The Government needs to support businesses to achieve their global ambitions

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Jack Simpson, International Services Executive, latest column for The Journal

Recovering stronger is a shared regional ambition, not just for our football, but for our economy. Key to this will be our ability to maintain and expand international trade, and establish our presence as Global Britain.

The North East is a historic powerhouse in international trade From manufacturing 50% of world ships in 1900, to leading the way in car manufacturing and renewable technologies in 2022, we have always been an innovative an forward thinking region.

So too with recent challenges in international trade. It has been one of the hardest periods for global traders, dealing with pandemic shutdowns, Brexit border changes and supply chain restrictions

But I have been impressed with the global community’s innovation and resilience, and now regional traders, indeed, for the first time since 2019 recent regional trade figures show a stabilisation in total trade, with a 2% rise in exports to the EU for the first time since 2021.

Research from Durham University predicted a 9% decline in economic activity, stabilising around minus 3-5%, from our Trade Agreement EU Exit. The sudden drop due to adjustment to new trading procedures, stabilising below normal levels due to new permanent barriers locking businesses from opportunities.

The recently released Levelling Up White Paper outlined the Government’s vision to “spread opportunity and equality” across the country, i.e close the gap between London and rest of England.

Sadly “export” is only mentioned 20 times in the 332-page paper, and while it highlights UK’s small 10% of businesses exporting, it offers no strategy for the future. Global businesses have been proven to pay more, innovate more and generate more income than domestic rivals, and is surely an open goal to “level up” regions such as the North East.

The North East is the most reliant region on EU trade, it receives 60% of exports for 50% of imports- geography dictates this core fact won’t change.

Those regional trade figures shows UK total trade 11% behind pre-pandemic levels, whilst North East is 14% behind, in which our trade to the EU lags 20% behind. Essentially, the North East is being left behind in international trade.

Therefore, we need Government to support businesses achieve their global ambitions in a more competitive and restricted environment. Traders often tell us the hardest market to sell is the UK, indicating it is access, not appetite, harming UK brand trade.

UK Import Border Change

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July 2022- Entry Summary Declarations

Since UK-EU Exit, the UK border has been “phased in” from 1st January 2021. Full import customs declarations were introduced on 1st January 2022, with full Sanitary and Phytosanitary (SPS) checks and Entry Safety and Security (ENS) declarations required from 1st July 2022.

For Entry Safety and Security declarations, the carrier (haulier or ferry operator) must have a copy of an Entry Summary Declaration (ENS) at point of import, to enter the UK.

To submit your declaration to arrange the ENS you will need to be registered to the S&S GB, and you will need to submit any relevant declarations or licences for the product. You will also need information about the:

  • goods description or commodity code
  • consignor and consignee
  • type, amount and packaging of your goods
  • mode of transport at the border
  • onward journey details

Once this has been submitted and accepted, you will be issued with a Movement Reference Number (MRN) which should be supplied to your haulier.

The declaration will then be risk assessed, and if any issues are spotted, a “Do Not Load” message will be relayed, with guidance on how to proceed.

Timelines of submitting an ENS, and further guidance can be found here.

The UK Government’s current planned timetable is “under the revised timetable:

  • The requirements for pre-notification of Sanitary and Phytosanitary (SPS) goods, which were due to be introduced on 1 October 2021, will now be introduced on 1 January 2022.
  • The new requirements for Export Health Certificates, which were due to be introduced on 1 October 2021, will now be introduced on 1 July 2022.
  • Phytosanitary Certificates and physical checks on SPS goods at Border Control Posts, due to be introduced on 1 January 2022, will now be introduced on 1 July 2022.
  • Safety and Security declarations on imports will be required as of 1 July 2022 as opposed to 1 January 2022. Full customs declarations and controls will be introduced on 1 January 2022 as previously announced”.

Source: https://www.gov.uk/government/news/government-sets-out-pragmatic-new-timetable-for-introducing-border-controls

Bowburn business celebrates multi-million USA success

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County Durham based company High Force Research is celebrating a great export win for its scientific manufacturing services from US based customers.

