UK becomes ‘third country’

UK becomes ‘third country’

After leaving the EU on January 31, the UK has become a ‘third country’, outside the EU’s Single Market and Customs Union. During the transition period until December 31 2020, current arrangements will continue while the UK and EU attempt to finalise border control arrangements.

However, it is important to remember there will be no changes to the terms of trade with the EU or the rest of the world until the end of the transition period. Where EU trade agreements apply, UK and EU content will continue to count toward the rules of origin requirements in exactly the same way as they do now. The EU has issued a notification to third countries outlining this approach.
Once the transition period ends, the EU trade agreements will not apply to the UK. However, the UK is seeking to reproduce the effects of the existing arrangements for when they no longer apply to ensure continuity for businesses.

The UK has currently negotiated 20 continuity trade agreements, covering 50 countries, with others still in discussion. During the transition period, the UK will be able to hold formal trade negotiations but any trade deals reached would not be able to be implemented until the end of the transition period.

There will also be changes with the way you trade with the EU once the transition period ends, whether or not a UK/EU trade agreement is concluded. Goods traded between the UK and the EU will be subject to border controls and customs declarations. Customs duties will be payable unless the goods qualify for preferential treatment, ie meeting specific rules of origin as defined in a trade agreement.

US to press EU on food standards

The US will push for food production methods that are currently banned in Europe to be included in a trade deal with the EU. This could include the introduction of chlorinated chicken, beef raised with growth hormones and genetically modified crops into the EU.
In theory, these trade talks have stalled as the EU has refused to include agriculture. The EU succeeded against US’s threat to impose import duties on European cars in 2018 by putting together a narrow trade deal eliminating industrial tariffs and enhancing regulatory competition across a range of areas.

Trading with developing countries

HMRC has announced the EU Generalised Scheme of Preferences (GSP) will remain in place during the Brexit transition period. Once the transition period is over, the UK will launch its own GSP framework which will be split into:

• Least developed countries framework (LDCF)
• General framework
• Enhanced framework

The frameworks will replicate the same market access as the EU’s GSP.

Separately, the EU has published Commission Delegated Regulation (EU) 2020/128 which has removed Nauru, Samoa and Tonga from being GSP beneficiaries as they have been classified as upper-middle income countries by the World Bank. These changes have come into force from January 1, 2020. These changes will also be replicated by the UK’s own GSP.

CIP on indirect representation extended

There has been a further extension to the deadline for the implementation of a Customs Information Paper which was called CIP 10 when it first appeared in August 2018.

The paper, which outlines the change in approach on indirect representation for some customs authorisation holders, was due to come into effect in April 2019 but was put back (as CIP15) to January 31, 2020. Now, as CIP3, its introduction has been delayed until December 31, 2020 after HMRC acknowledged the pressures facing businesses.

HMRC has confirmed that, where a declaration relies on an authorisation, the authorisation holder must act as the declarant. This has implications for agents using their own Simplified Declaration Authorisation to declare goods to another party’s Special Procedure Authorisation.

WTO trade dispute mechanism

The EU recognises the importance of an independent and impartial appeal stage for trade disputes. Therefore the EU and 16 other WTO members have agreed to work on an interim appeal arbitration process for trade disputes where the results are effective and binding between the members. This is as a result of the WTO being unable to make any new appointments to the WTO Appellate Body.

The interim arrangement will be based on Article 25 of the WTO Dispute Settlement Understanding and will apply only until the WTO Appellate Body becomes operational again. The parties involved in this arbitration process are Australia, Brazil, Canada, China, Chile, Colombia, Costa Rica, the European Union, Guatemala, Republic of Korea, Mexico, New Zealand, Norway, Panama, Singapore, Switzerland, and Uruguay.

International Trade Tools

DfIT (Department for International Trade) has recently launched two new tools – Trade with the UK and Check How to Export Goods – for businesses importing and exporting goods from the UK. The tools provide product-specific and country-specific information on tariffs and regulations in one place. They have been developed in conjunction with HMRC and DEFRA and will be updated regularly to provide up to date information to traders. If you would like to know how to access these tools, please get in touch.

China halves customs clearance times

Chinese Customs has managed to shorten import clearance times two years ahead of schedule. The average import clearance times have now fallen to 36.7 hours from 58.9 hours, a significant improvement. If you export to China, this will mean your customers will get their goods earlier.

If you would like more information of the effect of Brexit on your business, please get in touch.