The UK has left the EU and new trading conditions will be needed from the beginning of 2021. Current trading deals with the EU remain in place during the transition period.
However, the suggestion that the deal is done at this point is at best optimistic, as the real negotiations over our future relationship with Europe start now. The EU has suggested that the volume of new trade deals needed will take significantly longer than the end of the year.
It’s not inconceivable that we’ll find ourselves facing the prospect of a no-deal exit at the end of December and all the preparation that will involve in the busy pre-Christmas period of 2020.
FWD is working with our members and Government to ensure that wholesalers and the sector are well placed to manage the challenges posed by Brexit. And as ever, we’ll keep our members updated on what’s required of them as policy evolves into legislation. We’ll be actively championing the wide economic contribution of wholesale to make sure wholesalers’ views are represented and their voices heard in Westminster and beyond.
The 12-month transition phase ends on December 31st, at which point the new trading agreements with the EU and other countries traded with trough the EU come into effect. Where new relationships are not agreed, the UK adopts WTO terms.
Negotiations on Free Trade Agreement
Negotiations between the UK and the EU are ongoing. The key deadlines that both sides are working to is October 31, which is the last date that a legal text needs to be agreed by Heads of State in order for the Treaty to be ratified by the European Parliament.
The key trade issues to resolve are:
The scope of a trade deal in practical terms covers only the issue of whether goods and services traded between the UK and the EU will be subject to tariffs or not. A whole range of new customs, food safety and security administrative requirements will apply to UK/EU trade flows whatever the outcome of FTA negotiations. For example, even if you are exporting or importing food to the UK and there is no tariff you will still need to make a customs declaration and you are likely to be liable for VAT, which is chargeable on most food in most EU countries. Information on VAT post January 1 can be found here
At the end of the transition period Northern Ireland Protocol, which includes the movements of goods from GB to NI, will be implemented and operational, with a number of new checks and obligations on food businesses. These include a range of EU controls and inspections, such as the use of compliant heat-treated pallets, and the use of an NI or EU business address, potentially creating cost, complexity and trade friction.
The FDF and NIFDA has published infographics highlighting the proposed framework of regulations, certifications and checks that will enter into force from January 1 2021 for movements of food and drink under the Ireland/Northern Ireland Protocol. The two infographics set out the requirements for each trade flow:
The Northern Ireland trader support service went live on 28 September. The service aims to help businesses and traders of all sizes to navigate the changes to the way goods move once the Northern Ireland Protocol comes into effect. https://www.gov.uk/guidance/trader-support-service
Border Operating Model
The latest version of the Border Operating Model has been published, explaining how goods will move between GB and the EU from January 1 2021, and the actions traders, hauliers and passengers need to take. A summary of what has changed from the previous version can be found on page 6.
The model outlines details of the “Check an HGV is Ready to Cross the Border Scheme”, which will require all HGVs travelling via Dover for export to register in advance for a Kent Access Permit. HGV drivers doing domestic journeys that start, travel through, or end, in Kent will not need to obtain a Kent Access Permit to access key roads such as the M20. The Government advise that all drivers transporting goods domestically carry paperwork detailing their journey to minimise any possible delays.
The Government has also published its Reasonable Worst Case Scenario for borders for potential disruption to freight travelling between GB and the EU at the end of the transition period.
Food and drink labelling changes
Guidance on food labelling requirements for the end of the transition period has been updated, and covers organic labelling; country of origin labelling; and use of geographical indications. This page also links to updated guidance on health and identification marks from January 1 2021 which has also been published by the Food Standards Agency.
HMRC call – customs declarations
One of the messages of the Border Operating Model is to think about whether to appoint agents to help handle your customs issues.
Information on doing customs declaration in house can be found here: https://www.gov.uk/guidance/customs-declarations-for-goods-brought-into-the-eu
Information on agents can be found here: https://www.gov.uk/guidance/appoint-someone-to-deal-with-customs-on-your-behalf
Export Health Certificates
From January 1 2021 exports of Live Animals and Products of Animal Origin to the EU require an Export Health Certificate. Exporters can apply for EHCs online and can register for the online service now.