The new work was initiated following a Department for International Trade (DIT) physical and virtual trade mission to Atlanta, Washington and Boston and builds on the company’s existing relationships with businesses on the West Coast. The missions focus on the East Coast of the US helps build the company profile across the United States.

Sam Whitehouse, CEO, High Force Research, a North-East England Chamber of Commerce member said: “We have seen a real increase in R&D, manufacture and pharmaceutical contracts since the start of the pandemic. Our expertise and long-standing track record are proving to be incredibly attractive for our customers across a range of specialist life science products both in Europe and in the USA.

“We support clients with clinical products, manufacture right through to early phase research, as well as providing materials in other sectors such as agriculture and food technologies. Our ambition is to double our turnover year on year for the next five years and I’m delighted to say we’re well on track to achieve that.”

Julie Underwood, Chamber international trade director said: “We are delighted to support this fantastic company which is so firmly rooted in the North East. Exporting has proved to be a real catalyst for growth and it is fantastic news that the USA contracts are so substantial.”

High Force Research is an experienced exporter and works with customers from all over the world. It has seen significant growth in the last two years with new and returning customers valuing the high quality chemical products. It has also recently invested in a further scientific facility at NETPark where it specialises in R&D for new customer applications, which complements its existing manufacturing operation in Bowburn. The new USA contract is for the pharmaceutical industry and includes manufacturing molecules for synthetic biological applications

Sam Whitehouse is a UK Government Export Champion who encourages other businesses to see the advantages of international trade.

North East England Chamber of Commerce provides advice and international trade expertise on documentation, customs declarations and overseas opportunities.

Chamber says new trade figures show major challenges for exporters

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North East England Chamber of Commerce analysis of the latest Office for National Statistics (ONS) export figures for Quarter 3 2021 show a significant drop in international trade.

Jack Simpson, Chamber international services executive said: “For the third quarter in a row, we have seen a decline in North East export figures, while the UK average continues to recover from the double shock of pandemic and EU Exit. We need practical and committed action to stop this trend.

“The ONS figures lay down the gauntlet for Government to commit to a global Britain and North East. Exporting is a sure way to business growth, but over the last 12 months new barriers and restrictions have made trading overseas more complex and disruptive.

“The Chamber was founded on international support and we continue to offer accredited training, customs brokerage and in-country market support for businesses. But as we enter our second year as an independent trading nation, more must be done to ensure the benefits of international trade are open to all.

“We are calling on Government to increase the practical support available to exporters to tackle trade barriers and reduce the burden of risk for new exporters and markets. With new border changes this month, this support must also be expanded to importers grappling with new processes and in need of advice or support.”

The Chamber is part of the British Chambers of Commerce which today, 18 January, launched a manifesto to tackle growing problems with international trade, help recruit a new generation of exporters and support increased overseas trade growth.

Restriction on Hazardous Substances

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Certain substances and materials, while hazardous, are essential to manufacturing in some sectors. For businesses dealing in these materials, there is a level of necessary restriction. This article aims to inform you on those restrictions so that your business might better understand them. This article will deal specifically with restrictions against electrical and electronic equipment (EEE).

Why restriction?

In the UK, many types of EEE are regulated to control the levels of hazardous substances that they contain. In the same way that the food we eat needs to be regulated to stop us getting sick, so too does the equipment that we use. The government implements regulations with the aim of protecting human and animal health from the toxic effects of certain substances, chemicals, and materials.

What are the restrictions?

All restricted electrical products need to meet certain requirements. These requirements include:

  • that all products must have supporting technical documentation (known as a technical file), which demonstrates compliance
  • a necessary Declaration of Conformity (You can download a model one from the government’s website here)
  • requirements that labelling be accurate and contain required information
  • requirements that the appropriate conformity marking for GB and/or NI markets are visible, as appropriate.

Who’s responsible?

In the UK, manufacturers, importers, and distributors (including retailers) are all responsible for compliance with RoHS restrictions for products that they make available on the GB and NI market. Economic operators (retailers) in the UK, must be able to identify who supplied them, and who they supplied to, for 10 years following the placing on the market of a restricted good.

Further Information

You can find more information on the government website here. From this page, you can find guidance on RoHS compliance in Great Britain and Northern Ireland. You can also contact the Office for Product Safety and Standards regarding specific compliance queries.

