UK plans for import controls on EU goods from 2021

Author: Tom Brown

2020/02/11

LONDON (ICIS)--The UK government expects to introduce more controls on EU goods at the end of 2020 in measures that could stand to slow the pace and increase the cost of goods passing across the English Channel.

The UK expects to require EU businesses to submit customs declarations with all goods entering the country and to face potential goods checks, meaning that European product will be treated the same as material from anywhere else in the world.

“The UK will be outside the [EU's] Single Market and outside the Customs Union, so we will have to be ready for the customs procedures and regulatory checks that will inevitably follow,” said UK's minister Michael Gove.

The measures could also see the reintroduction of customs, excise and tax duties on product entering the country from the EU, or going the other way.

EU politicians have also stated that checks are likely on UK product entering the 27-country bloc.

The announcement is the latest indication of UK lawmaker rhetoric hardening on the UK's post-Brexit relationship with the EU, its largest trading partner.

Supply chains between the UK and continental Europe have formed around the idea of frictionless border trade, with materials potentially moving across the channel several times as finished articles are manufactured.

Industries such as the automotive sector rely on just-in-time supply chains, where goods are scheduled to arrive exactly when needed in the manufacturing process as opposed to keeping large inventories on-site.

There are also questions over whether there is sufficient time to install the necessary order control infrastructure in the 10-and-a-half months remaining in the transition period, according to British Retail Consortium director of food and sustainability Andrew Opie.

“Government will need to move fast if it intends to provide the necessary infrastructure to carry out full border controls on imported goods from January 2021,” he said in a statement.

After several decades of limited border checks, the addition of even a small amount of documentation could result in significant additional congestion for freight in and out of the country.

BASF, Europe’s largest chemicals producer, sources 90% of the 1m tonnes/year of product it sells in the UK from EU member states, according to the company.

The previous UK Prime Minister Theresa May had spoken of technology-based solutions to allow for the reimposition of border controls without compromising the pace of trade, but this is unlikely to be viable for several years, according to Gove.

“As representatives of the logistics industry, we are naturally disappointed that the promise of frictionless trade has been replaced with a promise that trade will be as seamless as possible but not until 2025,” said Elizabeth de Jong, UK policy director of logistics trade body the Freight Transport Association (FTA).

“Gove put to rest [UK Chancellor of the Exchequer] Sajid Javid’s assertion that industry had plenty of time to prepare,” she added.

The UK government’s tone on post-Brexit trade reduces the odds that the country will be able to retain membership of EU regulator the European Chemicals Agency (ECHA) post-Brexit, meaning that producers may be required to prepare for a UK Reach registration process.

UK industry body the Chemical Industries Association (CIA) had also called for UK product to be counted in EU rules of origin quotas, which stipulate how much material in a product has to be sourced from within the bloc to count as an EU product.

If UK-origin product no longer counts toward those quotas, then European players may prioritise material from compliant sources, which could see UK chemicals firms fall out of EU supply chains.

The agency continues to believe that frictionless trade with the EU is of paramount importance to the sector, according a representative.

“Our view remains that Brexit can be achieved through securing frictionless, free trade, regulatory consistency and access to skilled people,” a spokesperson said.

“Lots of statements are being made in the UK and in Brussels as we prepare to start the negotiations and will continue until they end.”

The UK government advised companies to prepare for border controls by securing an economic operator registration and identification (EORI) number and looking into how they want to make declarations, such as finding a customs agent.

Some customs support funding for business remains unclaimed, with the deadline for companies to apply extended to 31 January 2021.

The expected border measures do not apply to trade between the UK's Northern Ireland and the Republic of Ireland, Gove said.

So far in UK-Commission talks, it is expected that Northern Ireland will continue to be subject to EU legislation but remain part of the UK in trade terms, as a means of preventing the need for a hard border on the island.

This could lead to some differences between trading conditions in Northern Ireland and mainland UK, according to Health and Safety Executive director for EU Exit, chemicals Dave Bench.

“What could be different is the way that decisions are taken in those regimes from [the end of the transition period] onwards, [we] may get some divergence in what is possible to be on the market in those regimes, which could mean differences in Great Britain, Northern Ireland and the Republic,” he said, speaking at a policy conference last month.

Front page picture: Pro-EU campaigners outside the Houses of Parliament in early February after the country officially left the EU
Source: James Veysey/Shutterstock

Focus article by Tom Brown