News

The government has recently released guidance for businesses in the event that the UK and the EU do not agree a Brexit deal.

The UK has set a target to leave the EU on 29 March 2019, but despite negotiations continuing between the UK and EU, the government has issued guidance to assist businesses to prepare for a stalemate no Brexit deal.

Trading with the EU

One of the perks of being in the EU is that there is within the EU free movement of trade. If we leave the EU without a Brexit deal then the free circulation of goods between the EU and UK would cease and we would have to pay customs charges, and other taxes and duties, when trading with EU member states.

The government has advised that businesses take the following actions to mitigate any potential disruption caused by not achieving a Brexit deal:

• Update commercial contracts between agents, suppliers, traders, importers etc, and review terms and conditions of business. In addition, businesses should review any revised terms and conditions for business of any businesses which they may deal with. This is because UK businesses could soon be classed as importers to the EU which will have various ramifications on the current course of business.
• Understand and take steps to take account of any likely changes to customs and excise procedures.
• Consider the potential implications to supply chains for any delays which may be encountered when exporting or importing goods to/from the EU.
• Consider the costs of not benefitting from free movement of trade as the Most Favoured Nation (MFN) tariffs and non-preferential rules of origin would apply between the EU and UK, in the absence of a free trade agreement.
• Businesses may need to appoint a customs broker, freight forwarder or logistics provider.
• Businesses will need to consider how they will submit customs and excise declarations.
• Consider if your business requires additional licences to operate such as import and export licences.
• Businesses will need to decide the correct classification and value of their goods for excise declarations.

There are many implications of Brexit as a whole but the main implications of not reaching a Brexit deal are as follows:

• Businesses would have to apply the same customs and excise rules for dealing with countries outside of the EU when dealing with countries within the EU so customs, import, export and safety and security declarations may need to be made.
• Businesses importing or exporting goods to/from the EU will have to comply with customs procedures which is not currently required.
• Businesses will need to register for a UK Economic Operator Registration and Identification (EORI) number. This does not require an immediate action yet as the government will provide further information later in the year but (at present) it usually takes 3 working days to receive.
• Carriers will need to make Safety and Security Declarations (Entry Summary Declaration (EXS) and/or Exit Summary Declaration (ENS)) when entering into EU consignments.
• Goods will be stored at customs warehousing with duty or import VAT being suspended until they leave the customs warehouse. This will inevitably delay delivery services, interrupt supply chains and jeopardise “just in time” deliveries.
• Goods will need to be classified in accordance with the UK Trade Tariff.

Trade Remedies

Whilst the UK is a member of the EU, businesses have the option to apply to the European Commission for a trade remedy if they encounter unfair trading practices or unforeseen surges in imports which affects the UK’s trade. Once the UK leaves the EU this option will not be available.

The government has intends to establish a trade remedies system in the form of the “UK Trade Remedies Authority” (TRA) which will offer similar remedies as the European Commission so if there is a relevant complaint, UK businesses would apply to the TRA for remedy. The government will announce when the TRA becomes operational and at that point it should be used in parallel to the European Commission whilst the UK is a member of the EU.

When the TRA becomes operational, businesses can make an application to the TRA demonstrating evidence of:

• dumped goods (when manufacturers of exporting countries sell goods in the importing country at a price below their home market price/below the cost of production), subsidised goods or an unforeseen surge of imports;
• the World Trade Organisation (WTO) standing requirements in relation to import volumes and injury are satisfied;
• they have the required level of support from domestic producers collectively; and
• they have the required share of the market of like goods for consumption in the UK.

If the TRA considers an application has satisfactory evidence then it will initiate an investigation to verify whether the legal conditions to apply measures are fulfilled and establish the level of the measure it will recommend should be applied.

If the TRA find that measures should be applied then it will submit a recommendation to the Secretary of State for the Department for International Trade who, having consulted with ministerial colleagues, has the decision whether to accept or reject that recommendation.

Our Help

At this moment in time, the ramifications of Brexit are not yet known however we can help businesses mitigate disruption arising from Brexit whether the government reach a deal or not.

Here at Eaton Smith we can assist you with reviewing and amending your commercial contracts or your terms and conditions of business to guard against Brexit-related events.

If you have any concerns which you wish to discuss with us surrounding your business and Brexit then please contact us on 01484 821 300.

Web site content note:

This is not legal advice; it is intended to provide information of general interest about current legal issues.