You can find an article relating to the REACH system, which regulates hazardous chemicals specifically, here.

January Brexit Changes

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Changes to EU – UK trade coming in January 2022

There are 5 key areas in which there will be changes to EU-UK trade. Businesses need to be prepared for them from the 1st of January 2022 onwards.

Following the transition period after the UK’s departure from the European Union, the UK government is introducing import controls on goods moving from the EU to Great Britain. The changes being implemented will bring EU imports in line with the imports into GB from the rest of the world.

Full details of the changes can be found in the Border Operating Model (BOM), which now includes details for goods being imported to Great Britain from the island of Ireland.

January 2022 Onwards

1. Customs Declaration Changes

Changes to the timescales to submit import customs declarations and what will be required from 01/01/2022:

  • From 1st January 2022 it will no longer be possible to delay Customs declarations as was granted by the easements in 2021
    • Unless the goods are being imported from the Republic of Ireland – as announced on 15/12/21 the easements in place for imports into GB from the island of Ireland will remain in place until further notice.
    • Further detail is available here.
  • GB Importers receiving goods from the EU will have to submit a Customs import declaration to HMRC prior to their goods being allowed to be loaded to the cross-channel transport modality (ferry, channel tunnel or aeroplane) that will deliver the goods to the GB frontier.
  • Many businesses that trade outside of the EU use a customs intermediary to submit declarations to HMRC.
  • Information required for completing a Customs declaration include
    • GB EORI number for the importing business
    • Commodity Code of each product in the consignment
    • Customs procedure code
    • Origin of goods
  • The commodity code information on the tariff will show if import duty or VAT is applicable for the product and will also identify if there are any tariff quotas applicable to the goods when imported into the UK. List of tariffs applicable to UK importers is available here.
  • The UK has a free trade agreement with the EU, meaning that it is possible to import certain goods from the EU with zero rated duty.  The origin of the goods determines whether this is possible or not.
  • The North East England Chamber of Commerce can assist you with customs declarations through its compliance focused ChamberCustoms Brokerage service for UK import and UK export declarations including for GB-NI movements. For more information, visit this link.

2. Goods Vehicle Movement System

The Goods Movement Vehicle System (GVMS) will become a requirement for all GB non-inventory linked ports to create a Goods Movement Reference (GMR) from 01/01/2022:

  • The GVMS GMR links the truck to the consignment of goods that it is carrying.
  • All hauliers responsible for the carriage of goods across the channel via non-inventory linked GB ports should be registered to use the system
  • Non-UK based hauliers need to be registered to use the GVMS system. To be able to register they must have a GB EORI number. To register on the system a government gateway ID is also required
  • GVMS entries to create GMRs are required for import and export movements through non-inventory linked ports, the current list as published by HMRC is available here
  • Consignments will only be able to board their intended cross channel transport once the GMR has been generated.
  • In order for the GVMS entry to be created and generate the GMR, the details of the road transport must be known, the ferry operator, or if it will travel through the Channel Tunnel. Details from the GB customs entry will also be required such as the Declaration Unique Consignment Reference (DUCR) or Movement Reference Number (MRN).
  • A link to the GVMS registration page can be found here.

3. Origin Declaration

Under the EU-UK Trade and Cooperation Agreement (TCA) zero rated duty is available on certain commodity codes as detailed in the UK tariff for goods of UK or EU origin. The easements that have been in place during 2021 to support origin statements are being removed from 01/01/2022:

  • From 01/01/2021 under the TCA, proof of origin for goods was not required in the form of a supplier declaration at the time of export to make an origin statement on the commercial invoice.
  • The grace period allowed exporters using origin statements until 01/01/2022 to get the legally required supporting evidence from suppliers to cover exports made during 2021.
  • This changes from 1st January 2022, supplier declarations must be held by the exporter prior to the origin statement being made on the commercial invoice for exports in 2022.
  • The supplier declarations held by exporters do not need to be sent to overseas customers, they are only for official customs audits.
  • There has not been an easement period for importers declaring preference during 2021
    • Exporter preference statement or importers knowledge has been used
    • Importers bear the burden if they claim preferential duty rates
  • From January 2022, all European suppliers must have a Registered Exporter (REX) authorisation. It is necessary for the REX number to be shown on the Commercial Invoice for eligible goods to enter the UK with zero rated duty.
  • UK exporters do not need to hold a REX, the GB EORI number is used instead.
  • Any eligible goods arriving at the UK Customs border without the REX number stated on the Commercial invoice will not be able to benefit from the zero-rated duty.

