EU indicates it will impose full customs controls on UK goods from January

Trade deal this year ‘more important than ever’ if Brussels is unwilling to reciprocate a six-month phased implementation, says freight association BIFA, warning of the potential for disruption and delays at borders.

The European Union (EU) will impose full customs controls and checks on goods from the UK from 1 January 2021, a key EU diplomat indicated last week, declining to reciprocate London’s plan to offer traders a six-month phased implementation period.

Joao Vale de Almeida, the EU’s ambassador to the UK, said in a Chatham House webinar on Thursday, reported by Bloomberg: “You can count on us to be forcible and systematic in implementing the deal, and in doing so certainly protecting the single market. We took note of the British decision (to offer traders a six-month phased implementation period from 1 January), but we are not at the point in time where we either need or wish to take decisions on our side.”

In response to the comments, freight forwarder trade body the British International Freight Association (BIFA) reiterated its hopes that a trade deal between the UK and the EU can be achieved before the end of the transition period on 31 December, making a trade deal this year “more important than ever”, if the EU has no plan to reciprocate the UK’s decision to offer traders a six-month phased transition of the revised importing arrangements.

Potential for disruption and delays

Robert Keen, director general of BIFA, said that even if a trade deal is agreed, BIFA members will have to manage a huge increase in paperwork and administration, leading to potential for disruption and delays at the border. But those challenges would be even greater if no agreement is reached.

“In the event of no trade deal, and no reciprocal grace period being offered by the EU for goods moving from the UK into mainland Europe, there is a high likelihood of significant frontier delays – something BIFA has warned about and is working with government to avoid wherever possible,” he noted.

“We continue to question whether there is enough time for the companies that manage cross-border trade between the UK and EU to make the necessary preparations to facilitate the revised arrangements, even with the UK’s decision to implement a phased transition for the new border processes on imports from the EU, and the promise of an additional £50 million investment in Customs IT infrastructure and training.”

The UK government is reportedly planning a major information campaign from July to encourage businesses and individuals to make preparations amid concerns most have done nothing to prepare for the end of the transitional period and are not expecting any changes. Government research found businesses have been “reluctant to take action without certainty”.

As reported last week, the UK government has outlined a series of new customs and border arrangements for 2021, in which it has committed to a three-phase introduction of a series of changes for goods imported from the EU, to building new border facilities for carrying out required checks, and to providing targeted support to ports to build new infrastructure. The UK government also confirmed that the UK’s ‘transition period’ from the EU will not be extended and that many of the controls for importing goods will now apply from July 2021 – instead of the previously assumed implementation date of 1 January when the UK exits its ‘transition period’ from the EU.

The UK government acknowledged that its previously announced plan to implement full border controls from 1 January on imports coming into GB from the EU was unrealistic, especially given the additional challenges presented by the Covid-19 pandemic, noting: “Recognising the impact of coronavirus on businesses’ ability to prepare, and following the announcement in February that the UK would implement full border controls on imports coming into GB (Great Britain) from the EU, the UK has taken the decision to introduce the new border controls in three stages up until 1 July 2021. This flexible and pragmatic approach will give industry extra time to make necessary arrangements.”

Although both the UK’s Freight Transport Association (FTA) and Road Haulage Association (RHA) expressed relief about the decision to phase in the introduction of new trading arrangements between the EU and UK in the first six months after the Transition Period, both organisations have expressed concerns about whether the arrangements would be reciprocated by the EU.

Only half of the problem

The RHA’s chief executive, Richard Burnett said that unless the arrangements are reciprocated by the EU, the UK’s solutions would only solve half of the problem. The FTA also acknowledged to Lloyd’s Loading List that a more relaxed approach to from the UK to border checks, if applied a unilaterally, would only solve half of the problem, and that goods flowing to the EU from the UK would still face full checks as they enter EU countries, unless the initiatives were reciprocated by Brussels.

An FTA spokesperson told Lloyd’s Loading List: “We can’t control what happens on the EU side of the border but we are hopeful that the EU will mirror the UK’s pragmatic approach to the borders to allow trade to continue to flow freely. This will obviously be a key part of the negotiations between the two sides as talks progress over the next few months, and we are hopeful that the UK will prioritise these issues with their EU counterparts.”

Welcoming the UK government’s new approach, the RHA said it was “vital that the EU takes the same approach”. Commenting on 12 June, Burnett said: “At the moment our sense is that they (the EU) are stonewalling. They’re playing the same tactics as before and that means that we’ll have to prepare for a no-deal free trade agreement. We’ll also have to revisit plans such as Operation Brock to park trucks up in Kent, just in case we have to adhere to a complete customs process on the other side.

“The (UK’s) six-month relaxation, as we see it at the moment, will provide more time for businesses to prepare. The past few months have clearly shown that we have been able to maintain imports but the big issue is preparing UK businesses to be able to export.”

From January 2021

Under the UK government’s new approach, from January 2021, traders importing standard goods will need to prepare for basic customs requirements and will have up to six months to submit customs declarations to UK customs agency HMRC. While tariffs will need to be paid on all imports from Day One, payments can be deferred until the customs declaration has been made, giving traders time to adjust to the new requirements, the UK government said. Safety and Security declarations will not be required for six months for all goods. Traders will, however, need to consider some other processes, such as how they will account for import VAT.

However, traders moving controlled goods such as tobacco and toxic chemicals into GB will be required to complete a full customs declaration when the goods enter GB, in line with the requirements for goods moving into GB from the Rest of the World.

All traders importing live animals and high-risk plants and plant products will be required to have pre-notification and health documentation from the outset. Imports of high-risk animal by-products (ABP) will also need pre-notification. Documentary checks will be carried out remotely, and physical checks of high-risk goods will take place at destination or other authorised premises.

From April 2021, all products of animal origin (POAO) – for example meat, pet food, honey, milk or egg products – and all regulated plants and plant products will also require pre-notification and the relevant health documentation. And from July 2021, traders moving all goods will have to make full declarations and pay tariffs at the point of importation. Full Safety and Security declarations will be introduced, while for Sanitary and Phytosanitary (SPS) commodities, there will be an increase in physical checks and the taking of samples: checks for animals, plants and their products will now take place at GB Border Control Posts.

As reported separately in Lloyd’s Loading List, a new £50 million support package was also announced aiming “to boost the capacity of the customs intermediary sector – including customs brokers, freight forwarders and express parcel operators – providing businesses with further support ahead of the new processes taking effect in July 2021”. This funding is intended to “support intermediaries with recruitment, training and supplying IT equipment to help handle customs declarations”, bringing the total government funding “to grow the customs intermediary sector to encompass EU trade after 2020” to £84 million.

New border facilities

Additionally, the UK government also committed “to building new border facilities in GB for carrying out required checks, such as customs compliance, transit, and Sanitary and Phytosanitary (SPS) checks, as well as providing targeted support to ports to build new infrastructure. It said where there is no space at ports for new infrastructure, the government will build new inland sites where these checks and other activities will take place. It is consulting with ports across the UK to agree what infrastructure is required.

Source: Lloyd’s