Summary
The adverse effects of shortcoming in the UK’s approach to establishing border controls on goods entering from the territory of the EU on the cut flower trade has been highlighted. Information essential to the future conduct of this trade is still not available. Shortcomings in the design of administrative requirements and a general lack of business preparedness have also been highlighted. What is more, multiple freight issues arising from the creation of the new UK/EU border are also likely to severely impact the cut flower sector, with these posing particular problems for the triangular supply chains ACP exporters’ work through. Solutions to facilitate the continued smooth functioning of cut flower triangular supply chains are urgently needed. The outlines of such solutions are now emerging. They need to be actively pushed for by the concerned ACP governments and exporters, in association with Dutch cut flower industry in a context where there is limited ‘band-width’ in the UK and EC for dealing with triangular supply chain issues.
The Fresh Produce Consortium CEO Nigel Jenney has called on the UK government to change its plans for future UK/EU border controls, so as to avoid shortages and increased prices in the UK plant and cut flower sector. While the UK government is calling on businesses to prepare for new border controls CEO Jenney posed the question: how can an industry prepare when it lacks essential information? (1)
Against this background, amongst other issues faced CEO Jenney highlighted the need for the UK government to clarify:
- Which plants for planting are ‘controlled’ or ‘high risk’ and therefore need pre-notification and checks.
- Where consignments requiring checks will have their goods cleared.
- Whether the proposed inland inspection facilities ‘will be resourced properly to avoid delays and increased costs’ (1).
CEO Jenney further highlighted how ‘UK importers of cut flowers and plants from the Netherlands need a realistic timeframe which is less than 24 hours in which to pre-notify imports of cut flowers coming in via roro ports.’ He argued it was ‘vital that traders have a simple and efficient process to follow to pre-notify consignments and clear customs, as well as covering plant health requirements.’ He further highlighted the need for UK government trade management systems to be ‘integrated so traders don’t have to make multiple entries across different systems’ (1).
Particular problems are seen as likely for ‘businesses which have only ever traded with the EU’ and hence have no experience of customs procedures or of working with customs intermediaries.
FPC CEO Jenney sought to place the challenges facing the cut flower sector in the context of the ‘massive hit’ the sector has taken from the necessary policy response to the Covid-19 pandemic, the effects of which are still being felt to varying degrees.
The major fear is the entry into force of new UK/EU border controls will coincide with a new winter wave of Covid-19 infections, compounding what is already likely to be a difficult situation (1).
Overall CEO Jenney expressed the view the ‘Border Operating Model for trading between the EU and GB as it stands will be unworkable for many businesses unless the UK Government listens to us and makes changes now’ (1).
However this is just the tip of the iceberg of Brexit related problems for ACP cut flower exporters. The Dutch auction houses play a major role in supplying the UK market with cut flowers. ACP cut flower exporters have one of the highest levels of dependence on triangular supply chains in serving the UK market. In this context the issues the UK’s withdrawal from the EU customs union and single market gives rise to in the haulage industry are of particular concern.
Main Southern and Eastern African Cut Flower Exporters to the EU28, Netherlands, Belgium (tonnes and % share) – 2019
| 0603 | Kenya | Ethiopia | Uganda | Zambia | Rwanda | Zimbabwe | Tanzania | East Africa |
| Total extra EU28 | 158,328 | 58,105 | 9,102 | 5,843 | 1,167 | 5,029 | 3,731 | 241,305 |
| Netherlands | 134,457 | 38,651 | 9,055 | 5,021 | 1,163 | 4,985 | 3,365 | 196,697 |
| % Neth. of EU | 84.9% | 66.5% | 99.5% | 85.9% | 99.7% | 99.1% | 90.2% | 81.5% |
| Belgium | 5,512 | 15,715 | 0 | 0 | 0 | 0 | 71 | 21,298 |
| % Belgium of EU | 3.5% | 27.0% | – | – | – | – | 1.9% | 8.8% |
Source: EC, Market Access Data Base, https://madb.europa.eu/madb/statistical_form.htm
Perhaps the most fundamental in this regard is the ‘Groupage’ issue, since this could potentially require a major rethink of the logistical models currently in use for the onward trade in cut flowers to the UK. The issue of ‘Groupage’ arises where products of different origins and/or different importers are grouped together in a single consignment.
