of duty payable will depend if the goods are UK originating (or UK duty paid) or are from outside the UK/EU plus if they are considered to be “at risk” of entering the European Union via Northern Ireland. This may result in EU rates of duty being assessed although mechanisms for claiming remission or having those amounts to be subsidised by the UK Government may be possible. 

Other systems will also have to be adapted specifically for Northern Ireland and to facilitate this, traders in Northern Ireland will have to obtain a specific separate EORI (Economic Operators Registration and Identification number) which will have a “XI” prefix rather than the current “GB” number. In addition, a separate “XI” VAT number will be required for continuing to trade with the EU on an Intra-EU basis. 

For certain goods such as animal product and plants and plant products these will need to meet EU sanitary and phytosanitary (SPS) standards and require pre-notification on European systems such as TRACES. 

The biggest impact of this will be felt on the short sea crossings across the Irish Sea and impact hauliers the most along with those with regular movements of large consignments of mixed products. Although anyone whose business involves moving goods between Great Britain and Northern Ireland need to be familiar with the changes. See for more information. Read also about import classification research and global trade data solutions that can help organizations efficiently adjust to a post-Brexit world.