The UK’s vision for Brexit Border: what we know now
August 16, 2017
The UK’s vision for Brexit Border: the UK Government has published the options to keep the border as frictionless as possible. The paper has been welcomed by business who have now received their first real guidance on how to prepare for Brexit. That preparation needs to start now.
A defining aspect of Brexit will be the customs arrangements we are able to agree with the EU. HM Government has outlined it’s vision for how the UK-EU border could be kept as frictionless as possible after we leave the EU Customs Union. Whilst highlighting how complex this area of change is and how much is still to be decided, the options presented in the paper do make clear that whatever happens next, change will be needed to comply with future customs arrangements with the EU. Businesses now need to start to understand the potential implications for their business and prepare for the potential different scenarios for both a transition period and the final arrangement.
Let’s take a look at the key aspects of the paper to understand what the options would mean and how this could impact business.
A highly streamlined customs arrangement
The details of this option are all sensible priorities for speeding up cross border trade and reducing the burden on business outside of the customs union. In practice the government would introduce a range of risk based technology enabled programmes to streamline trade by collecting data, issuing authorisations and clearing goods differently. Relying more on trusted trader regimes which companies will need to register for. We explored some of these options in our blog last month. Putting in place the systems, infrastructure and policies to allow this model to function effectively will take time and investment by government and business in both the UK and the EU alike.
Data will pose a particular obstacle as often companies don’t currently have the data or systems in place to track and transmit the information that would be required to take full advantage of this option. This will require a joined up approach to changes all the way through the supply chain including importers, exporters and brokers. When fully implemented, this could provide a trading environment that would optimise trade between the UK and the EU.
A new customs partnership with the EU
The UK is thinking about bold and untested options to streamline future relationships with the EU. This option seems to major on tracking the application of duties on imports entering the UK which are bound for the EU, but does not consider the complexities of further manufactured or assembled products. In practice for business, this could mean onerous requirements to track and comply with complex enforcement regimes to satisfy EU concerns. It also doesn’t touch on other key areas of the current UK customs regime.
The challenges with this approach are around the data obstacle above, many businesses will not currently have IT systems and inventory control processes to accommodate tracking products while they are in circulation in the UK. Therefore, investment and cost is envisaged for the business community under this option. However, the UK Government has asked for businesses to inform and shape their views on the paper and they should readily take this opportunity to do so.
How can businesses prepare
The paper admits that both options, despite being ambitious in terms of innovation and streamlining, will lead to an increase in the administrative burden for businesses. Now is the time for businesses to start to prepare, assess and engage and this paper does give a good basis on which to do that as it confirms the back-stop position. HM Government outlined their plans for falling back to a WTO system; with no arrangements with the EU, in paragraphs 52-54 of the paper.
So what should a business be considering?
The Authorised Economic Operator (AEO) accreditation or Trusted Trader programme as often referred to, will undoubtedly feature heavily in any new border arrangements, considering applying for AEO should now be a priority for a Business involved in cross border trade.
Data and IT systems, a comprehensive assessment of trade data held currently, what data will need to be held for UK-EU trade in the future and what systems improvements will be required should be undertaken. Understanding the cost of new declarations, VAT and compliance requirements will be important.
HM Government Consultation, understanding and being able to quantify the impact on your business or industry of the options presented by HM Government will enable the assessment of the economic impact. Don’t miss out on the chance for your business to influence HM Government's vision.