4. Import of Products, Animals, Foods, and Feed System (IPAFFS)

From 1st January 2022 it will be necessary for pre-notifications to be sent to the Department for Environment, Food and Rural Affairs (DEFRA) and the Animal and Plant Health Agency (APHA) via the IPAFFS system for goods being imported into Great Britain from the EU (with the exception of the Republic of Ireland).

  • To send the pre-notifications from January 2022 onwards, UK importers of Products Of Animal Origin (POAO), Animal By-Product (ABP), High Risk Food not of Animal Origin (HRFNOAO), plant and plant based products, composite products and germinal products must register with the web-based service called Import of Products, Animals, Food, and Feed System (IPAFFS):
    • To register for IPAFFS the importer must have a GB address
    • Businesses do not need to be approved to set up an IPAFFS account
  • Pre-notification via IPAFFS must be submitted per consignment and not per truck
  • Submission must be made at least 4 hours in advance of the goods arriving in GB
  • Imports into GB from the EU (excluding direct imports from the Republic of Ireland) only need to use IPAFFS and do not need to use TRACES.

5. Commodity Codes

On 1st January 2022, the UK trade tariff will be updated in line with the changes made by the World Customs Organisation (WCO) to the Harmonised System Nomenclature for 2022.

  • The update to the UK trade tariff will create approximately 5500 changes to commodity codes
  • Details published on the changes to date by HMRC are available here
  • All businesses submitted customs
  • If there is any uncertainty in which commodity code should be used for a product you can apply to HMRC for an Advanced Tariff Ruling, applications must be made prior to shipment
  • Details made available to date show that the 2022 amendments show an increase in the requirement for supporting documentation and an increase in the number of commodities classed as dual use.

If you have any specific queries relating to your business, HMRC can be contacted directly with queries regarding imports, exports and GVMS. Details of which can be found here.

If you would like any further details, or support on how to manage any of these changes, please contact [email protected]  

Understanding REACH

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(Registration, Evaluation, Authorisation, and Restriction of Chemicals)

Certain substances, while hazardous, are essential to manufacturing in some sectors. For businesses dealing in these materials, there is a level of necessary restriction. This article aims to improve your understanding on what is required of you when trading or manufacturing hazardous substances. It outlines the UK REACH system, which deals specifically with restrictions on chemicals.

What is REACH?

Brought into law under the European Union Withdrawal Act of 2018, UK REACH replicates EU legislation intended to protect human and animal health from dangerous chemicals. Although replicating EU legislation, UK and EU REACH operate independently from each other. This article will deal solely with UK REACH regulations, which apply to Great Britain. In Northern Ireland, EU Reach regulations apply, in line with the Northern Ireland Protocol.

What REACH tries to do is evident from its name, which stands for the Registration, Evaluation, Authorisation, and Restriction of Chemicals. REACH has four main principles, which are as follows:

1. The ‘No Data, No Market’ principle

While it might sound complicated, this principle basically means that manufacturers and importers must gather information on the properties of their chemical substances in a central database. (You can register information on this database at the government’s website here). This allows for the safe handling of chemicals and hazardous substances. Without the gathering and registration of information, hazardous chemicals cannot go to market. Hence the term, ‘no data, no market’.

This EU Commission designed this principle because, for many years, manufacturers created hazardous substances, and put them on the market in at times very high amounts. However, there was insufficient information on the risks that they posed to human health and the environment. As such, the government is trying to fill this gap so that the industry can better assess hazards and risks that the substances pose. It’s all about protecting you and our environment.

2. The ‘last resort’ principle on animal testing

This means that any chemical tests done on animals can only ever be carried out as a last resort. REACH states that the registrant of the chemicals can only generate information by means OTHER than animal testing, wherever possible.

