|Brexit – we’re leaving the European Union next week. Yes it’s really happening and for any business currently trading with the EU27 what then happens after 31st January 2020?
Ok, the short answer is nothing. We enter what is called a transition period where everything stays the same as it is now, until 31.12.20. Mr Johnson has declared there will be no extension to this date, contrary to the belief of many trade experts that a deal can’t be done, but we must believe it to be so.
So the longer answer is we need to use this time wisely to prepare for this date.
What should be on your agendas in every board room is Brexit (if we’re still allowed to call it that) and how your business will need to adapt to post-Brexit trading. What are the burning issues for your business? Really home in on priorities.
Free Trade Agreements
The government are due to start trade discussions shortly and they are looking for a comprehensive Free Trade Agreement (FTA) with the EU although the US may complicate how things proceed.
Rules of Origin
In some ways this could start to look a lot like a troublesome no-deal which we were planning for last year. The reason being is if an FTA is brokered with zero tariffs, we then move into Rules of Origin (ROO) territory. Proving the origin of your goods and that you qualify. More on this in another bulletin.
This will mean administration and still customs procedures – read ‘friction’ and therefore delays. It needs to be made clear for your preparations there WILL be customs paperwork and formalities. We are hoping that during the year there will be more clarification of if frictionless trade will be possible, but it is looking unlikely. Obviously we are concerned as are our clients that severe changes may be needed to their suppy chain and how it currently operates, but again, we still don’t know the details.
At Jordon we have installed new IT infrastructure and cutting edge software to track consignments through the borders (using geofencing) and have full customs facilities in-house for customers when the time comes. At present the government cannot tell us exactly how the customs procedures will work but as soon as they do, we will be in contact to discuss options for you.
Factoring in costs for administration needs to be done for your 2021 budgets. Export docs, import docs, certificates of origin, staffing, data input/ouitput, etc all need to be considered. Initial customs pricing may be high as customs agents try to understand the implications to their own business (only knowing Ocean work) of taking on ro/ro clearances. Having done this myself 30 years ago some may be in for a shock, but we’re very aware that it’s a 24/7 operation and it aligns well to our existing 24/7 business model.
Another area for concern is the recent quote from Mr Sajiv Javid regarding his suggestion the UK will deviate from EU regulatory alignment quite markedly, subsequently backtracking today to a small degree. Again flip flopping quotes causing market damage so keep a close eye on how this may affect your industry. Exposed sectors such as food and drink labeling, automotive, pharma, chemicals, etc have all expressed their dismay at possible deviation of alignment with EU so try and familiarise yourself with what’s going on here if it’s important.
I will just mention that you will need to identify your trade tariffs if you haven’t already and start to look at WTO for worst case scenario to also help in cost planning options. a ‘How-to’ with me on this can be found on JordonTV (see below).
Don’t forget now is a good time to look at your incoterms too. New 2020 incoterms recently released can be found on our website. Incoterms indicate who is responsible for what in the supply chain and it is absolutely vital to communicate and agree with your partners right now. We had many customers trying to change incoterms in the run up to Brexit 2 which became a bit of a battleground for some.
Government Training Grants
The governnment grant scheme ends this month and there is still time to apply for training. If you move goods in or out of Europe you should qualify for 100% funding for training. We highly recommend you consider applying because you will be party to customs formalities, even if you use an agent to complete them (as opposed to in-house). But be quick!
It would be really beneficial to have a formal understanding of customs procedures as ultimate responsibility for the correctness of the customs entry is down to the importer/exporter. Also trained staff will know how to prepare data to customs agents and how the system works, something we have talked about extensively before.
Don’t forget to check how you will prepare your data flows out of your company to customs agents. Depending how you charter and lead times it may need to be fast.
We at Jordon are heavily invested in making sure all our customers are informed and ready and that we as a company take as much of the strain off you as possible. That is our mission and promise!
Writing this blog this morning was simply to say dont panic, nothing changes after next week. But it’s become clear I could write all morning on this subject (actually now have) and so will start vlogs on our YouTube channel JordonTV again soon to refresh areas we need to focus on and also bring in some new parts as we seek an FTA with the EU. The main issue with the vlogs is information is fast moving, often wrong, often changes or simply it’s just guesses. So as concrete information comes out that we can acually use practically we will then deploy.
To keep up to date on Brexit we mainly use the following channels.
YouTube – JordonTV for Brexit related videos with playlists as follows :-
Brexit resouces – all 3rd party helpful videos
Brexit vlogs (that’ll be me)
Brexit how-to’s (me too)
Chamber of Commerce videos (you can find a ruiles of origin video here worth watching now)
Twitter – we’re also very active with trade and industry experts on Twitter so do follow us if you need to keep in the loop.
Website – our website now has it’s own Brexit Information page where we filter uploads into three sections.
Brexit Vlogs & Blogs – videos from me and written articles (like this)
Brexit Videos – all 3rd party videos that we feel inform and further knopwledge
Documents & Files – HMRC documents, training documents, etc
This is new for us and we’re refining this all the time to make it easier to use.
So a re-cap on some things that should be done now.
1. Identify trade tariffs
2. Agree incoterms
3. Ensure goods are insured
4. Communicate, communicate, communicate across your supply chain
5. Check EU regulatory compliance and observe updates
One last thing, there is a clause in the WA that states that should we not be able to broker a FTA with the EU that suits the UK government, that we will reserve the right to pull out completely. What this means is no-deal and moving to WTO tariffs, so this is still possible come 31.12.20. This is a very frustrating consideration as companies also have to prepare for this just in case as well as whatever is being negotiated right now – we just have to hope no-deal doesn’t come to fruition.
Don’t stress, but be pro-active
So there are vast amounts to do for businesses now and only you know your business best and what are the key things to focus on. Let’s all be pro-active because it’s really happening and use this time wisely to prepare for 01.01.21 – we can do it.
If I may say though, please don’t leave it until the last minute, it would be very stressful to. If you have any questions or concerns at all, please do call me here, I’d be very happy to help if I can and also it helps me understand what people are having issues with and I can feed that back to the many bodies we deal with.
We hope this has helped a little to give a brief overview of where we are now with Brexit, where we’re going and some of the obstacles we face and that it’s been written in language that can be understood. It’s by no means comprehensive or conclusive but hopefully all the information and activity across our channels will help see you through this tricky year successfully.
Director & Brexit-Co-ordinator
24th January 2020