Post-Brexit SPS Border Changes to be Delayed

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Changes to the UK customs border, which were set to be implemented at the end of this month, have been delayed until next year. The changes, primarily related to the import of Sanitary-Phytosanitary (SPS) products from the European Union, were supposed to come into force from October 2021 as ‘Phase 2’ of the UK’s new Border Operating Model.

They require the import of animal or plant origin to be pre-notified to the relevant authority before being cleared into the UK’s customs territory, as well as new certification requirements including Export Health Certificates and Phyto-sanitary certificates.

The new timeline for the changes to the GB border is below:

Agri-foods imported from the European Union will need to be pre-notified from 1 January 2022, rather than 1 October 2021

Export Health Certificates will be required on relevant goods imported from the European Union from 1 July 2022, rather than 1 October 2021

Phytosanitary Certificates and physical checks on SPS goods will now be introduced on 1 July 2022, rather than on 1 January 2022 

Safety and Security declarations on imports will be introduced on 1 July 2022 rather than 1 January 2022

The date for full customs procedures and customs checks for goods imported from the European Union remains unchanged from the pre-existing date of 1 January 2022.

Guidance on importing products, animals, food and feed system (IPAFFS) is available here.

Guidance on importing live animals, germinal products, animal by-products and high risk food and feed not of animal origin is available here.

Full guidance on the UK Border Operating Model can be found here.

Changes to the import of EU Sanitary-Phytosanitary goods coming in October 2021

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From the beginning of October 2021, the second phase of the UK’s Border Operating Model will be implemented, after being postponed earlier in the year. These changes will introduce additional requirements for the import of many goods subject to Sanitary-Phytosanitary (SPS) controls from the European Union.

The goods that will be affected by the implementation of Phase 2 of the border model are ‘Products of Animal Origin’ (POAO), Animal By-Products (ABP) not for human consumption, fishery and live bivalve molluscs, and ‘High-risk food and feed not of animal origin’ (HRFNAO)

These changes will mean that these SPS goods imported into the UK from the European Union will need to be pre-notified to the relevant competent authority, and require an Export Health Certificate in order to be cleared into Britain. These goods will also be subject to customs checks to ensure that the correct paperwork is in place, and possibly physical checks of the goods.

This has not currently been the case, but SPS goods being exported to the EU have been subject to these rules since the beginning of 2021. At the start of the year, the requirements for Export Health Certificates and the demand for a qualified veterinarian to certify the goods caused significant disturbances.

Full information on the UK Border Operating Model can be found here.

Navigating a path towards global growth

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Recently unveiled as the North East England Chamber of Commerce’s international trade manager, Alex
Stocks is providing support to members seeking clarity in the ever-changing commercial landscape. Here,
she tells Steven Hugill more about her role and how she is relishing the prospect of helping businesses in the
region realise their global trading ambitions.

You have joined the North East England Chamber of Commerce as an international trade manager and are presently working with customs clearance specialists to help members navigate new Brexit trading rules. What more can you tell me about your role?

I lead the Chamber’s international trade teams that arrange export documentation and customs brokerage services with the BCC-qualified customs clearance specialists. I also work alongside the global network adviser and member relationship managers to provide support to businesses in the region that helps develop trade, resolves issues relating to international trade movements and bolsters knowledge and understanding of international trading among the North East business community.


Tell me more about some of the support services the North East England Chamber of Commerce helps to deliver, such as ChamberCustoms® and Chamber Global

We offer a wide range of international trade support. In January 2021, we started a customs brokerage service -ChamberCustoms® – to support businesses with the new customs requirements for post-Brexit trading and provide a compliance focused service for the additional estimated 215 million customs entries.

We also complete import and export declarations for our
customers. For businesses that are Chamber Global members, they have a dedicated relationship manager, who supports them with international trade queries. There is also a helpdesk for submitting international trade queries, which can be contacted at [email protected]

The Chamber offers a series of BCC-accredited training courses on a variety of international trade topics, as well as webinars and forums. We also offer bespoke training to meet individual companies’ needs.

The international team arranges, where required, export documentation that can include a Certificate of Origin, a letter of credit, movement certificates and legalisation of documents. These can be arranged by contacting
neechamber.co.uk

We work with a global network of more than 70 chambers around the world to provide members with access to local information and support, and have links with the Department for International Trade too.

What are you enjoying about your role and have there been any challenges you’ve had to overcome?

It is a great opportunity to support businesses in the North East with international trade, and to champion businesses in the region.

Many of the challenges have been in relation to helping navigate post-Brexit trade, involving changes in customs requirements, understanding commodity codes and custom procedure codes.

