Companies face new Brexit red tape burden on imports from EU
Companies bringing goods into Great Britain face a new set of bureaucratic hurdles from 1 January, as the UK imposes full Brexit customs controls on imports from the EU for the first time.
Controls on exports to the EU under Boris Johnson’s Trade and Co-operation Agreement (TCA) were introduced a year ago, but mandatory checks on imports from European countries were delayed to July, and then postponed again to the start of 2022 after British businesses warned they were not ready.
Thousands of companies will have to complete customs declarations either at the border or in advance of moving goods, and will be required to produce proof that the items originate from within the EU in order to qualify for tariff-free access under the TCA.
They will no longer benefit from the six-month grace period for making declarations and paying any relevant tariffs, introduced to smooth the process after the UK left the EU single market and customs union on 31 December 2020.
Trucks bringing products to Britain will have to be registered on the government’s Goods Vehicle Movement System (GVMS). Importers will need an Economic Operators Registration and Identification (EORI) number and the companies they buy from may need export declarations, licences or certificates to send goods to the UK as well as a Registered Exporter (REX) number of their own.
Import declarations will require the correct commodity code for each product being brought into the country, along with its value. And licences and certificates are needed for certain high-risk goods.
Authorities will have to be pre-notified of incoming animal and plant products, though full veterinary and sanitary checks on agri-food products do not come into effect until July 2022 in what is expected to be the most disruptive change to trading conditions resulting from Brexit.
And there will be no change to imports from the Republic of Ireland and Northern Ireland to mainland Britain until the conclusion of talks on the Northern Ireland Protocol.
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In 2020, goods and services imports from the EU totalled around £300bn – half of all UK imports.
The government’s Office for Budget Responsibility calculates that trade with the EU has already declined by around 15 per cent since Brexit, contributing to a forecast 4 per cent decline in UK GDP over the longer term as a result of EU withdrawal.
The government insists that trader readiness for further changes is “strong”. But a recent survey by the Institute of Directors suggested that nearly one-third of British companies importing goods were not prepared for the new requirements coming into force as the New Year begins.
And representatives of the logistics industry warned that even if UK firms get their paperwork in order, they are dependent on hundreds of thousands of small and medium sized (SME) exporting businesses from across the EU.
Alex Veitch of Logistics UK, which represents hauliers, ferry companies, ports and customs agents, told The Independent that the organisation was “cautiously optimistic” that the bulk of UK/EU trade conducted by around 10,000 large multinational firms would continue unaffected.
But he said: “There is concern that some EU exporters to this country -particularly the SME community may not be ready to do the paperwork and there may be turnbacks because of that.”
Delays were likely to be at the point of collection in EU nations, rather than at Channel ports, as most lorries will not depart for the UK without first receiving a “movement reference” number to show that the paperwork for their loads has been correctly completed, he said.
“We are fully confident that 90 per cent of trade will be fine because it’s done by about 10,000 very big companies,” said Mr Veitch. “But nonetheless, just as we saw last year, there is the other 10 per cent of smaller traders who get caught out because they often have few people to look at this stuff.
“And because this time the onus is on the EU exporters to get ready, it’s very hard for UK government to get those messages to them. There are definitely some bumps in the road to expect.”
The chief executive of the Cold Chain Federation, Shane Brennan, said: “UK-based businesses are pretty prepared. We’ve been doing this going the other way for the last 12 months. What we are really worried about is the businesses across the European Union because they are the ones that have to make a change now that they haven’t had to since Brexit.
“As of January, they have to make declarations, they have to do the paperwork, they have to gather information in order to trade with the UK. That is a big change and we are worried about how prepared they are.”
Mr Brennan said importers will face “significant extra cost” of around £300-£400 for every lorry bringing goods from the EU under the “much more inflexible and much more costly” system which replaces the free movement of goods available when the UK was a member of the 27-nation trading bloc.
Full customs controls have already been in place for 12 months for alcohol and tobacco products, and one Welsh wine importer said he feared an “impending plane crash” for other sectors if their experiences are repeated.
Daniel Lambert that lead times for supply had increased from one to eight weeks following Brexit and it was regularly the case that one-third of his range was missing.
Only two of the 300 EU companies which he buys from had obtained the necessary REX status by the time new arrangements came into place a year ago, and some have still not done so, he said. Even when that bureaucratic hurdle is overcome, errors in paperwork are rife.
“The system is so complicated that we seldom have everything done correctly by the suppliers first time round, it normally takes two or three versions to get it right,” said Mr Lambert. “Transportation companies are now in the habit – rightly so – of not even collecting stock until all documents are correct.”
And he added: “My worry is that producers think ‘Oh f*** it’ and stop with the UK and sell everything within the EU. This is very plausible.”
A government spokesperson said: “Overall trader readiness for the introduction of import controls is strong, and there is plenty of support available to ensure businesses are well positioned to comply with UK border processes from 1 January 2022, including one-to-one advice through the Export Support Service.
“Through our targeted multimedia campaign and a series of sector-based webinars, businesses are also signposted to the relevant information to help them get ready.
“Given the impact of Covid-19 on global supply chains, we are introducing import controls in phases throughout 2022 in order to give businesses more time to prepare.”