The July 2020 UK government proposals for how border control will operate highlighted how from 1st January 2020, the clearance of the entire ‘Groupage’ load will be dependent on each individual component of the load being ‘cleared’ in line with ‘the relevant requirements for those goods to be imported’ (2). This means ‘traders, intermediaries, and hauliers will need to ensure that the relevant declarations, permissions, and where necessary, paperwork, is in place to ensure Groupage loads are not subject to delays or compliance action due to customs or other requirements not being met’ (2). This basically creates a situation where the level of inspection and associated delay faced by ‘Groupage’ loads will be determined by the product subject to the most rigorous controls.
In the cut flowers sector this needs to be seen in a context where phytosanitary import inspection requirements can vary considerably by country or origin. This is not currently an issue since these phytosanitary import controls take place at the initial point of import into the EU and are generally from a single country of origin. However, a Groupage load of cut flowers sold at auction in the Netherlands to UK customers could consist of cut flowers from a multitude of countries of origin, each with different frequency of inspection requirements.
This will be further complicated by ‘proof of origin’ requirements for onward shipments in a context where a ‘Groupage’ load could include cut flowers originating in the EU, ACP countries (which enjoy duty free access to both the EU and UK markets), GSP beneficiaries (like India), or MFN suppliers (such as Brazil), or may originate from countries exporting under other UK only trade agreements (e.g. from Ecuador or Colombia). All of this documentation will need to be checked given different tariffs could be applied to the same product from different countries of origin
UK Cut Flower Tariffs
| ACP EPAs/LDCs | MFN (e.g. EU) | GSP (India) | GSP+ |
| 0 | 8% | 5% | 0% |
Source: UK Global Tariff: Search Engine, https://www.check-future-uk-trade-tariffs.service.gov.uk/tariff?q=070410&n=25&p=1
The extent of the delays which the ‘Groupage’ issue could give rise to will be critically determined by the effectiveness of the IT solutions which the UK is planning to put in place to facilitate the continued smooth movement of goods across the newly established EU/UK customs border. Current preparations are a source of major concern to the UK freight haulage industry.
The full implementation of the UK governments proposed Goods Vehicle Movement Service (GVMS) system which is intended to allow advanced submission of all relevant documentation in electronic form, is now to be delayed until July 2021, with a Smart Freight Service (SF) app being developed for use as an interim measure from 1st January 2021. However, neither system is yet ‘ready and available for testing’ (3).
Indeed, it is feared ‘many of the details concerning the new systems still appear to be at the conceptual stage’. Against this background the UK freight industry is concerned over ‘whether there will be sufficient time to make the necessary preparations to facilitate and implement the revised arrangements’ (4).
It also needs to be seen in the context of low levels of business readiness to deal with the new border controls and the absence of sufficient customs intermediaries to assist with what will be entirely new customs documentation requirements for many exporters and traders.
Overall it is felt current UK government proposals ‘leave too many questions unanswered’ in a context where there is now ‘very little time available to identify and implement solutions’ to the problems which are becoming increasingly apparent (3).
In August 2020 the UK government in publishing its traffic flow management plans (3) for cross channel “RoRo” services, effectively acknowledged it expects a no-deal departure from the EU to lead to up to 10 months of traffic disruptions and port delays, with varying degrees of severity depending on the effectiveness of business preparations and government mitigation measures (5).
Against this background the Freight Transport Association (now called Logistics UK) has expressed its disappointment that ‘the government is expecting significant friction at the border with the EU, after the logistics industry had been given previous reassurances that friction would be minimized’ (5).
