BREXIT - What Now?

Following last night's events where Parliament deemed the new Withdrawal Agreement and bill worthy of a second reading, but dismissed the accelerated timeframe in which to debate it along with the President of the European Council recommending that the EU gives the UK an extension, it now seems very unlikely that a Hard Brexit will happen on the 31st October, albeit possible if the EU does not agree to an extension.

Of course, at the time of writing, we do not know what that extension will look like if offered and what the UK Government intends to do with such an extension. Whilst under the Benn Act they appear to be obliged to accept an extension until 31st January what will they use the time for – continue to work on the existing bill, but run the risk of a number of potential amendments to put it to a confirmatory referendum or shaping the future trading agreement to include a Customs Union? Alternatively, as seems to be the case, does the Prime Minister try and force a general election in order to gain a majority government with which he can either pursue the existing deal or potentially an even more hardline one? What happens if the general election does not result in a conservative or labour majority or hung parliament.

In the meantime, unless an extension is offered and accepted by tomorrow (24th October) no deal planning will start kicking in – Excise Traders trying to declare EMCS movements to Europe after 31st October will probably find their declarations rejected. At what point do traders start to think about pre-lodging import declarations for goods due to arrive after 31st October? The ability to do so will be restricted, at least in the UK, by the ability of the Customs systems to accept them if not configured for a No Deal Brexit?

So, the uncertainty for businesses across Europe continues.

More details emerge regarding Northern Ireland Customs arrangements

If the bill does continue in the same form, then the documents released 21st October gave some more indications on how it is envisaged the arrangements with Northern Ireland would operate under the current Withdrawal Agreement.

It is proposed that Northern Ireland will not be in the EU customs territory nor in a Customs Union with the EU but will be in a “customs arrangements and regulatory zone” with the EU whilst staying in the customs territory of the UK. Although the Impact Assessment recognises there will be ongoing costs of completing administration requirements for movement of goods between Great Britain and Northern Ireland, it does not quantify those costs or benefit figures on the basis that there is no data on the number of consignments moving between Great Britain and Northern Ireland.

“The Protocol applies EU tariffs in Northern Ireland except for movements within the single customs territory of the United Kingdom.”

The impact of any tariffs on UK-NI trade will be subject to discussion and agreement by the newly created Joint Committee, determining the goods at risk of entering the EU and the details of the UK’s approach to waiving or reimbursing tariffs, which themselves could be constrained by any agreements on state aid to avoid disruption to the operation of the EU single market.

Northern Ireland Border Processes

The impact assessment also gives clues that the UK-Northern Ireland process would be similar to the current Rest of the World - UK,

“Any processes normally required on goods entering the EU will be implemented at the Northern Ireland-Rest of World border or on trade moving East-West between Great Britain and Northern Ireland.” And “there will therefore be processes to ensure that goods entering Northern Ireland destined for the EU pay the right duty and that all goods comply with the appropriate rules.

These processes will be largely electronic in nature and any checks on goods will principally relate to regulatory alignment rather than customs compliance (noting, for example, that the UK currently checks only 4% of movements notified through customs declarations, with under 1% involving physical checks of the consignment).”

Any goods entering Northern Ireland directly from outside the EU or from the UK will be subject to UCC rules and regulations and could be similar to current import and export processes.

Interesting whilst the focus has been on east to west movements, where;

“Goods moving from Great Britain to Northern Ireland will be required to complete both import declarations and Entry Summary (ENS) Declarations because the UK will be applying the EU’s UCC in Northern Ireland.”,

the impact assessment also raises the possibilities of some form of reporting West to East “Some practical information will need to be provided electronically on movement of goods West-East……. In a no deal scenario there would be no customs costs for businesses moving goods from Northern Ireland to Great Britain.”

Quite what form this may take is not clear at the moment and obviously depends on whether this agreement and bill is pursued following an extension, but it could involve:

  • At least import declarations from Great Britain to Northern Ireland.
  • Safety and Security (ICS) declarations from Great Britain to Northern Ireland.
  • Measures to collect customs duties in certain circumstances.
  • Measures to apply EU regulatory standards.
  • Measures to allow business to recover customs duties if it can be proved they did not enter the EU market.
  • Some form of statistical reporting on goods moving from Northern Ireland into the UK.

 To read more about Brexit and to understand how our Customs Regulations software can help you visit our dedicated Brexit Resource Center.

Written by Martin Meacock

Director, Product Management