Speculation continues as to “what sort of a deal” will be struck between the European Union and the United Kingdom with regards to trade in goods and customs matters in a post Brexit environment. Recent advances in the negotiation process have allowed both the United Kingdom and the European Union to move to the next phase, which will be to start discussing a future trading and customs environment and the implementation of the transitional period.
The Trading Environment
The United Kingdom outside of the European Union means that the United Kingdom will not have access to the “Single Market” and will not be a member of the “EU Customs Union”. While the United Kingdom is seeking a “deep and special” trading relationship with the European Union, it is evident that any future trading environment will require changes to border controls and admissibility rules on both sides of the English Channel.
Existing agreements, as described in depth in the below white paper, between the EU and its regional trading partners provide some insight on what could be negotiated to promote and facilitate trade with the EU and its single market.
The Customs Environment
The UK’s current position within the EU Customs Union and single market allows the movement of goods that are in free circulation (third country goods that have been nationalized and goods grown or manufactured within an EU member state) to move across national borders without any customs control. While negotiators seek to determine and understand what a “deep and special” relationship will entail, little doubt exists that a situation where that the free movements of goods, as is currently the case, could not continue to exist, once the UK leaves the EU as open borders would undermine the fiscal and trade autonomy of both parties.
The EU, on the other hand, has not publicly moved from its stance that goods moving between the parties after the UK leaves the EU will be treated as “third country goods” and be subject to EU border controls.
Preparing for BREXIT
At this stage, it is not possible to preempt what the future trading relationship between the UK and EU will be. In preparation for BREXIT, the following factors are considered of prime importance:
- Knowledge of customs legislation and procedures
- AEO certification
- Fully understand the possible implications to your supply chain and distribution network
Traders are encouraged to take part in discussions and consultations with customs administrations whenever such opportunity should arise.
In the interim, we believe that the steps described in the full white paper should provide insight on how to deal with the unavoidable changes brought about by the UK leaving the single market and EU Customs Union.
For further questions regarding Brexit and how it may affect your supply chain, please reach out to your local Expeditors representative.