Keep Britain trading 10 ways to make customs borders work after Brexit This paper summarises FTA proposals to make UK-EU trade after Brexit as frictionless as possible.
Background Long-term solution Implications of leaving the Customs Union Free trade deal with the European Union
The Prime Minister signalled in January 2017 that the UK The best way to reduce or eliminate tariffs and ease non- intends to withdraw from the EU Single Market and Customs tariff barriers to trade in the long term is for the UK to enter Union on departure from the European Union, and instead into a comprehensive Free Trade Agreement with the will seek a comprehensive Free Trade Agreement with the European Union, with substantial trade facilitation measures. EU and a new customs agreement. The UK Government is already committed to this in principle. The challenge is that such an agreement may take several If neither of these new trading arrangements are in place years to finalise, and will certainly not be agreed by the end when the UK leaves the EU then businesses will face trade of the Article 50 process. This raises the concern that the UK barriers including tariffs (customs duties) and non-tariff would leave the EU with no trade agreement or replacement barriers such as the need to make customs declarations; the customs agreement in place – the so-called ‘cliff edge’ that need to demonstrate compliance with EU trade rules; and business wishes to avoid. to provide details of how goods are being transported to border authorities.
FTA members have serious concerns that these non-tariff Bridging the gap barriers will give rise to delays on busy ro-ro trade routes, particularly Dover-Calais, where delays of even a few more Transition agreement minutes per HGV would create major delays and threaten FTA members strongly support a transition arrangement supply chains. It is vital to introduce efficient, fast, border to bridge the gap between leaving the EU and entering controls that facilitate both import and export. into a Free Trade Agreement. However, business must only change systems once. FTA members are strongly opposed to changing systems during a transition period, then again for a final trade agreement. In addition, businesses need a minimum of two years to implement changes of the scale required due to Brexit.
Therefore, FTA calls for the continuation of the existing trade and customs relationship with the EU for a minimum period on a transitional basis. This should be set out in two parts (see below).
• A negotiation period, to allow the UK and EU to agree long- term arrangements
• A minimum two-year implementation period, to give business time to adapt, bearing in mind that authorities on both sides of the border will need time to adapt as well.
Transition period FTA proposal
NEGOTIATION IMPLEMENTATION Free Trade Brexit PERIOD PERIOD Agreement Day 1 (minimum two years) with EU
Status quo trading relations retained throughout five-year transition period.
2 FTA MAKING BORDERS WORK: 10 WAYS TO KEEP BRITAIN TRADING o1 customsN paperwork presented a 10 ways to make customs borders the border t work after Brexit 2 Documen and one-stop-shoptation: registered service exporter s FTA members with expertise in international nsure3 E traders have EORI numbers trade facilitation and customs propose the aiver4 Wfor safe following set of practical, deliverable proposals declarations ty and security to reduce friction at the busiest UK-EU borders. egotiated5 N solution for ro-ro ports These measures should be developed and incorporated into any future UK-EU trade utual6 M Recognition Agreement f agreement and if a transition period is not AEO Security or agreed, then some could be negotiated ransit:7 T join the Common Transit relatively quickly, in advance of a full trade Convention, with TIR as a back-up plan agreement. uxtaposed8 J controls with France?
Please see the Annex for graphics illustrating etain9 R Low Value Consignment Relief how these facilitations could help move trade der 10 agencies must be fully through the border (examples shown are a Bor resourced and better coordinated general export process and goods in transit).
1 No customs paperwork presented at the border An essential condition as the UK prepares for Brexit is to ensure that all customs and security documentation is paperless. In practice, this means ensuring the new HMRC Customs Declaration System (CDS) can process 3 Ensure traders have EORI numbers the estimated 250 million additional declarations Currently any trader doing business outside the EU required, and that traders are able to access it (EORI must have a specific ID known as EORI (Economic number – see below) and use it (training – see below) Operator Registration Identification). It is vital that from day one. traders have these numbers as they are needed by the trading partner (buyer/seller) on the EU side for FTA applauds the efforts being made by HMRC to their paperwork. ensure CDS will be fully functional, and to understand and engage with businesses. FTA offers its full support It currently takes between one and three days for to work with its members to help them prepare HMRC to process EORI applications. With over for Brexit. 100,000 additional UK traders requiring EORI numbers after Brexit, HMRC should urgently introduce a 2 Documentation: one-stop-shop service faster authorisation process. FTA members support In addition to customs, traders will need other types a simplification whereby either an EORI or company of certificates to be able to export to the EU, for VAT number could be used, which would reduce the example Certificates of Origin if they are claiming number of applications. preferential tariff rates under a future free trade agreement, and proof of compliance with product 4 Waiver for safety and security declarations standards. Transport operators may simply refuse to The UK should seek a waiver from the requirement to take products from traders which do not have all the submit entry and exit summary declarations for goods required documentation. being moved between the UK and the EU. This would remove a time-sensitive administrative requirement Looking forward, the Government and trade (for example, for ro-ro shipments, these declarations community should develop a ‘one-stop-shop’ trade must be submitted at least one hour before departure). service for companies, and set up an approved This proposal is made in the Government policy exporter system recognised by the EU, to enable paper Future customs arrangements and is strongly authorised companies to avoid producing documents supported by FTA. for each consignment.
