The original interview was published on 2 September 2020 in German by AWA - The Foreign Trade Academy.
Arne Mielken, Managing Director of Customs Manager UK Ltd. and Vice-President of the Institute of Export & International Trade, accompanies British and European companies in preparing for Brexit. In an interview with the AWA, he talks about the challenges of leaving the UK.
What does the end of the transition phase mean for importers and exporters in the EU and UK?
From 1 January 2021, EU companies that are currently purchasing goods from the UK and placing them on the EU market will become importers, while companies currently selling products in the UK will become exporters. The borders between the EU and the United Kingdom (UK) will be reopened, even in the case of a comprehensive EU-UK free trade agreement. Changing customs and trade regulations pose significant challenges for European and UK businesses, whether they are importing or exporting. We may expect delays due to traffic jams at the border crossings, increased paperwork due to necessary customs declarations and rising administrative, customs and import costs. In addition, the legislation on the British Isles is changing. It is almost impossible for companies to read, understand, and act on hundreds of pages of ever-changing laws.
What changes can we expect from a customs and export control perspective, for example?
From January 1, 2021, exporters from or importers into the EU will have to fulfil the obligations set out in the Union Customs Code or the Dual-Use Regulation for goods with a dual purpose. Anyone who imports or exports goods to Great Britain has to deal with the regulations that apply there, which differ from the regulations of the EU. The same customs formalities and certification and licensing regulations apply in both countries as for trade with third countries. There will then no longer be preferential treatment without a free trade agreement.
Specifically, this means:
When exporting, export declarations (including security declarations) must be submitted and possible export restrictions checked. When importing goods must now be presented, then declared for temporary storage and a subsequent customs procedure, e.g. free movement, shipping, bonded warehouse or processing. Security notifications may also be required there. In the case of goods that are relevant for export control, it must be checked whether there is an authorization requirement and which application procedure is possible. In short, anyone who still wants to trade with the United Kingdom or the EU in 2021 must be well versed in customs and export control law.
What else is there to consider?
Remember that products placed on the EU or UK market must be properly labeled and labeled. If certification by an EU or UK authority is required under Union or UK law - such as for some medical devices, machines or construction products - products that have been certified by bodies based in the EU or UK are no longer allowed to enter the internal market in the EU or UK. For the EU the “CE” logo is mostly used, in the UK “UKCA” should be used.
Which companies are facing the greatest challenges?
With Brexit, those companies are particularly challenged that so far have not had to deal with European or British customs law because they only traded with the UK or the EU. Withdrawal from the EU makes the United Kingdom a third country. The EU's trade and customs regulations with third countries apply. Those who fail to prepare are preparing for failure.
Furthermore, these companies should pay particular attention to:
Companies that will be subject to a high rate of duty:
If there is no free trade agreement without tariffs and quotas, import fees will apply. These can e.g. for animal products or ceramics, turn out to be very high and thus completely wipe out the margin. Supply chains and alternatives should be reviewed early on.
Companies that observe preferential rules of origin
Actually, from January 1, 2021, all companies will also have to prove the originating status of the goods being traded. Customs duties are levied on goods that do not meet the origin requirements, even if the EU and the UK conclude a duty-free and quota-free trade agreement. However, this is particularly important in the context of a possible future agreement between the EU and the UK in order to be able to exploit preferential advantages. Companies that trade with EU preferential partner countries can be affected. Because from now on, all pre-services of the UK (both pre-products and processing operations) must be treated as "non-originating" within the framework of the EU preferential rules. By the way: In Great Britain we expect that the so-called cumulation of the EU origin is allowed, i.e. UK companies enjoy an advantage over EU companies.
Companies trading with Northern Ireland
Special rules apply that are still being negotiated. It is very important to keep up to date. For EU trade with Northern Ireland, EU law continues to apply to a large extent, but special goods labeling is required. UK trading with Northern Ireland is getting more complicated and arguably governed by a new Trader Support System.
Companies that require EU or UK approval
The example of the trade in chemicals makes it clear: The EU regulations on the registration, evaluation, authorization and restriction of chemical substances (REACH) no longer apply in the UK. Registrations held by UK based manufacturers and producers are no longer valid in the EU. Products or substances must therefore be registered with a manufacturer or importer in the EU or UK in order to sell them on.
Companies that trade in controlled goods
Companies that trade in controlled goods may be subject to special import and export controls from January 1, 2021, and must present certificates and permits that were not previously required. In the area of export control it could e.g. come to the need for individual export permits.
Road transport companies
The loss of Community permits could restrict access to the internal market for UK transport vehicles. There will be border controls. Longer deadlines due to these additional border controls and formalities must be taken into account.
About the author
Arne Mielken has been advising national and international clients on customs, trade agreements and export control matters for more than 15 years. Since 2016 he has been accompanying British and European companies in preparing for Brexit. As an active member of the Trade Contact Group at DG-TAXUD, its British counterpart JCCC and as a board member of the UK Export Control Profession, he defends the interests of European companies with legislators. He is Vice President of the Institute of Export & International Trade (IOE & IT) in London, UK and Managing Director of Customs Manager Ltd. UK ".
AWA Webinar Brexit Update Series
On January 1, 2021, the United Kingdom will leave the European single market and customs union for good. This will create trade barriers that will have far-reaching effects on German and British companies. The list of changes is long: it ranges from new customs procedures and border controls to high, additional administrative costs with non-compliance risk. From now until December, the AWA would like to actively support companies with webinars in their preparation for Brexit.
Each webinar begins with an update on the current situation, followed by a presentation focusing on learning.
Update 1: 28.09.2020:
Dispatch of goods with the United Kingdom under the UK Operating Model in 3 stages
Delayed import declaration in the standard import procedure
Differentiation from the controlled import procedure
Goods Vehicle Movement Service (GMVS)
Update 2: 08.10.2020
Introducing the UK Global Trade Tariff from 2021
Comparison of the combined nomenclature
New UK trade tariff Import/export licenses
Update 3: 21.10.2020
How does the new Customs Declaration Service (CDS) work in the UK?
Changes in the application of the NCTS procedure
Transport of goods according to the common transit procedure
Update 4: 9.11.2020
Rules of origin with or without a free trade agreement between the EU and the UK
Non-preferential origin or preferential origin - what applies?
Cumulative rules of origin and Brexit.
Update 5: 30.11.2020
Last-minute tips to prepare for Brexit
Update 6: 08.12.2020