Prior to joining the North East England Chamber of Commerce, you worked in the logistics department at British Steel. How did that position prepare you for your current role?

In my previous role, I was involved in import and export movements for the EU and rest of the world via sea, air, rail and road, managing relationships with a variety of logistics providers and the customs requirements for those movements. It gave me a good grounding in operational understanding of the different modalities of transport for
international trade, Brexit planning and the global impact on supply chains from the COVID-19 pandemic.

As part of the logistics department, I was heavily involved in issue resolution, which covered a wide variety of logistics related challenges and involved working alongside a variety of teams across the business, as well as logistics partners.

This stood me in good stead to work with the Chamber’s international team, the 70-plus network of chambers around the world and our affiliated consultants to help and support members that are trying to resolve issues.


What are you most looking forward to achieving in your role?

Building on the Chamber’s established international trading history to ensure we can support businesses in the region to thrive and navigate the ever-evolving regulations for international trade.

The next thing on the horizon is providing support around the removal of the Brexit easements in October for health
checks for all imports coming from the EU and from January 1, 2022, the requirement for all imports from the EU into Britain to have a pre-lodged import customs entry to ensure that unnecessary delays and costs are avoided.

A key area will be continuing to establish and cement the position of the Chamber as a recognised compliance-focused customs broker in the North East, alongside the continuation of the longstanding export documentation service that includes issuing Certificates of Origin and movement certificates, such as EUR-1s.

How important a function do you think the North East England Chamber of Commerce plays in supporting the growth of the region’s business community?

The Chamber is very important; it is here to help businesses in the region by collectively representing their interests and concerns centrally to BCC and wider audiences, such as parliamentary groups.

The Chamber plays a key role in ensuring the region has easy access to reliable support to understand and develop international trading knowledge. It is here to support businesses for new avenues in trade or to develop existing ones.

To find out more about the Chamber’s suite of international services, or if you require support, please speak to your relationship manager or email [email protected]

UK-Japan Comprehensive Economic Partnership Agreement (CEPA)

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Effective: 01/01/2021

The agreement dictates the terms of trade between the UK and Japan, replacing the agreement that the UK benefitted from as members of the European Union. The CEPA also goes further in some key areas.

Trading Relationship

Total trade in goods and services between the UK and Japan was £23.9bn in the four quarters to the end of Q1 2021.

  • Total UK exports to Japan = £12.2bn
  • Total UK imports from Japan = £11.6bn
  • Japan was the UK’s 11th largest trading partner in this period.
  • In 2020, the North East exported £400 million worth of goods to Japan. 7.5% of the total of UK goods exports to Japan.
  • The North East also imported £600 million of goods from Japan. 8.0% of the total of Japanese goods imports to the UK.

The UK Government have produced a document outlining a number of benefits of this agreement, which is available here.

Tariffs

Tariffs on the majority of goods traded between the UK and Japan have been carried over from the agreement between the EU and Japan, but some have been reduced further. There are also plans to gradually reduce tariffs over time, as part of the agreement, such as tariffs on textiles and handbags which are set to be reduced to 0% by 2028 and 2033 respectively.

There are a number of Tariff Rate Quotas (TRQs), that limit the quantity of products that qualify for reduced tariff access, that continue to apply to UK exporters. They are listed here.

You can check tariffs and customs procedures for exporting to Japan here.

You can check tariffs and customs procedures for importing goods to the UK here. 

Rules of Origin

In order to gain preferential access to the Japanese markets, goods will need to be proven to be of UK origin.

Guidance on product-specific rules of origin can be found here.

The UK agreement with Japan has slightly more liberal rules for some food and textile products than the agreement between Japan and the EU. Approximately £88.2 million more of UK exports are set to receive preferential than under the EU-Japan agreement.

The requirements for claiming preferential origin have remained unchanged. A clam should be based upon a statement of origin by the exporter that the product is originating in the UK, or the importer’s knowledge that the product is originating.

Goods do not require a statement of origin if they are:

                Entering Japan and are below 200,000 yen in value

                Entering the UK and are below £1,000 in value

Trade in Services

In addition to granting service firms access to each other’s markets, the agreement goes beyond the agreement signed between Japan and the EU, in areas of service trade, in a number of ways. This includes the ability for UK financial firms to not have to store financial data in Japan and saving business costs.

The agreement also includes a streamlined process for UK companies applying for licenses to operate in Japan and greater mobility for people travelling to Japan for business. For example, VISA applications will be accelerated and spouses of people on business trips will now be allowed to enter the labour market in Japan.

