When the UK leaves the EU there may be changes to UK-EU trade at the border including on customs, tariffs, VAT, safety and security, documentation, vehicle standards, and controlled products. Changes at borders between the UK and the EU could disrupt supply chains, involve potential delays and add an additional administration burden. There will be additional compliance costs if companies have to apply rules of origin and enter customs declarations.
Our current trading and transport relationship with the EU have been governed by a vast number of contracts negotiated with suppliers, local employees, agents and customers. Any change in the trading arrangement including licencing and regulatory changes, could have a knock-on effect on the contracts that underpin them. Companies can start to manage their risks by reviewing their existing contracts and starting to consider future contracts in light of what legal changes Brexit may bring.
Possible Opportunities and Challenges
If you are an importer or exporter you should get a UK Economic Operator Registration and Identification (EORI) number so you can continue to import or export goods and apply for authorisations that will make customs processes easier for you. Some SMEs may have to navigate customs rules and procedures for the first time in an area that can be complex and confusing. It is important to firstly understand the impact that customs may have on your business by reviewing supply chain movements to determine which flows of goods will be affected. UK hauliers and drivers should review documentation, registration for trailers and international road haulage permits for movement to minimise potential disruption to business.
Changes in tariffs on trade
Tariff changes with EU countries following Brexit will be dependent on the exact deal negotiated in relation to EU country exports. Businesses should consider the impact of a situation where there is no special agreement with the EU and therefore tariffs between EU-UK are based on the Most Favoured Nation (MFN) tariff. Start planning now by identifying the MFN tariff classifications as well as the HS codes (international classification system) for your products to identify potential impact on your cost base.
Rules of origin in UK-EU trade
Even if the UK has a zero-tariff trade agreement with the EU, businesses will need to prove that their product is of UK origin to benefit from this. This usually means that 50-55% of the product has to be locally sourced or that materials or components sourced from outside of the UK must be sufficiently worked or processed in order to be considered as UK origin. The exact terms of these rules between the UK and the EU are yet to be negotiated. Businesses will need to review their supply chain and manufacturing processes to determine what actions may be needed to establish UK origin. This may include an audit of your suppliers covering where they source their materials. Likewise, as a supplier, you may need to provide your customers in the UK with proof of where you source your content.
Licensing and regulatory changes
Changes to the EU regulatory regime may mean businesses are working across multiple regulatory and licencing frameworks. There is uncertainty as to whether UK regulators will be able to provide licences for the EU market or if notified bodies in the UK can conduct conformity assessment checks on goods destined for the EU market. Businesses will therefore need to consider how to comply with separate regulators in the future and the cost implications of this extra burden. Start by identifying which regulatory agencies you work with, which products and services are subject to regulatory requirements, and what steps you may need to take to comply with separate regulation.
An information campaign is being launched across the UK and Europe to ensure businesses and hauliers are prepared for the UK to leave the EU. The public awareness drive will make sure hauliers obtain everything they need from traders to get through border customs smoothly, reducing risk of delays at ports. As part of the campaign an email will be sent to 70,000 UK operators, industry bodies and other interested parties detailing essential information for those driving to the EU after 31 October. If the UK leaves the EU without a deal, hauliers will be required to go through customs checks when exporting goods to the EU from the UK. It is the responsibility of traders to apply and obtain the right paperwork for the goods hauliers are carrying. The UK government will also be providing hauliers with a handbook and a pocket guide to clearly set out how they can prepare themselves, their vehicles and their goods so that they can continue to travel freely. The how-to guides will be available across the UK and the continent at pop-up facilities in service stations, truck stops and petrol stations.
TO DO LIST: Preparing for a possible No Deal
- Assess your business preparedness with the Business Wales Brexit Toolkit
- Sign up to the Business Wales Newsletter
- Visit Welsh Government’s Preparing Wales website
- Register to get EU Exit updates from HMRC
- Stay up to date with Health and Safety Executive information
- Search for new contracts and advertise your services on the Sell2Wales website
If you import or export
- Watch HMRC’s hour long webinar about 5 key areas UK businesses must be aware of to keep trading goods when the UK leaves the EU
- Review UK Government’s publications on Trading with the EU
- If you are an importer or exporter you must have an Economic Registration and Identification (EORI) number to continue to trade with the EU. If you don’t already have yours, you can get an EORI number on GOV.UK. Having an EORI number is just the first step to continue to import or export. Follow these import and export processes to trade with EU and non-EU countries.
If you transfer personal data
- Follow the Information Commissioner’s Office’s ‘6 steps to take’
- Visit using personal data after Brexit
If you provide services or operate in the EU
If you employ EU citizens
- Support your EU staff to access the required documentation
- Consider up skilling your workforce – see the Skills Gateway support
If you sell manufactured goods
If you are involved with intellectual property or copyrights
- Comply with changes to intellectual property
UK Government’s full list of EU exit information for businesses can be accessed here.