The UK government has outlined plans to tackle supply chain congestion at the Dover-Calais border crossing in a no-deal Brexit scenario by allowing a six-month relief on the requirement for entry summary declaration (ENS) documentation for EU importers.
An ENS is an electronic statement of goods submitted prior to arrival at a border with a European Community (EC) member that enables a risk analysis of the cargo. It is required for any cargo that crosses an EC border, even if the eventual destination of the cargo is outside of the EC.
Currently, carriers are required to submit an ENS through the EU-wide import control system (ICS), which allows traders to only submit cargo information once.
The six-month reprieve on EU imports will only apply on the Dover side of the crossing unless the EU agrees to a reciprocal arrangement. ENS requirements will continue to apply for trade from the rest of the world.
Critics of the plan are pointing out that a one-sided border solution will do little to ease the expected backlog.
Importers will still be required to submit import declarations for customs purposes, which are not the same as ENSs, although allowances have been introduced. At the start of the month, the UK’s HM Revenue & Customs outlined the process by which UK businesses can register for its transitional simplified procedures (TSP) process, which will allow them to transport goods from the EU into the UK without having to make a full customs declaration at the border. The process is expected to remain in place for a year. Importers will also be able to postpone paying any import duties.
Gove on the lamb
The dire consequences of a no-deal Brexit on UK-EU supply chains were also outlined by cabinet minister, and leading Brexiteer, Michael Gove this week, who reminded his audience that the EU has stipulated that new tariffs would be higher than 100% on some key exports in the agri industry and could decimate UK farmers’ export businesses.
Speaking at the National Farmers’ Union annual conference in Birmingham on February 19 as part of his efforts to drum-up support for the prime minister’s Brexit deal, Gove outlined the myriad challenges relating to a lack of infrastructure in place at the Dover-Calais channel crossing and warned of significant delays to goods travelling both ways through the ports.
The environmental, food and rural affairs secretary stated: “As I speak there are no border inspection posts at Calais. None. The French authorities promise to invest in border inspection posts capacity but with just six weeks to go we face considerable uncertainty over future arrangements.”
Turning to the imposition of tariffs on UK exports in a no-deal scenario, he noted that with only six weeks to go the UK was no closer to securing third-party recognition from the EU.
As it stands, the UK will switch to WTO rules with any trading partner it fails to secure a deal with by March 29, which would bring in new tariffs to a wide range of traded goods as the default status.
“There is no absolute guarantee that we would be able to continue to export food to the EU. I am confident we will secure that listing, but in the event of no-deal the EU have also said they will impose strict conditions on our export trade,” Gove explained.
He noted that the EU intends to levy the full external tariff on all food in line with other non-EU exports.
GTR understands that the UK’s full tariff regime for a no-deal scenario is due to be released this week.
“That [import tariffs] means an increase of at least 40% on sheep meat and beef, rising to well above 100% for some cuts. The impact on upland farmers and the carousel trade in beef would be significant and damaging,” Gove said.
The EU accounts for 90% of the UK’s sheep meat exports. Gove highlighted that other countries within the single market would be quick to replace the UK exporters. At the same time, New Zealand and Australia would still have tariff-free trade for a specified quota of sheep meat to the EU while the UK would not.
On the same day as Gove’s speech the UK treasury released guidance to ensure import and export trade in animals, animal products, fish, food and feed can continue in the event that the UK leaves the EU without a deal.
Theresa May’s deal, which was voted down by MPs last month, is due before the house of commons again in the coming weeks.
UK against the clock to ensure trading continuity
The department for international trade (DIT) finalised continuity agreements with Israel and Palestine this week to ensure trade would continue between the UK and those parties on the same terms observed by the EU after March 29.
The latest agreements bring the DIT’s tally of various forms of continuity agreements, which aim to replicate the UK’s current trade environment, to six out of the 40 free trade deals the EU has with global trading partners.
Trade secretary Liam Fox was forced to admit last week that his previous prediction that all 40 deals would be in place in time for March 29 is unattainable. The DIT is now prioritising the deals which represents the largest proportion of the 12.1% of the UK’s total trade that comes via EU trade agreements.
High-flying SMEs reject Brexit gloom
Despite multiple warnings of the wide-spread disruption to trade supply links in the event of a no-deal, which is the UK’s default position unless a deal is reached before March 29, some UK businesses are optimistic about their export prospects.
The UK’s high-revenue SMEs are, on average, far more optimistic about future exporting opportunities and the impact of Brexit than those with lower growth projections, according to a report by Santander Corporate & Commercial.
Santander’s analysis of UK SMEs is based on a survey of more than 1,000 businesses conducted by YouGov during November and December 2018.
The bank classified a high-growth business as one that has grown its revenues by at least 20% over the past 12 months or expects to do so over the coming year. This demographic made up 12% of survey respondents.
A third of the UK’s high-growth businesses surveyed expect the country’s departure from the EU on March 29 to positively affect their business, compared to only 9% of low-growth businesses.
High-growth SMEs were also found to be more international in their outlook, with 74% already operating in overseas markets or intending to start exporting within the next 12 months, compared with 63% of their lower-growth counterparts.
Looking ahead, half of high-growth businesses are planning to increase their international sales in the year ahead, against 30% of lower growth businesses.
Despite ongoing Brexit uncertainty and the prospect of a no-deal Brexit now firmly on the horizon, high-flying respondents still see the EU as the greatest opportunity for international growth, with 31% planning to increase sales in the EU over the coming year. North America is the second most popular region for international expansion (27%), compared with 15% of lower-growth firms, while 25% are looking to Asia versus 16% of lower-growth firms.