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Brexit

On 29th March 2017, following a national referendum on whether to remain in or to leave the EU, the UK invoked Article 50 of the Treaty on European Union, which notified the European Commission of its decision to withdraw from the EU. Great Britain is now in the process of negotiating its exit (commonly referred to as Brexit) from the EU treaties and this process should be completed in two years. The negotiations are to agree the arrangements for the withdrawal and the framework for the UK’s future relationship with the EU.

 

The European Commission has proposed that, provided the future arrangements are agreed in principle, there will be a transitional phase from 29th March 2019 to 31st December 2020, during which nothing will change while the UK and EU prepare for the new trading relationship.

 

For customs and international trade, there are a large number of concerns, both for those trading within the EU at present and for those trading with countries outside of the EU.

 

Trade with the EU

The UK Government wishes the UK to leave not only the Single Market but the Customs Union too and to have a new comprehensive free trade arrangement with the EU. In July 2018, the UK issued a White Paper outlining its vision for an economic partnership that would see the UK have a common set of rules with the EU for international trade and a “Facilitated Customs Arrangement” for trade with the EU. This proposes no border controls for trade between the UK and the EU 27 countries which would flow much like today. The proposal has not been accepted by the EU.

 

The prospect of nothing being agreed between the UK and the EU by 29th March 2019 is a possibility. If there is not a deal, it will result in border controls and duties being applied on trade between the UK and EU. It is important for businesses to consider how they can prepare for this very difficult and unknown future.

 

Trade with other countries

Unless the UK Government changes direction and agrees to stay in a customs union with the EU, once it has left the European Union, the UK will be able to set its own external tariff. This will be similar to, or even the same as, the EU tariff; certainly duty rates will not increase. However some trade measures, such as anti-dumping duties will change.

 

The EU has a number of free trade deals with countries such as South Korea, South Africa and Mexico and the UK will need to negotiate similar deals with these, and other, countries. In the meantime, it is hoped that there will be agreement to “grand-father” the current arrangements.

 

The EU provides for preferential tariff treatment to be given to imports from developing countries under its Generalised System of Preferences and it is expected that the UK will adopt a similar scheme.

 

New Customs Legislation

The UK has passed a new Customs and Trade Act and is developing new legislation to replace the EU Customs Code (UCC). It is expected that the new legislation will replicate much of the UCC but there will be some changes to current import procedures.