FTA MAKING BORDERS WORK: 10 WAYS TO KEEP BRITAIN TRADING 3 5 Negotiated solution for ro-ro ports Currently over 500 UK businesses are already approved In the Future customs arrangements paper the UK under the AEO Security scheme established in the Government proposes the “bilateral implementation Union Customs Code. If the UK were to adopt an of a technology-based solution for roll-on, roll-off AEO scheme equivalent to the existing EU scheme ports which could consist of pre-arrival notification of then it should be straightforward to negotiate a consignments on a port IT system, linked to customs Mutual Recognition Agreement (MRA) with the EU declarations and vehicle registration numbers so to enable AEO Security traders on both sides of the that vehicles were not required to stop at the border, border to benefit from border facilitations. This could enabling traffic to flow smoothly.” be a significant benefit for UK exporters to the EU after Brexit, because several EU countries have high This proposal, while ambitious, could be the best inspection rates for consignments. This proposal is approach to achieving low-friction trade through made in the Government policy paper Future customs ro-ro ports. FTA offers support to engage through arrangements and is strongly supported by FTA. our members across the supply chain to explore this proposal in more detail. The UK should also create MRAs with other countries who have adopted similar schemes, notably the US 6 Mutual Recognition Agreement for AEO Security and China, both of whom already have an MRA with the EU. Many countries have introduced compliance schemes to allow authorised traders to benefit from border 7 Transit: join the Common Transit Convention, with facilitations on the Authorised Economic Operator TIR as a back-up plan (AEO) framework, established by the World Customs Organization. The AEO concept enables companies Transit of goods to and from the EU must be that can demonstrate regulatory compliance and good frictionless – ie no goods in transit across the UK to governance to gain priority treatment when inspected, the EU should be held for inspection at the UK-EU and to have advance notification of inspection. This border. This is particularly important for the Republic can speed up the border process in countries that have of Ireland, which relies on the ‘land bridge’ across the high inspections rates. UK for a significant proportion of its goods. To achieve this the UK should seek accession to the Common
4 FTA MAKING BORDERS WORK: 10 WAYS TO KEEP BRITAIN TRADING Transit Convention (CTC). This combined with a clear require the purchase of additional land. There is urgent marking scheme for trailers will enable frictionless need for a dialogue with authorities at national and transit of goods between the Republic of Ireland and regional level on both sides of the Channel, to assess other EU destinations via the UK. This proposal is what adaptations would be required and how these made in the Government policy paper future customs could be made to facilitate trade post-Brexit. arrangements and is strongly supported by FTA. 9 Retain Low Value Consignment Relief As a back-up measure, greater use could be made Low Value Consignment Relief, the threshold at which of the TIR Carnet scheme. However, this involves goods can enter the UK without taxes and duties, additional paperwork (TIR is still largely paper-based), currently set at £15 for VAT and £135 for duties, should cost and only applies for goods moved at least partly be maintained for all types of low value consignments by road transport. It is also untested at these volumes for a period of at least five years following Brexit. This of trade. That said it does have the benefit of facilitating simplified customs process will avoid adding hundreds both import and export trade and is available without of millions of additional declarations into the CDS, additional political negotiation as the UK is already a with knock-on effects on the wider economy. It is also member of the TIR Convention in its own right. The in line with the OECD/G20’s recommendation that it UK may see a dramatic rise in TIR Carnet approval should not cost more to collect revenue than the taxes applications should there be no progress on joining and duties themselves. the CTC. 10 Border agencies must be fully resourced and 8 Juxtaposed controls with France? better coordinated The possibility of extending the agreement on Border Force and HMRC must have sufficient resources juxtaposed controls to customs has been mentioned to analyse data and target vehicles for inspection. by several stakeholders in the UK, and such a solution Interventions must be targeted and intelligence- could potentially remove the need for customs’ checks led, making full use of the increased data on UK-EU at arrival. It could, however, increase the length of consignments that will be available post Brexit. A checks at departure, and there would be significant new Trade Facilitation Agency should be created legal and political challenges to resolve. to create more joined-up decision making and enhanced business engagement on customs and A more pressing issue, however, is a lack of trade facilitation, with a particular focus on SMEs infrastructure. Space constraints at Dover are well unused to trade compliance issues. Currently business known, but Channel ports on the French coast face engagement is spread across separate committees similar challenges. For instance, the Port of Calais organised by HMRC, Border Force, Department for is already going through a major expansion, which Business, Energy and Industrial Strategy (BEIS) and was planned pre Brexit: any further expansion would Department for International Trade (DIT).
Contacts for further information:
Alex Veitch CMILT PIEMA Pauline Bastidon Head of Global Policy – Head of European Policy – Freight Transport Association Freight Transport Association Email: [email protected] [email protected] Mobile: +44 (0)7818 450 548 Mobile : +32 47877 6674
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6 FTA MAKING BORDERS WORK: 10 WAYS TO KEEP BRITAIN TRADING EUROPE d UNITED KINGDOM esente pr ansit document Tr t IRELAND d NORTHERN esente pr Transit Agreement (Common Transit Convention) Transit (Common Agreement Transit IRELAND ansit documen REPUBLIC OF Tr Traders produce a single Transit Document which is presented at the border at which is presented Document a single Transit produce Traders EUROPE UNITED KINGDOM required Declaration This is currently the main point of access to the rest of the EU, as well as the most efficient route from a financial and time-competitiveness from a financial and time-competitiveness route as the most efficient as well the EU, of the rest to access of the main point is currently This No Transit Agreement Transit No IRELAND NORTHERN required Declaration
IRELAND Traders make a full declaration on entry to, and departure from, the UK from, and departure to, on entry a full declaration make Traders REPUBLIC OF Transit flow trade Irish Helping Britain: Great Land bridge through point of view. Typically, trucks will cross by ferry to Holyhead and go to Dover where they will take a ferry or use Eurotunnel facilities to cross to Calais. A Transit Agreement is Agreement A Transit Calais. to cross to facilities or use Eurotunnel a ferry they will take where Dover and go to Holyhead to ferry by trucks will cross Typically, view. of point this trade. facilitate crucial to
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