Are you an exporter/importer struggling with post Brexit paperwork?

Find out more about Where Now Consulting.

After all the debate and discussion over the last few years, the UK finally came to the end of the transition period with the EU on 31 January 2020, right in the middle of the global pandemic. The fact that there was a deal was a relief to many, but the reality is that business is slowly waking up to the new world of increased paperwork and friction in trade between the UK and EU markets. Fortunately, the pandemic has greatly reduced trade flows and therefore, other than a few high-profile news stories, the expected queues at the ports have not materialised.

Despite this, and even though many businesses were prepared for a no deal Brexit, business is facing increased costs and complexity at a time when staffing levels and location are impacted by the current COVID lock downs. At Where Now Consulting we have been extremely busy helping our clients with setting up their first exports post Brexit and in establishing new options, including overseas branches and VAT registrations, where things are not working as well as expected or are adversely impacting the end customer and the customer experience.

We thought it would be helpful to lay out a summary of the UK’s ongoing relationship with the EU. This relationship is governed by the EU Withdrawal Agreement and a Trade and Cooperation Agreement (TCA) which were agreed on 24 December 2020.

Trade

The trade agreement ensures that most goods traded between the UK and EU from January 1 will not face new tariffs or limits on the amount that can be traded. However, British exporters will face a range of new regulatory barriers that will potentially make it more costly and arduous to do business in Europe.

Market Access – UK and EU good will continue to receive tariff free and quota free treatment. Some new checks will be introduced at borders as the UK has left the EU’s Customs Union, there will now be customs paperwork and checks for goods crossing the UK-EU border, although the UK does have a transitional period until 1 July 2021, with extended deadlines for paperwork to be filed on imports into the UK.

Rules of Origin – new rules require UK business to self-certify the origin of its exports to the EU. For example, to enable goods to be imported on a tariff-free basis, certain thresholds relating to materials or value add originating in the UK or EU will need to be met. For businesses that rely on international supply chains meeting the origin thresholds may be challenging and these companies my face new tariffs.

Health and Safety – The EU will require UK agri-food exporters to provide health certificates and undergo sanitary and phytosanitary (measures for the control of plant diseases especially in agricultural crops) controls at border inspection posts.

Testing and Certification – The absence of a mutual recognition agreement means that UK regulatory bodies will not be able to certify products for sale in the EU, which could potentially create a barrier to trade. To remedy this the EU and UK may pursue tariffs or other sanctions according to rules established by the World Trade Organisation (WTO).

Services and Qualifications

Much has been made in the press of the fact that the trade deal does not include services. The UK therefore reverts to the general agreement of trade in services (GATS) effectively means that UK service providers have to abide by a different national trading regime in each EU member state.

Practically this means, for example, that there will no longer be automatic mutual recognition of professional qualifications. Doctors, nurses, dentists, pharmacists, vets, engineers, and architects will need to have their qualifications recognised in each member state they wish to practice in.

The TCA offers little clarity for financial firms. There is no decision on equivalence which would allow firms to sell their services into the single market. The agreement only features standard provisions on financial services, meaning it does not include commitments on market access.

The UK and EU are set to discuss how to move forward on specific equivalence decisions, with the European Commission saying it needs more information from the UK. In addition to this, both the UK and EU have made a joint declaration to support enhanced co-operation on financial oversight, aiming to agree on a Memorandum of Understanding by March.

Business Travel

There are provisions to enable UK companies and individuals to have the “legal certainty and administrative clarity” they need to continue engaging in business activities and in general travel between the UK and the EU. The agreed length of stays reflect the outcome reached in the EU-Japan Economic Partnership Agreement and includes for the ability for UK short-term business visitors to travel to the EU for 90 days in any 180 day period.

Business travel to the most countries in the EU, Iceland, Norway, and Switzerland will require the use of an existing passport with EU markings, provided that it has more than six months until it expires. If there are less than six months until expiry, the passport will need to be renewed. This doesn’t apply for travelling to Ireland, where your passport with less than six months left will continue to be valid.

Further to this, European Health Insurance Cards (EHIC) which provides free essential medical services in EU countries will only be valid until its expiry date. The government will cover routine medical treatment when in the European Economic Area (EEA) or Switzerland for the first year following the end of the transition period (1 January 2021 to 31 December 2021). This is intended to cover ongoing treatments such as dialysis and chemotherapy. The scheme will be administered by the NHS Business Services Authority (NHSBSA) and must be applied for before travel, in association with the NHS clinician who decides your treatment requirements. The UK government says EHIC will be replaced with a new UK Global Health Insurance Card, but full details have not been released yet; until then travel insurance will be essential. Businesses should confirm with their insurers that cover is still valid post Brexit.

Security and Data Protection

The trade deal agreed between the UK and the EU contains interim provisions in relation to data transfers between the UK and EEA member states. The EU has agreed to permit data flows to continue from the EU to the UK until the end of June, unless a formal adequacy decision is made by the EU regarding the UK’s data protection legislative regime prior to that date. Similarly, the UK has decided that the EEA has a data protection framework in place that is adequate to permit transfers of personal data from the UK.

This interim arrangement allows businesses based in the UK to transfer data to customers and suppliers in the EU and EU-based businesses can continue to share data with entities in the UK. This also applies to public bodies and law enforcement agencies. UK businesses with no contacts or customers in the EU/EEA will be unaffected by this if they are compliant with GDPR, other than needing to adjust any privacy information and documentation to state the difference in legislation that covers data protection.

However, the new rules around data transfer and security are contingent upon the UK government not exercising certain powers under the Data Protection Act 2018, such as approving certification mechanisms or providers or passing an adequacy decision in respect of any third countries. If the UK government exercises any of these powers or amends the UK data protection regime (other than to align with EU law), then the interim arrangements permitting flows of data between the EU and UK will end immediately.

What is the impact of the changes?

The end of the transition period has made some of our clients rethink their operations, whether that is their exports to the EU or their operations and supply chains within the EU. In the main these considerations that face any exporter, but after years of frictionless trade with the EU they can be frustrating, costly, and ultimately a barrier to growth in the short term.

So, how have we been helping our clients prepare and implement business models for the new post Brexit relationship with the EU?

• Creating EU subsidiaries and branchesOur client has manufacturing in both the UK and EU. We helped set up an EU Branch and VAT registration to enable this business to continue to seamlessly serve its EU and Global customers.
• VAT registrations in EU countriesE-commerce retailers have been impacted heavily by Brexit. We have been helping our clients review the options for future sales in the EU.
• Review of export options (incoterms, certificate of origin, etc).For some of our clients’ export paperwork is a new world as there was no requirement for EU sales. Our support has included general reviews and advice on documentation, assessment of the impact of origin rules and general advice.

If you are looking to export to the EU or are already exporting and struggling with the changing legislation, our team would be delighted to help.

About Where Now Consulting Ltd: Where Now Consulting is a management consulting company that focuses on helping its clients to grow and compete. The company offers a range of consulting services, including business turnaround and performance improvement, formulating market entry strategies, mergers and acquisitions, joint ventures and alliances, and sales and distribution strategy and management.

For more, please visit Our Services page.