Wednesday, October 5

One Year Since Brexit: Will New UK Import Controls Complicate Trade Even More?

The British government has repeatedly delayed the implementation of many controls on EU imports required by international standards as a result of Brexit. But that’s about to change in 2022, causing an additional headache for companies adjusting to the new world.

January 1 brings new customs formalities including some controls on products entering Britain from the EU.

Other requirements will follow in stages throughout the year.

While the EU immediately implemented border controls last January after the Brexit transition period expired, the British government had already announced that its controls would be in phase due to the pandemic. The deadlines were delayed again by March, and once again in September.

The delays helped EU agri-food exports to the UK stay roughly the same in the first eight months of 2021, according to the latest US Statistics – while UK exports to the EU plummeted by more than a quarter.

Meanwhile, EU exporters are concerned that the toxic state of relations between the UK and the EU, and in particular with France, could spill over into the world of trade, threatening to further damage cross-border trade.

More bureaucracy, higher costs

“Dutch agriculture and horticulture have a great interest in preserving the open borders with the United Kingdom; annually we export more than 8,000 million euros,” reads the latest LTO Nederland Brexit Newsletter, the Netherlands Agricultural Producers Agency (in Dutch). The country ships goods to Britain across the board, from meat and vegetables to flowers and sugar.

The headline of the LTO report, “Brexit: No end in sight,” hints at the challenges ahead, given the impending changes.

“In 2021, the importer of the entire [English] Channel only had to send some basic data to British customs. The importer could postpone the effective customs declaration for up to six months under certain conditions. That will end on January 1, “he says.

Regarding documentation requirements, the farmers body cautions exporters of the need to register in advance with the UK systems, some of which “unfortunately create a lot of red tape.”

Starting in the new year, customs declarations can no longer be deferred. Prior notification of agri-food imports will also be required. As of July 1, health certificates will be needed and physical controls of food products will be carried out at border control posts.

“Obviously the fact that verifications and controls are needed, that means that this will increase the waiting times of the trucks, it will increase the logistical and administrative costs for both parties”, says Daniel Azevedo, director of commodities and trade of the organization of European farmers Copa-Cogeca.

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He told Euronews that the European Commission has been holding regular meetings with member states and traders, as well as being in contact with their UK counterparts to ensure traders are prepared.

FoodDrinkEurope, which represents food and beverage manufacturers in the EU, says the new requirements are “complicating the logistics of deeply integrated supply chains.”

“There is also inherent uncertainty surrounding UK plans due to repeated delays in their introduction and many companies are naturally skeptical that the situation could change again,” their spokesperson told Euronews.

“The delay on these details is particularly challenging, as the details will need to be translated and communicated to growers and shippers at the busiest time of year for many of them.”

The trade body expressed concern about “groupage” movements, in which several exporters ship goods in one truck, which could cause problems as incorrect paperwork “will likely delay the entire truck entering the UK.”

He also highlighted the challenge for small and medium-sized enterprises (SMEs) in particular, “which only trade within the EU” and “will need to get used to the new requirements quickly.”

The ranks between the UK and the EU ‘could affect trade’

EU exporters fear that the poor state of UK-EU relations will not help smooth the transition and could make matters worse. In the months since Brexit took effect, London and Brussels have repeatedly clashed over issues ranging from trade in Northern Ireland to coronavirus vaccines.

“Deadlines change regularly and ongoing disagreements between the UK and the European Union can still lead to major accidents. In other words: damage to trade between the two,” says LTO Nederland, citing a stalemate over a post-Brexit ban. on EU-UK trade in seed potatoes.

In France, too, there are fears that the recent antagonism between London and Paris could have a negative impact on trade. Post-Brexit tensions have turned into full-blown diplomatic squabbles, particularly over fishing licenses and the migrants crossing the English Channel.

Askorn is a small company specialized in artificial body parts and surgical equipment, based near Rennes in Brittany. Supplies to UK hospitals account for 20% of their business.

In 2020, when stalled negotiations between London and Brussels raised the possibility of a “no-deal” outcome on trade in the run-up to the end of the transition period, the company planned ahead.

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He decided to open a branch in the UK to keep business as smooth as possible. UK customers order directly from the UK affiliate rather than from France. Multi-channel deliveries are concentrated in fewer larger shipments than before Brexit.

Manager Denis Pichon says the new arrangements have worked well “in 98% of the cases.” But a couple of recent events, you describe as a “hiccup,” got you thinking.

“We had very little trouble with additional shipping, not for most of our shipments, but when we needed to send additional goods to the UK, in two cases our packages were rejected and sent back to Brittany. To be honest, don’t know exactly the reasons why this happened, “he told Euronews.

The moment of the two refusals, the first in September and the other in October, came when the already tense relations between the British and French governments overflowed.

“I hope our politicians work together to find good solutions and stop fighting each other … I don’t know if they were linked or not, but I was surprised that during the first six months of Brexit we never had a problem … and the little ones Problems came at a time when they were fighting each other, and I hope it’s not linked, “says Pichon.

Laurent Kerlir, a milk producer based in southern Brittany, also fears that the political standoff across the Canal could exacerbate the challenges posed by new trade requirements.

It is preparing for the new health controls to be imposed on exports to Britain during 2022. The local industry has already lost business due to Brexit.

“At the moment it is a bit early to say what effect (the controls) will have. Unfortunately, we detected some tension between France and Great Britain on several issues. We hope that does not have too much impact … I hope they focus on talking and not get bogged down in a way that exacerbates the problems, “he told Euronews.

“It is a perception that we have, but we are concerned about these tensions that are increasing between France and England and that could have repercussions on trade between our two countries.”

‘Export market n. 1 ‘

National Farmers Union of the United Kingdom (NFU) said in september that repeated delays in post-Brexit import controls had given EU exporters a competitive advantage, allowing them to “keep access to the UK market relatively free of charge.”

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It was “crucial to have a level playing field,” argued the NFU, calling “for this asymmetric border control problem to be solved and for more notice to be given of any changes in delays.”

“The delay only postpones the inevitable halt that full import controls mean for UK trade with the EU,” said Joe Marshall of the Institute of Government wrote At the time. Neither the EU exporters nor the British government seemed prepared, he added.

Two and a half months later, a Small Business Federation survey In early December it was discovered that three-quarters of UK companies were not yet ready for the new import controls.

More delays may not be a practical option. As the Institute of Government points out, this would only prolong the uncertainty and, by not imposing controls, it is unclear “for how long the government can continue to treat EU imports more preferentially than those from the rest of the world.”

The UK should reportedly begin trials of new digital border technology, to reduce trade friction for importers. The The EU is also working on its own plan to facilitate the clearance of goods, which could help British exporters to the bloc.

“Hopefully if the electronic system, the digital system in the UK when it will be implemented, the border checks and controls, if it works, then we don’t expect a major disruption,” says Daniel Azevedo of Copa-Cogeca.

FoodDrinkEurope is calling on both the EU and the UK to move towards digital export health certificates (EHC): “this would somewhat ease the administrative burden for veterinary authorities in member states, food businesses and transport companies”, He says.

Meanwhile, the body of food and beverage manufacturers underscores how much is at stake with upcoming border controls.

“The UK is our # 1 export market, ahead of the US and China. Geographical proximity also means a strong emphasis on just-in-time supply chains and a higher proportion of products with a shelf life. shorter. Therefore, the challenges posed by border controls are much greater and more costly. “

This article is part of a five-part series looking at the impact of Brexit, one year later.

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