Andrew hosts a Q&A session
10 key factors to consider before the Brexit from the EU customs union
Andrew Austin, our Group Operations Director, hosts the Brexit clinic at the AutomotiveEV conference.
Here are the speaker notes from his keynote session, discussing ten key factors to consider before the Brexit from the EU customs union:
Hello and welcome to this seminar on Brexit. My name is Andrew Austin and it is my pleasure to discuss the topic of Brexit with you this morning. It is something that has been overshadowed perhaps by the events of this year but also something that’s been in the offing for some years now, so it has some significance to us all.
So let’s just share a few slides this morning. We won’t be going into any particular depth but if there are any questions, there’ll be a link at the end for some future question and answer sessions, as part of this conference, for you to be able to participate in.
We’re just going to take a few moments to consider 10 factors around Brexit, which we all need to be thinking about right now.
Let me introduce myself; my name is Andrew Austin, I’m the Group Operations Director at Priority Freight and I’ve been in logistics all of my working career. It’s my pleasure to be with you today.
Now, just to remind ourselves, article 50 in the UK was triggered in March 2017 to start the process of the UK leaving the EU. In February this year, the actual transition period began after many debates in parliament and in the country at large and, obviously, with the EU too. In July this year, the deadline for the transition extension was reached and the transition period now ends on 31st December 2020 with the UK having formally left the EU customs union on 1st January 2021, so it is very close.
The UK Government has only signaled its intent, of late, to leave the EU customs union on the 31st December 2020 and has not deviated from that path, so we have plan and work to that timetable. That represents a significant change in the way we will be transacting as businesses into and out of the UK.
There have been a number of negotiations around the whole of the trade terms. In fact, eight rounds thus far. Some of them have been conducted by video conference because of the restrictions around the pandemic but there are some indications that the negotiations are faltering, with differences between both parties, seemingly irreconcilable but, obviously, we would like to expect the differences will be reconciled and we will have some levels of agreement we can all understand and operate by.
What does this mean? If there is, for example, a no-deal Brexit where the trade terms cannot be agreed in sufficient time, we may be moving to something like the World Trade Organisation terms which will mean tariffs (of duties and taxes) will have to be paid on good coming into and out of the UK. In addition to this, there will be a series of full border checks – something we haven’t seen for many decades – in and out of the UK, with all the obligations that gives.
When we talk about the infrastructure that needs to be around this, there’s some level of uncertainty as to what level that’s been developed. A number of concerns have been raised by many parties about the difficulties around the infrastructure: in and out of ports, inland, the requirements for each of the shippers or customers in terms of declarations and how goods should be treated throughout the supply chain.
The IT systems around the whole of Brexit are also under question. There have been many promises about sophisticated new systems being developed by, so far, little delivery of such things. You can see by this photo here, when there have been previous blockages at the ports, the queues on the UK-side of the road structure have led up to 35km delays. That may be indicative of the kind of delays we see when everything has to be declared in and out of the UK.
We’re obviously concerned about the fact if there’s a no-deal contingency plan: what does that look like? It’s both required and underway but, in addition, the UK Government has of late signaled its intention to legislate to override the EU Withdrawal Agreement which, in itself, is presenting additional strain between both sets of negotiators in the EU and the UK.
So, we’re saying here that immediate action is required. Many groups, including Logistics UK and the Road Haulage Association are lobbying the UK Government to say ‘you need to tell us what the infrastructure is going to look like in the post-Brexit ports. The photo you have on your screen is obviously the previous leaders of the UK Government – also sitting together, something we haven’t seen since the pandemic started either – but it’s really an indicator of how long these negotiations and discussions have been going on. There’s a genuine fear that the arrangements are not as complete as they need to be at this stage.
What about trading into and out of the UK? Nearly 75% of the UK exports were delivered to the listed 15 trade partners you see on the right-hand side of the screen there. Significant trading partners, all of whom we would expect to have trading arrangements and agreements with. Over half of the exports from the UK were delivered to fellow European countries and indeed half of the imports coming into the UK were from Europe themselves. So Europe is a significant trading partner in any shape or form, depending on how you consider it. The importance of having agreements between both parties is significant.
For the first time in nearly five decades, a number of requirements are in place. We’ll have to be declaring through Movement Certificates or different customs entries. We may also need a customs freight simplifying procedure for importing goods into the EU. Processes need to be developed, and I’m sure are partially developed, around facilitating payment of any applicable duties or taxes but we’re not sure they are particularly mature at the moment so we have challenges in and from the customs.
There will be some relaxation, we understand, from customs in those first six months in terms of payments having to be made or submission dates but, nonetheless, from the 1st of January, every export movement and every import movement will need to be recorded for the duties and taxes to be dispersed at a later stage. So, payments deferred rather than suspended and that’s an important consideration.
So what’s next? There are less than 100 days to go and that’s a sobering thought, isn’t it? The timetable is expected to continue, the negotiations are reaching some level of difficulty, the infrastructure seems to be immature, as is the supporting IT. As a logistics provider, serving you as customers or additional logistics providers, if you are having to face this challenge, really the purpose of today was to highlight that and also to invite you additional Q&A sessions throughout this conference to try to raise the debate and the understanding on how we should deal with this challenging situation.
It only remains therefore for me to say thank you for attending. You can see our website address below if you need some further information and again, I would encourage you to join us on our Q&A sessions. This is a large challenge, on the back of what’s been a challenging year already but I think we have to raise the profile, we have to raise the awareness in our own organisations of the implications of Brexit so that we can deal with them appropriately. Thanks again for your time.