3. Access to information for workers

This one is pretty self-explanatory. Any employees working for chemical manufacturers have a right to access safety data sheets, chemical safety reports, and other information about the substances and mixtures provided to the employer.

4. The precautionary principle

This principle means that risk reduction measures must be considered when the risk of a certain chemical is uncertain, but a significant hazard has been identified.

What does this mean for me or my company?

Most companies use chemicals in some way, so you may have obligations under UK REACH. However, not every company will have specific duties. You will need to consider how you use chemicals, and what your obligations may be. Remember that REACH obligations:

  • apply to all sectors
  • apply regardless of your companies size
  • make you responsible for the safe use of the substances you place on the market or use
  • require that every actor in the supply chain communicates information on the safe use of chemicals

Further Information

Hopefully this article has enhanced your understanding of the REACH system, its main principles, and its reason for existing.

You can access further information on UK REACH on the government’s website here.

You can access further information on EU REACH on the European Commission website here.

In a similar vein to this article, you can find another NEECC article here, detailing Restrictions of Hazardous Substances (RoHS) rules in the UK.

Declaring Origin

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Different methods of declaring origin

This article aims to help you trade more effectively internationally by explaining the different possible methods of declaring the origin of your goods.

When conducting international trade, declaring the origin of a product is an important and necessary part of the process. Declaring origin is required because governments need to know where products were produced, manufactured, or processed. If the country of origin has a trade agreement with the UK, you might also be eligible for reduced/nil rates of duty by declaring origin.

Rules of Origin requirements are some of the most important requirements that your business needs to understand and meet. There are several ways of declaring origin, and the proof required will depend on the type of goods, and where they’re being imported from/exported to.

1. Certificate of Origin (CO)

This trade document certifies that goods are wholly obtained, produced, manufactured, or processed in a particular country. As such, you might see it as a sort of birth certificate which states the ‘nationality’ of a good. The two types of CO that can be issues are Preferential COs and Non-Preferential COs. Preferential COs certify that goods in a consignment are eligible for reduced tariffs or exemptions. Non-Preferential COs state that they are not. This is decided depending on the existence of a Free Trade Agreement between the UK and another country.

2. Origin Declaration/Invoice Declaration/Statement of Origin

It’s also possible to declare origin via a commercial document that contains enough detail in it to adequately identify the origin of the goods. This document may take the form of an invoice, a packing list, or a delivery note.

For this method, there’s a time limit. Origin declarations must be presented to HMRC within 2 years of the date your goods were imported.

3. Importer’s Knowledge

In some instances, an importer may claim preference based on the knowledge that they have about the origin of the goods they’re importing. This can be used instead of an origin declaration, but you will need supporting documentation and records. These should cover:

  • Commodity Codes
  • A brief description of the production process
  • Category of the goods
  • If the goods have been altered or transformed
  • Any additional information that would help verify the origin of the goods

4. Long-Term Supplier Origin

This is the final method of declaring origin. If your trade supplier regularly provides you with shipments of goods, and those goods are all expected to have the same country of origin, they might supply you with a single declaration which covers multiple consignments of those goods. This is a long-term supplier declaration.

If you want to acquire a Certificate of Origin, please contact the North East England Chamber of Commerce at [email protected]

More information on all the appropriate methods of declaring origin can be found on the gov.uk website here.

Freeport Misconceptions

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In March 2021, Chancellor Rishi Sunak announced eight new freeport locations. Freeports are designated zones, usually around a port, where “different economic regulations” apply for businesses to benefit from.  Those regions were:

  • East Midlands Airport
  • Felixstowe and Harwich
  • Humber Region
  • Liverpool City Region
  • Plymouth
  • Solent
  • Teesside
  • Thames

From October 2021, the Teesside Freeport has begun operations, though in its infancy. The government want Freeports to help regenerate economically deprived areas of the UK., and they have claimed that it will ‘level up’ the country in the process.

Supporters of freeports say that they can help increase manufacturing and encourage jobs/investment in areas that struggle to attract both. According to Sunak, these special economic zones will make it ‘easier and cheaper to do business’. They will also bring ‘investment, trade, and jobs to regenerate the regions across the country that need it most’. The name, however, has caused the most confusion.