Consumption Tax

‘Consumption tax’ is Japan’s version of VAT and is charged at every point in a sales chain, including upon import. Guidance on Japanese consumption tax is available here.

The consumption tax is currently set at 10%, with a reduced rate of 8% for some products, mostly foodstuffs.

An international, non-resident trader will be required to appoint a Japanese resident tax agent who is responsible for all communications between the company and the Japanese tax authorities.

The State of North East Trade & Investment – 2020/21 Core Statistics Book

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The Department for International Trade (DIT) recently published its updated Trade and Investment Core Statistics Book for July 2021, filled with information regarding national and regional trade performance. The publication is a convenient opportunity to take a look at the ‘State of Trade’ for the North East and includes information that covers most of the nation’s trade in 2020.

Trade in Goods

In 2020, the North East continued its long-standing position of having the lowest number of exporting businesses, but having the highest average value of exports per exporter of all English regions. In total, 2,661 businesses exported goods from the North East in 2020, out of a total of 149,531 exporters across the entire United Kingdom. The total value of North East goods exports in the same year was £11.7bn. The value of Yorkshire and Humber goods exports in 2020 was only £14.6bn, despite having almost four times the number of exporting companies than the North East (9,247 exporters).

This trend is mirrored in import statistics, with the North East importing more goods, per business, than any other English region. 4,386 businesses in the North East imported goods in 2020, with a total value of £12.4bn. Both of these figures were the lowest of all English regions.  

Expanding the North East’s export base remains a key challenge for the region’s future trading success, and will be a key metric to assess Governments’ ‘levelling up’ attempts.  

Trade in Services

When it comes to services statistics, they only available up to 2018 but the North East had 2,300 firms involved in the export of services, excluding financial services. The share of North East exporting companies was only 1.6 % of the total number of UK service exporters – the smallest contribution made by all British regions.

The North East’s services imports were worth a total of £5.7bn, contributing just 2.9% of the UK’s total service imports. In the region, 1,600 firms imported services in 2018, only 1.4% of the total number of UK services importers (111,900)  – the same level as Wales.    

Foreign Direct Investment

Between 2020-21, the North East saw 51 Foreign Direct Investment (FDI) projects which created 1373 jobs. The UK as a whole saw 1,538 FDI projects which were responsible for 55,319 new jobs.

As a percentage of the total labour market, the North East has seen greater job creation from FDI projects than all other English regions, meaning that any changes that result in the UK being a less attractive place for foreign capital to invest, will present a disproportionately large risk for the North East.

UK Developing Countries Trading Scheme (DCTS) – Changes to UK Trade with Developing Countries

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The way that UK businesses trade with developing countries is set to change in the coming years, following the Department for International Trade (DIT) announcing the new Developing Countries Trading Scheme (DCTS). Government is also seeking the views of businesses as to how trade with developing countries should look moving forward. The link to the consultation and the full list of countries within the DCTS can be found at the bottom of this page.

The scheme will determine tariffs and the terms of trade between the UK and 70 developing countries, granting their exporters preferential access to the UK market and helping developing economies to grow, with reduced or sometimes zero tariffs.

While members of the European Union, the preference granted to developing economies to the UK market was determined by the EU’s ‘Generalised Scheme of Preferences’ (GSP). The GSP is split into three Frameworks that will be replicated in its replacement:

  • General Framework: for low and lower-middle income countries, as categorised by the World Bank. This offers full or partial removal of tariffs on two-thirds of goods.
  • Enhanced Framework: for low and lower-middle income countries that also ratify and effectively implement 27 international conventions. This offers full removal of tariffs on two thirds of tariff lines.
  • Least Developed Country Framework or ‘Everything but Arms’: for all countries classified as least developed countries by the World Bank. This offers duty-free, quota-free access for all products except arms and ammunition.

Since the UK left the EU, the GSP has been carried over, but this new scheme will be tailored specifically by the UK. The International Trade Secretary, Liz Truss, has stated that the UK wishes to go further with their own scheme, reducing tariffs, bureaucracy and simplifying Rules of Origin for exporters in developing countries.  The new UK scheme will hopefully come into force in 2022.

While there are few concrete plans for how the Developing Countries Trading Scheme will look upon completion, a ‘Direction of Travel’ document gives some ideas as to the government’s general aspirations for the programme. The 27 international conventions that countries will be expected to uphold have remained the same, and there are a few policy proposals where the new UK scheme may alter from GSP:

1. Simplify product-specific rules for Least Developed Countries (LDCs) to make it easier for these countries to meet Rules of Origin requirements and benefit from preferential access to the UK market.

