Summary
The UK government has announced the deferment of the implementation of a range of controls on goods entering the UK from the EU. While this is nominally in response to Covid-related disruptions, shortcomings in UK government Brexit planning and investment appears equally important. The response of UK businesses to the deferment announcement has been mixed. Concerns have been expressed the problem has simply been ‘kicked down the road’ to avoid a pre-Christmas crisis, while extending the uncertainties over the conditions under which trading operations will take place in the future. There are concerns ongoing uncertainty is having particularly adverse effects on the ‘re-export’ trade along ACP fresh and chilled produce supply chains, with such business operations simply being placed in the ‘too hard’ basket. Against this background there is a need for political initiatives around the issues facing the ACP re-export trade along triangular supply chains, so as to remove uncertainty and restore business confidence in the future of such trading arrangements.
On 14th September 2021 in dual statements in the House of Commons (1) and House of Lords (2) UK government Ministers announced, what Lord Frost described as ‘a pragmatic new timetable for introducing full import controls for goods being imported from the EU to the UK’ (2). The specific modifications announced covered the deferment of:
- Requirements for pre-notification of imports of goods requiring Sanitary and Phytosanitary (SPS) clearance from 1 October 2021, until 1 January 2022.
- Requirements for Export Health Certificates, which have been deferred from 1 October 2021 until 1 July 2022.
- Requirements for Phytosanitary Certificates and physical checks on goods requiring SPS controls at Border Control Posts, from 1 January 2022 until 1 July 2022.
- Requirements for Safety and Security declarations on imports from 1 January 2022 until 1 July 2022 (2).
Requirements for ‘full customs declarations and controls’ will however still be ‘introduced on 1 January 2022 as previously announced’ (2).
According to Lord Frost, the government has taken the deferment decision, so as to allow ‘businesses to focus on their recovery from the pandemic rather than have to deal with new requirements at the border.’ It was maintained the governments’ decision will ensure ‘businesses will now have more time to prepare for these controls which will be phased in throughout 2022.’ It was implied the decision would be particularly beneficial to the agri-food sector (2).
Business reactions to the deferment announcement have been mixed. The Confederation of British Industry (CBI) took the view the extra time now available would ‘relieve pressure in supply chains ahead of the traditionally busy Christmas period for retailers.’ However, this was qualified with the CBI’s Europe director, Sean McGuire, pointing out how ‘progress was still needed to eradicate most checks, particularly for agri-foods’ (4). This view was endorsed by Shane Brennan the Chief Executive of the Cold Chain Federation who maintained the government was ‘kicking the can down the road’, largely to avert a ‘potential disaster for Christmas food supplies.’ He argued the fundamental issue of the implications of ‘imposing rest of world checks on high intensity EU-UK trade’ still needs to be addressed (5).
Whether a Christmas supply crisis will be averted by the UK governments’ decision to defer controls on goods crossing form the EU until July 2022 has been questioned, with business leaders including the National Farmers Union (NFU) arguing ‘delaying the new trade barriers would not solve the food shortages in the supermarkets as this was the result of a chronic lack of lorry drivers’ (3).
More widely the Food and Drink Federation (FDF) was more critical of the UK governments’ deferral decision, maintaining the last-minute nature of the announcement, pulled the rug out from underneath those businesses which had effectively prepared for the 1 October introduction of border controls (5). According to the FDF, ‘all the big supermarkets importing fruit and vegetables from the continent were already prepared for the paperwork.’ FDF chief executive, Ian Wright, maintained the ‘repeated failure to implement full UK border controls … undermine trust and confidence among businesses.’ Logistics UK similarly argued the further deferment of UK border controls, with just over two-week notice, served to add to the uncertainty which is now endemic across the sector (3).
This issue of trust and confidence is a critical factor in the operation of re-export supply chains, particularly for smaller scale traders in short shelf-life products. Nevertheless, it was recognised the Governments decision acknowledged the extreme pressure under which food and drink supply chains now operated.
More fundamentally the FDF and NFU were both of the view the postponement of UK border control on goods crossing from the EU gave ‘European exporters a commercial advantage over British firms’, since ‘UK exporters have been saddled with red tape, extra checks, and costs since Brexit with all border controls being implemented by the EU in January, while EU exporters face near frictionless trade into the UK’ (3).