‘Free’ ports?

Don’t take the word ‘free’ literally. The term ‘freeport’ does not mean that UK businesses shipping goods in and out of these designated ports can bypass VAT and duty obligations. They are not ‘free’ in this sense.

Even though these zones are within the UK geographically, they are legally outside of the country’s border for tax purposes. This means that they are not part of the UK’s Customs Zone. Once any goods you’re importing pass the freeport border, however, you must still pay for the VAT/Duty on those goods as normal.

There are ways to pay less on VAT/Duty, such as Inward (IP) and Outward (OP) Processing measures. An article on Inward (IP) and Outward (OP) Processing is available here. The standard importer’s goods, however, are not exempt from VAT/duty just because they were imported through a freeport.

Additionally, freeports don’t stop you from having to supply the correct documentation that you normally would when trading internationally. Rules of origin, SPS/POAO checks, CPC codes etc, are all still very important for importing and exporting, regardless of the port of entry.

Laws surrounding what can legally be traded internationally also all still stand. So too do the usual licenses required for certain goods, as well as trade embargos and sanctions against trading with certain countries.

What’s their purpose, then?

You might be thinking, if the usual rules still apply, then what’s the point? How can they stimulate the economy? Well, economic benefits are provided for those companies that operate within these freeport zones.

Tax reliefs for freeports include full business rates relief for all new businesses for five years, tax-free capital investment in plant and machinery, and national insurance relief for employers. Companies operating within freeport zones can benefit from deferring payment of taxes until their products are moved elsewhere. They can also avoid them altogether if they bring in goods to store/manufacture on site, before exporting them again.

These regions are also hailed as being able to provide jobs for those living near freeport zones and will hopefully stimulate the economy in that way. A report by consultancy group Mace has indicated that freeports might boost trade by £12 billion a year, creating 150,000 new jobs, however, there are concerns that freeports will simply move activity and jobs around the region, rather than creating new value.

Brexit Rumbles on…

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Jack Simpson, International Services Executive, latest column for The Journal

It may be stating the obvious, it may make you put this paper down, but Brexit is not over and the impact is being felt. This may come across as doom and gloom, but to me it presents a rewarding challenge to a government or community.

In 2020, regional trade was erratic. We had a strong start to the year, before the pandemic resulted in a drop of almost 50%. But resilient as we are, regional trade recovered to over £7bn by the end of 2020.

However, the recovery surge has been curtailed in 2021 by EU Exit. The recent Q2 Regional Trade Figures show a continued reduction in international trade, down to £6bn in the first months of the year, and £5.9bn in the months after.

This is a huge reduction and looking at the country markets there has been a £700m reduction of European trade in 2021, worth over half the loss of regional trade this year.

Unlike COVID, Brexit resulted in structural changes, raising new trading barriers between the UK and EU which must be navigated, such as customs or regulations, while also implementing tariffs, import taxes, for some goods. This makes trade less appealing for both UK suppliers and EU customers alike.

What’s worrying, is although some say, and maybe wish, that Brexit is done and dusted, it is not. New border changes are coming from 1st January which will make importing further complicated, health checks on food & agriculture goods and recent spats with France & Ireland have undermined confidence in EU traders.

It was interesting in the UK budget that there was no mention of Brexit, or new proposals of how to support global traders either maintain trade with Europe or find new partners further afield.

International Trade is a proven benefit for businesses, with research showing global businesses are more profitable, innovative and pay better salaries than domestic counterparts, with many commenting it is easier to crack overseas markets than the UK.

How do we overcome this structural change? Research shows “perception of risk” is the biggest hold back for new traders, “I don’t want to trade because something will go wrong”, so increasing customs knowledge and market entry funding is key.

We need to remain globally competitive, utilising educational and cultural elements as well as economic, to get businesses trading or investing in the North East, as seen with the BritishVolt and Envision Gigafactory wins.

Playing to our world leading strengths, and expanding our global reach, is a sure route to prosperity and should be a priority locally and nationally in “levelling up” the North East.