2. Expand cumulation for Least Developed Countries (LDCs) meaning that goods including material from multiple LDC countries can qualify for preferential treatment. This would allow more LDC countries to export to the UK tariff-free and support regional supply chains across multiple LDC countries (primarily in Africa).

3. Extend the overall number of goods that can enter the UK tariff-free, from ‘low income and lower-middle income’ countries, when compared to the current GSP scheme.

4. Change the process of ‘graduation’. Under GSP, ‘graduation’ assessment can suspend the preferential treatment granted on a range of goods where a country is deemed ‘highly competitive’. The proposed change would reduce the number of goods that a suspension would cover and increase the amount of time between assessments to provide greater certainty for businesses.

Government are seeking views on the proposed changes to trade between the UK the 70 listed developing countries. The consultation will be open until 12 September 2021.

Least Developed Countries FrameworkGeneral FrameworkEnhanced Framework
AfghanistanAlgeriaArmenia
AngolaCongoBolivia
BangladeshCook IslandsCape Verde
BeninGhanaKyrgyzstan
BhutanIndiaMongolia
Burkina FasoIndonesiaPakistan
BurundiJordanPhilippines
Central African RepublicKenyaSri Lanka
CambodiaMicronesia
ChadNigeria
ComorosNiue
Congo (DRC)Syria
DjiboutiTajikistan
EritreaUzbekistan
EthiopiaVietnam
The Gambia
Guinea
Guinea-Bissau
Haiti
Kiribati
Laos
Lesotho
Liberia
Madagascar
Malawi
Mali
Mauritania
Mozambique
Myanmar
Nepal
Niger
Rwanda
Sao Tome & Principe
Senegal
Sierra Leone
Solomon Islands
Somalia
South Sudan
Sudan
Tanzania
Timor-Leste
Togo
Tuvalu
Uganda
Vanuatu
Yemen
Zambia

Green North East

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Last week the North East had the amazing news, and boost, of Nissan’s announcement of £1bn investment with battery maker Envision at the Sunderland plant.

Already coupled with news of Gigafactory BritishVolt in Blyth and GE WindTurbine in Middlesbrough, the road is surely being paved for the North East to become a world leading area in the green economy.

As a region, we export more per business, have high staff retention and five varied leading universities (as well as fantastic colleges).

Yet we don’t have a huge number of businesses trading overseas.

There is so much potential in our region waiting to be unlocked. Some may know the phrase “Build it, they will come”, from the fairytale baseball movie Field of Dreams, but it rings true in economic development.

Leading research has found that for every 1% increase in infrastructure, there is a 0.6% increase in trade. The better roads, rail and flight connections to business the easier it is to move people and goods, access new markets and drive productivity.

Emirates are a great example here, increasing flown cargo from £20m to £310m since their touchdown at Newcastle Airport in 2007. This is set to grow further as a new Frankfurt flight has been announced, linking the North East with one of Europe’s major connection hubs.

As the Government returns to its Levelling Up agenda, there are some obvious pointers. Dualling the A1 and investment into the East Coast Mainline (and HS2 delivery) would bolster regional attractiveness from both foreign investors and UK relocators.

We must not rest easy, but shake off the pandemic blues, hurdle Brexit barriers and develop the North East’s global prosperity. To do this, we need to focus on what makes us globally competitive, and how we build on it.

The industrial heritage and quality of life is a huge attraction, featuring heavily in Chamber promotion campaigns and investor decisions, and regionally on the cutting edge of energy, digital and sciences to attract investment.

Reshaping investment structures based on need- to replace the £500m EU Fund, putting housing policy at the core of economic development to retain skills but address social imbalances, and valuing regional culture (from street art to concert halls), are all equally important at keeping our North Eastern field of dreams globally competitive.

New trade statistics show negative impact of Brexit

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North East England Chamber of Commerce say Government regional trade statistics released today (7 July 2021) show a substantial reduction in EU trading since Brexit.

The figures are the first quarter to be reported since the UK left the EU and are an important barometer of international trade. They state £3.15 bn of goods were exported from the North East and imports were £2.9bn, a reduction of 11% and 16% respectively on the last quarter.

Tom Kennedy, Chamber international trade policy adviser said: “These figures are extremely worrying and clearly illustrate the difficulties facing our regional businesses who trade with the EU. Our recent Brexit survey highlighted very similar results with 75% of businesses saying new EU trading arrangements had a negative impact.

“This region’s exporters will be vital in driving the North East’s COVID recovery, as well as any attempts to ‘level up’ the region. It is vital the Government acknowledges and addresses the challenges that businesses are facing with the new EU-UK relationship.”