The food and drink sector is arguably one which will be most impacted by leaving the EU. Food and drink manufacturers that our wholesale members purchase from import a large share of their goods and 70% of their imports come from or through the EU.
Concerns around food and drink supply, access to workforce, a future trading agreement and possible border delays are significant concern for FWD members.
Whilst FWD are eager to seize upon the opportunities provided by EU exit, the sector needs to be in an unwavering position to do so. We believe that a prosperous future is heavily reliant on the Government securing the best possible Brexit deal for the food and drink sector.
We are calling on the Government to:
Negotiations are being held on a new trading relationship for after the end of transition. If deals are not completed by this time, an extension may be sought, although the Government has said it will not so this. Alternatively the UK may leave on WTO terms, the so-called No Deal option.
Departing the EU will require huge changes for the food and drink sector. We’ve chosen a few issues that will be of significance for wholesalers in the UK. For a more extensive list and advice on contingency planning, please visit the Brexit Food Hub
IMPORT AND EXPORT
The Brexit Food Hub, an trade association industry portal set up to provide a central source of information to help food businesses plan for No Deal in 2019, is being relaunched to provide guidance for the end of transition period on December 31, covering the following areas: Borders & Tariffs, Import/Export, Transport, Labelling, Workforce, and Northern Ireland. https://brexitfoodhub.co.uk
HMRC trader advice
HMRC has written to businesses who trade with the EU about the new trading arrangements from January 1.
The letter gives the following advice:
New guidance has been published on the Northern Ireland Protocol, which will take effect from January 1, 2021. Movement of goods from GB to NI and vice versa will take place as it does now. Trade in goods between Northern Ireland and Ireland, and between NI and EU member states will continue unaffected, with no change at the border, no new paperwork, and no tariffs or regulatory checks. https://www.gov.uk/government/publications/moving-goods-under-the-northern-ireland-protocol
Alongside this, the Government has announced £200m of funding for a free Trader Support Service to complete digital processes on behalf of businesses importing goods into Northern Ireland. The scheme will help businesses through any changes to the way goods move between Great Britain and Northern Ireland, and into Northern Ireland from outside the UK. Businesses can also use it to get declarations completed on their behalf. Businesses in Northern Ireland can register for further information about the scheme now, before it becomes operational in September.https://www.gov.uk/guidance/trader-support-service
The Department for Transport is consulting on plans for enforcing Operation Brock plans to minimise disruption at the Short Straits channel crossing from January 1 2021. The Government proposes to priori- tise highly perishable goods which will lose most of or all their value within five days or less, such as single loads of seafood products.
Up until October 2021, border readiness will be checked via a new Smart Freight web portal, and app for drivers. This will allow hauliers to self-declare that they have all necessary documents and clearances. Once documents are ticked off on the Smart Freight app, it will issue a Kent Access Permit (KAP) – drivers will need to be in possession of this before entering Kent en route to channel ports. Drivers without a KAP will be subject to £300 fines and/or impoundment of vehicles – enforcement will be against drivers as individu- als, not businesses. https://www.gov.uk/government/consultations/enforcing-operation-brock-plans-in-2021
The Government has published a list of HMRC-approved customs agents and fast parcel operators who can help submit customs declarations from January 1 2021. https://www.gov.uk/guidance/list-of-customs-agents-and-fast-parcel-operators
If you complete customs declarations you can apply for three Government grants covering: • training that helps to complete customs declarations and processes
• hiring new staff to complete customs declarations
• IT improvements to help complete customs declarations more efficiently
Future immigration system
Attached to this update is a presentation from the Home Office on the points-based immigration system, which begins when free movement for EU citizens ends on December 31. The points-based routes will be open by January 2021.