On 28 February the EU issued a draft document proposing how the UK and the EU will go their separate ways. Otherwise known as the transition or withdrawal.
The 118 page document with its catchy-title the Commission Draft Withdrawal Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community. is the legal text that will define the transition period and the state in which the UK leaves the EU.
It will be the subject of the upcoming UK-EU phase 2 negotiations.
This proposal document is the detail of the “divorce”discussions that are coming. If negotiations fail this document covers what the EU expects to happen and how. It is the back stop position.
For practical and political reasons it seems inconceivable we will reach October with this version of the text in tact.
On publication the EU said it was simply codifying the public statements made in December. Theresa May immediately made it clear the proposal contained within regarding the Irish border, was completely unacceptable. This is, after all, a negotiation. Both sides playing hard ball.
John Keynes,Economist (1883-1946) said “When the final result is expected to be a compromise, it is often prudent to start from an extreme position.”
Back in December it was clear that kicking the Irish border issue down the line to allow progress only deferred this thorny issue. We should also keep in mind that the UK government has said nothing is agreed until everything is agreed.
So onwards to the second phase of negotiations. Now the hard work commences.
UK trade has plenty of concerns about how the Customs aspect of Brexit will proceed and is looking for detail of new Customs rules in order to help shape decisions in the supply chain, cross border, logistics and forwarding sector. Uncertainty is causing inaction.
Time is running out to make, design, and deploy effective trade systems.
The reality is this EU proposal document for the transition period only confirms non-controversial Customs technicalities. Useful for specialists but no more.
The proposal describes what happens in the transition period and at cut over for goods en-route. What happens after that is upto the UK.
UK trade has to focus on the government legislation in London whilst keeping an eye on developments in Brussels as negotiations progress.
Today the vast majority of Customs activity in the UK is determined by the Union Customs Code (UCC) regulations, alongside Customs & Excise Management Act (CEMA). Until the UK leaves the EU the UCC will define how UK trade operates in the Customs sector.
EU wide Customs authorities negotiated for several years leading to the UCC (Regulation 952/2013) . It entered into force in May 2016 and itself has a transition period to 2020. It focused on aligning Customs data sets, electronic systems and modernising Customs to align processes with current business practice.
Looking ahead, the UCC is already the model for the Customs piece of the UK Taxation (Cross Border Trade) Bill currently passing through the House of Lords. This new Bill will be the legislation trade will have to work with post-Brexit however little detail is contained within.
Proposed Transition Dates
According to the EU proposal the withdrawal period is to commence on 30 March 2019 and the EU proposes an end date 21 months later on 31 December 2020.
The EU proposal addresses all of the Brexit negotiation topics. Those relating to Customs are summarised as follows:
- Article 43 – documents needed to prove UK origin for some modes of transport.
- Article 44-48 – legal status of Entry Summary Declarations, Pre Departure Declarations , goods in special procedure, VAT and excise
- Articles 93-95 – continued co-operation by the UK in Customs matters
- Article 126 – powers of supervision by the EU remain during transition
- Articles 157 & 158 – establishes joint committee to oversee transition, specifc sub committee for Irish border
- Common Regulatory Area – Protocol on Ireland (page 98 onwards) and concept of Common Regulatory Area
- Annex Y+2 – detail of administrative co-operation in Customs including transit,origin,dual use,investigations
- Annex Y+4 – systems
This EU Proposal is just a starting point for a Brexit Treaty. The next few months of negotiation will lead to changes and through that process it is hoped UK trade policy will emerge.
We hope that in the next few months post-Brexit UK Customs policy and rules will crystallize and then trade can begin proper preparations in earnest.
Clearlight Customs provide import,export,training and consultancy. Contact us directly on 01283 553099 for assistance or use web chat. Feel free to leave us a comment below.