The statistics show a larger drop in trade between the North East and the European Union than with non-EU countries, suggesting that Brexit and the new UK-EU relationship was the significant driver of this fall, rather than the pandemic.

Chamber survey shows devastating impact of Brexit on EU Trade

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One of the first pieces of research into how North East businesses have fared since leaving the EU has shown 75% of respondents had difficulties in trading post Brexit, reporting it had a negative or very negative impact on their companies.

Organised by North East England Chamber of Commerce the survey looked at a wide range of issues from what was difficult in the new arrangements, any advantages of Brexit, cost implications and logistics. 

Jack Simpson, Chamber training and global network adviser said: “Our survey analysed how businesses were finding EU trading six months on from Brexit.  The results demonstrated clearly how challenging companies have found international trade, with a plethora of issues depending on their sector and products.  We have identified the very urgent need for more, clear information from Government to support businesses and help find answers to their trading questions.  There is no doubt Brexit is hitting our competitiveness as a country and will also make levelling up even harder, due to the North East’s long-standing, positive international trade record.” 

Other headline figures from the survey highlighted that 37.5% of respondents said their EU sales had reduced since the start of the year, 45% said it has stayed the same with just 17% reporting an improvement.

One of the major changes of Brexit is that businesses, which have only traded in the single market, now have to go through customs processes.  The results showed over half of respondents had experienced difficulties in these procedures.

As well as the increased paperwork the tariff and administrative customs costs have also caused problems with 41% of businesses struggling to absorb the new financial burden.  Only 5% said they were able to absorb new costs.

The logistics of trading with the EU has also proved challenging according to the results.  A total of 66.7% of respondents confirmed they had been impacted by port congestion, delays or a shortage of hauliers since January. In addition to this there were reports of price inflation for containers and shipping, impacting cashflow and lead times for manufacturing supply chains.

Another issue raised by the Chamber survey respondents was the short timescale (seven days) they had to fully understand the EU deal before it was implemented.

Jack Simpson said: “We believe these results show larger businesses with more international trade resources, who have dealt with countries outside the EU, have coped with Brexit more easily than others who had no previous knowledge or experience. Respondents also experienced difficulties due to matters outside their control, for example, confusion over the required paperwork and shortage of experts, such as vets, to approve movements

“Under the new UK-EU relationship, most goods’ movements rely on multiple stakeholders working together, such as buyers, sellers, freight forwarders, customs agents, hauliers and others, towards the same end. Unfortunately, this chain of stakeholders can only be as strong as its weakest component, and an error made by one can have profound impacts for the others.”

The survey was conducted from 26 April 2021 and ran until 24 May 2021.

The Chamber has an international trade support desk which has specialists who help companies with EU and global trading and delivers expert training on customs and other procedures.

UK-EU Trade and Co-Operation Agreement (TCA)

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Effective: 1st January 2021

Preferential Tariff: 0% on all commodity codes.

Goods must meet certain originating rules to claim preferential tariffs. One way is to add a prescribed UK-EU originating value to the product, and the TCA sets a limit of how much non-UK-EU content can be added for preference, this known as MaxNOM. On average 50% of “MaxNOM” value can be added to the goods final value but ranges 35-70%.

The second way is to get a Change in Tariff Heading (CTH). If you substantially transform your product, it will change the commodity header of the product, and can be counted as UK-origin, for example, milk (44 01) processed into butter (44 05).

Full TCA table of commodity code preferential criteria.

If your product does not meet this criteria, the WTO Most Favoured Nation Tariff will apply.

Document requirements: Certificate of Origin or EUR1. Can declare by invoice until 2023.

VAT Rate: Vat rates differ member state to member state. Full VAT rates on page one on Europa

Work Travel & Visa: Visa-free travel allowed for up to 90 days in a 180-day period for travel and certain business activities. Requirements on which business activities require visas vary member state to state.

For member state visa criteria, see: https://www.schengenvisainfo.com/schengen-visa-countries-list/

Standard Marking: CE Marking required for EU marketplace. UKCA & CE marking required for Irish marketplace

Northern Ireland: Risk assessed Customs Process on goods, based on whether they remain in UK-N. Ireland area, or move to EU-Republic of Ireland area.

Using the Trader Support Service, there are three steps in the movement of goods- The Safety & Security Declaration (ENS) and Simplified Frontier Document (SFD) before arrival, followed by a Supplementary Declaration after arrival, with information provided by the declarant.

More guidance on Northern Ireland trade process here.

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