The UK governments deferment decision was not wholly unexpected. According to reports in The Guardian, signs the UK government was likely to ‘delay the physical checks on food and animal products coming in from the EU emerged in the summer when the officials told angry residents in Dover that plans for a giant lorry park for HMRC, and sanitary and phytosanitary (SPS) checks had been radically downsized and would not be ready until July 2022.’ According to The Guardian ‘the government’s lack of planning for Brexit meant the necessary infrastructure involving border control posts in key ferry ports including Holyhead, Pembrokeshire and Dover has yet to be built’ (3)
However, it should be noted according to Lord Frost ‘the government remains on track to deliver the new systems, infrastructure and resourcing required’ (2). The issue of potential border control delays, however, is much wider, with the UK logistics industry pointing out how while the UK government may be on track there remains ‘a shortfall of veterinary professionals in the EU to provide the necessary documentation for food’ (6).
| Comment and Analysis
While the deferment of full UK SPS import controls, pre-notification and safety and security requirements postpones additional problems for ‘re-exports’ along ACP-to-EU-to-UK triangular supply chains, it leaves the critical issue of the rules of origin/MFN tariff issue unaddressed. Whether ACP re-exports face MFN tariffs largely depend on the accuracy of the self-reporting of the EU trade partner shipping to the UK and the tenacity with which the UK customs and revenue services seek verification of these self-certified claims. However, in terms of the phytosanitary re-export certification process which has caused such difficulties along ACP-to-UK-to-EU fresh and chilled produce supply chains, it does provide time to address the issue of just how EU member states will apply these processes when they are introduced in July 2022. This requires initiatives in 4 related areas in each EU member states from which the ‘re-export’ trade to the UK takes place, namely: · A clear designation of the officials responsible for dealing with the issuing of · A clear specification of the timeframes within which phytosanitary re-export · A clear specification of the fee schedules to be applied to the re-issuing process, · The compilation and dissemination through identified stakeholder bodies, of clear The tabling of a Parliamentary Question in the European Parliament to both the European Commission and President of the Council of Ministers requesting clarification on member states processes for the issuing of phytosanitary re-export certificates could prove of considerable value. While Slovenia is the current holder of the rotating Presidency of the Council of the European Union, France (one of the principal EU member states involved in triangular trade with the UK) will assume the Presidency from 1 January 2022 (2022). Given the importance of this issue to East African fruit, vegetable and cut flower exporters, the Kenyan and other East African governments could usefully provide a lead in promoting a political demarche around this issue. In addition, the deferment of the introduction of UK border controls on goods crossing from the EU, opens up scope for lobbying of the UK authorities to waive the need for phytosanitary inspections where ‘re-exported’ products have been subject to phytosanitary inspections shortly prior to re-export. This would be consistent with UK government practice since 1 January 2021, a practice which has been extended until July 2022. Such a course of action can be justified in light of the minimal plant health risk posed by such pre-checked onward shipments. Addressing these two issues would reduce the likelihood of delays during onward shipment, which could help ease some of the price pressures faced in the onward shipment of ‘re-exported’ products to the UK. At the business level, the deferment of the introduction of UK border controls on goods crossing from the EU largely until July 2022, also provides more time for ACP exporters to discuss with their EU trade partners the scope for routing adjustments for deliveries of re-exported products to the UK. This can take one of two forms a) Shifting over to direct exports to the UK rather than utilising triangular supply b) Shifting the port of onward shipment in the UK away from short sailing ‘RoRO’ Alternatively, it provides time for ACP exporters to seek out new EU trade partners who have invested in ‘Brexit-proofing’ their supply chains, so as to be able to commercially sustain their trading operations under all likely scenarios. This option to date has largely been taboo, in the discussion of the options open to ACP exporters using ACP-to-EU-to-UK triangular supply chains. ACP exporters shipping along ACP-to-EU-to-UK triangular supply chains, now have nine additional months to get to grips with the challenges they will face once the UK introduces standard border controls on goods crossing over from the EU. It would appear incumbent on ACP businesses to make good use of the breathing space the latest UK deferment of the implementation of full UK/EU border controls allows. |
Sources
(1) Statement made by Penny Mordaunt, Paymaster General, ‘Border Controls’14 September 2021, Statement UIN HCWS285
https://questions-statements.parliament.uk/written-statements/detail/2021-09-14/hcws285
(2) Cabinet Office and The Rt Hon Lord Frost CMG, ‘Government sets out pragmatic new timetable for introducing border controls’, 14 September 2021
https://www.gov.uk/government/news/government-sets-out-pragmatic-new-timetable-for-introducing-border-controls
(3) The Guardian, ‘Britain to delay some post Brexit border controls due to Covid’, 14 September 2021
https://www.theguardian.com/politics/2021/sep/14/britain-delay-some-post-brexit-border-controls-brexit-covid
(4) rfi, ‘UK delays full post-Brexit border checks from EU’ 14 September 2021
https://www.rfi.fr/en/business-and-tech/20210914-uk-delays-full-post-brexit-border-checks-from-eu
(5) Financial Times, ‘UK postpones imposing checks on EU goods until 2022’, 14 September 2021
https://www.ft.com/content/e32dda1b-7dbe-454e-ab32-3d80604df431
(6) Bloomberg.com, ‘UK Delays Brexit Border Checks on EU Food as Shortages Hit’, 14 September 2021
https://www.bloomberg.com/news/articles/2021-09-14/u-k-delays-brexit-border-checks-on-eu-goods-as-shortages-hit
(7) wikipedia, ‘ Presidency of the Council of the European Union’
https://en.wikipedia.org/wiki/Presidency_of_the_Council_of_the_European_Union