Regulatory concerns rise as Brexit looms

With just a few weeks until the end of the implementation period, British firms are particularly worried about regulatory divergence and changes in trading rules. This was highlighted last month in our Trade Barometer research.

More than two-thirds of businesses (70%) are concerned about post-Brexit red tape. 55% expect to face problems in getting regulatory approval for products and a similar percentage (54%) foresee a negative impact from export and import tariffs.

The UK Government estimates that some 200,000 businesses which trade internationally have never previously had to complete a customs declaration.  Brexit means that 200 million more declarations will have to be completed each year from 2021 onwards. This is a fourfold increase on the current rate. To cope with this increase in bureaucracy, a further 50,000 customs agents are required, most of whom are expected to work in-house at businesses which trade internationally.

The Government is providing £50m of grant funding to support the training and recruitment of new agents, as well as to support the implementation of new systems to process customs declarations. Training grants of up to £1,500 per person are available, with payments worth up to £15,000 to help businesses recruit the necessary staff. More information is here.

Checklist for importers and exporters

We’ve produced a checklist of actions that businesses, both importers and exporters, should be looking to implement in readiness for the UK’s departure from the EU, regardless of whether a trade deal is agreed or not.

Exporters should be looking to take the following actions.  

  • Obtain an Economic Operator Registration and Identification (EORI) number. 
  • Check your commodity/tariff codes. 
  • Either secure access to the Government’s customs declaration platforms – the Customs Declaration Service (CDS) or Customs Handling of Import and Export Freight (CHIEF) – or hire a customs agent.
  • Check your customs declarations.
  • Check your INCO terms (they specify who’s responsible for paying for and managing the shipment, insurance, documentation, customs clearance, and other logistical activities).
  • Review commercial contracts and communicate with your EU customers.
  • Check your origin of products and certification. 
  • Check whether free trade or preference agreements and duties are applicable. 
  • Check special procedures. 
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For imports from the EU, the Government has announced a three-stage approach to the implementation of the UK’s customs requirements.

  1. From 1 January 2021, all controlled goods (goods that require import licences) will require standard customs declarations to be completed.
  2. From 1 April 2021, all products of animal origin (POAO) and all regulated plants and plant products will require pre-notification of import and the relevant health documentation will also need to be submitted.
  3. From 1 July 2021, all goods will require a full customs declaration at the point of import and the relevant duties will need to be paid (subject to duty deferment).

Importers should be looking to take the following actions.

  • Obtain an Economic Operator Registration and Identification (EORI) number. 
  • Check your commodity/tariff codes. 
  • Check your purchase invoices. 
  • Check your INCO terms (they specify who’s responsible for paying for and managing the shipment, insurance, documentation, customs clearance, and other logistical activities). 
  • Check and pay import duties and import VAT. 

Depending on the INCO terms, where the seller is responsible for goods clearing customs, they’ll also need to take the following actions.

  • Either secure access to the Government’s customs declaration platforms (CDS/CHIEF) or hire a customs agent/freight forwarder. 
  • Check customs declarations. 
  • Apply for the simplified customs procedure. 
  • Check your origin of products and certification. 
  • Review commercial contracts and communicate with your EU customers. 

More information on the above can be found here

International trade experts

We’re working with a network of international trade experts who can help you move seamlessly to the new system. Our network can provide: 

  • more detailed guidance on any Brexit-related issue, tailored to the requirements of your business
  • customs training in all key aspects of international trade
  • advice on what government support could be available to your business
  • a provider who can handle all of your customs documentation requirements, including submission to the CDS/CHIEF platforms. 
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For more information on the above please email international@santander.co.uk.

International freight news

Container rates across the majority of trade lanes continue to rise as we move towards the peak season, as carriers continue to manage capacity. Over the last week, the rates on Asia to Northern Europe routes have risen by nearly 10% over the previous week, with rates now just below $1,250 per TEU (twenty-foot equivalent unit). Alongside this, shipping lines are also looking to implement Freight all Kinds (FAK) rate increases with a number already announcing increases for November and December. 

The UK’s main deep-sea ports are still experiencing congestion problems, which has led to a number of carriers adding UK port congestion surcharges on top of already high container rates. The latest shipping line to add a surcharge is Mediterranean Shipping Company (MSC), which has confirmed that from 16 November it will be adding a $175 fee on Asia to UK freight. 

The International Air Transport Association’s September air freight data shows that while demand continues to grow it’s still down on the same period in 2019 due to a reduction in belly-hold capacity (spare space in the baggage hold area on scheduled passenger airplanes which is used to transport cargo). Global capacity was 25.2% lower than in the same period in 2019. However, while overall capacity has fallen, demand has fallen at a lower rate which has meant freight rates remain elevated. They’re not at May 2020 levels, but are still well above the same period in 2019.

How we can help

All of the issues covered in this week’s update have the potential to impact our clients’ international supply chains. We work with a number of logistics companies with specialisms in particular markets or sectors who would be happy to provide advice. If you’re facing supply chain difficulties, please get in touch to discuss potential solutions that might help you overcome such challenges.

To discuss how we can help your business please contact ccbsectorinsights@santander.co.uk


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