EU Set to Propose Customs Procedures for Shipments Near Brexit Date

A European Union task force recently issued a position paper on customs procedures in the days surrounding the United Kingdom’s exit from the EU in March 2019. The paper, which was set for internal discussions on Sept. 7, “contains the main principles of the EU position” on “Customs related matters needed for an orderly withdrawal of the UK from the Union." It says customs procedures begun before the withdrawal date should generally continue to receive EU treatment if completed after the UK withdraws from the customs union.

As the UK leaves the EU on March 29, 2019, the country will “no longer be part of the customs and tax (VAT and excise) territory” of the EU and “movements of goods between the UK and the EU 27 will constitute third country trade,” the position paper says. The UK’s withdrawal agreement should determine the customs status – EU or non-EU – of goods that enter, leave or transit the EU or UK “where the movement starts before and ends on or after the withdrawal date.” It should also cover VAT and excise duties, licensing requirements, and administrative cooperation procedures surrounding that date, the position paper says.

“The basic approach to be followed should be that the rules applicable in respect of an operation when it is commenced should continue to apply to that operation until its completion,” the position paper says. Entry summaries for non-EU goods loaded before the withdrawal date in a third country should remain valid if the entry summary was submitted pre-arrival to the EU or UK before the UK’s withdrawal date. Likewise, shipments between the UK and the EU will still be considered shipments within the EU for customs, VAT and excise tax purposes if the movement is started before and ends on or after the withdrawal date.

Goods in temporary storage or under special customs procedures like free-trade zones or temporary admission should likewise be handled under EU customs law if the temporary storage or special customs procedure was initiated before the UK’s withdrawal. Exports on or after the withdrawal date will also be treated as EU goods if a pre-departure declaration is submitted before the withdrawal date, the position paper said. Administrative cooperation procedures between the EU and UK customs authorities, such as customs investigations and country of origin verifications, should continue if they started before the withdrawal date.

Customs debts should be calculated in accordance with the law in place at the time the debt was incurred, the position paper says. “It is for the declarant to demonstrate the status of the goods (Union or non-Union) before the date of withdrawal and the fact that the relevant movement or entry into a customs regime was initiated before the date of withdrawal,” it said.

The days surrounding “Brexit” will likely create “supply-chain risks in the short-term,” according to a blog post on Livingston's website. Dealing with the UK “will involve increased administrative burden,” said the post, written by Philip Sutter, Livingston’s director of strategic analysis. “Everything touching the UK directly, or indirectly, involving the EU from entry procedures to long-term supplier declarations will be impacted. Even something as routine as a UK tariff schedule will need to be put into place. Overall, about 20,000 UK laws will need to be rescinded or reenacted,” Sutter said. According to one study, the UK will need to process 200 million additional customs transactions, costing businesses about $5 billion to $12 billion.