The British International Freight Association (BIFA) Director General, Robert Keen, has called on the UK government to put ‘some meat on the bones of the various announcements’ on border control measures made to date. This needs to be seen against the background of concerns over a recent pattern ‘of announcements with attention-grabbing headlines, but minimal detail that doesn’t appear to have been thought through’ (4).
With border clearance and smooth onward shipment depending on what happens on both sides of the channel to both imports and exports, the poor state of preparations on the UK side is a matter serious concern to all those involved in cross channel trading activities.
| Comment and Analysis The issues identified by FPC CEO Jenney are just the tip of the iceberg of challenges faced by ACP cut flower producers, exporting to the UK via initial ports of landing in EU member states. Ways and means need to be found of side stepping the border clearance challenge issues which the UK’s departure from the EU customs union and single market will inevitably give rise.These challenges can in part be addressed at the policy level and through the incorporation of ACP concerns into border preparations and border clearance systems currently being designed and shortly to be implemented.For example, where ACP cut flower exports:a) enjoy duty free-quota free access to both the EU and UK market;b) proof of origin documentation has been pre-submitted; c) goods have recently undergone phytosanitary import controls on entry to d) goods have undergone security and safety declaration checks upon there would appear to be no objective need for further border controls on cut flowers entering the UK market, since the phytosanitary and safety and security risk level would be low, given checks had so recently been conducted on these products when entering the EU. The adoption of such a policy approach would not involve any loss of UK sovereignty since the setting of phytosanitary and security and safety inspection requirements at zero would be based on an objective risk assessment, linked to the immediate prior conduct of EU controls. If this was agreed at the policy level, then the UK’s proposed Smart Freight Service app traffic light system could be applied, in extended form, to the automatic electronic clearance of ACP cargoes meeting the criteria set out above. Under this border clearance traffic light system ‘Green Light’ goods would be permitted expedited embarkation, disembarkation and border clearance arrangements. The introduction of such a system would allow the continued smooth flow of ACP cut flowers along existing triangular supply chains. Against this background, the most affected ACP governments need to make representations to the UK and EU authorities for the establishment of such a ‘Green Light’ system of border clearance readiness approvals, so as to avoid further undermining triangular cut flower supply chains which are already facing major challenges as a result of Covid-19 linked air passenger flight based freight service disruptions. However, this would require a range of complementary initiatives at private sector level, particularly in regard to the ‘Groupage’ issue. Since decisions related to the ‘Groupage’ of cargoes for onward shipment to the UK will largely lie with the agent or trade partner in the EU27 member state, ACP cut flower exporters trading into the UK via the Dutch flower auctions will need to urgently ascertain: · Whether their existing trade partners are considering ‘Groupage’ issues in their · What concrete steps trade partners in the Netherlands are taking to deal with the · What the cost implications will be of revising the current methods of onward |
Sources
(1) theflorist.co.uk, ‘Half-baked model puts flower sector at risk’, 28 July 2020
https://www.theflorist.co.uk/the-florist-magazine-news/2900-half-baked-model-risks-perfect-storm-for-flower-sector-says-industry-body
(2) uk.gov, ‘The Border with the European Union: Importing and Exporting Goods’, 13 July 2020
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/899991/200713_BPDG_-_Border_Operating_Model_FINAL_1320_edit.pdf
(3) theloadstar.com, ‘Post-Brexit planning bring in threat of personnel fines for ‘not ready’ hauliers’, 4 August 2020
https://theloadstar.com/post-brexit-planning-brings-in-threat-of-personal-fines-for-not-ready-hauliers/
(4) The Handy Shipping Guide, ‘Doubt over Brexit details concerns freight forwarders and logistics operators’, 11 August 2020,
https://www.fpcfreshtalkdaily.co.uk/single-post/2020/08/11/Doubt-over-Brexit-details-concerns-freight-forwarders-and-logistics-operators
(5) Independent, ‘10 months of ports chaos detailed in new government document’, 5 August 2020 Source
https://www.fpcfreshtalkdaily.co.uk/single-post/2020/08/05/10-months-of-ports-chaos-detailed-in-new-government-document