Summary
EC proposals for the customs cooperation arrangements in the immediate pre and post-Brexit period for goods in transit or storage, raise fundamental questions amount how the on-ward shipment of third country products between the EU27 and the UK will be handled post Brexit. This potentially raises serious customs administration issues for ACP exports to the UK which currently transit a EU27 member state or which serve EU27 markets through the UK. These issues will need to be addressed sooner rather than later.
On the 6th September 2017 the EC posted a position paper on ‘Customs related matters needed for an orderly withdrawal of the UK from the Union’. This document deals with customs matters which will need to be addressed during the immediate transition period. It covers the period immediately before and immediately after the UK’s formal departure from the EU, so there is clarity on how goods in transit or temporary storage are to be treated in mutual trade between the UK and EU27 (1).
The proposal deals specifically with ‘goods that enter, leave or transit the customs and tax territory of the Union, the United Kingdom or the EU27, where the movement starts before and ends on or after the withdrawal date, and the legal provisions applicable to them’ (1).
With regard to ‘non-Union goods loaded before the withdrawal date in a third country for introduction into the United Kingdom or the EU27 on or after the withdrawal date’, ‘under temporary storage’ or which are being held under ‘outward processing’ arrangements, it seeks to set out the administrative arrangements for the smooth continuation of the transactions based on ‘the relevant provisions of the Union Customs Code’ (1).
It proposes that ‘administrative cooperation procedures in regard to customs related matters launched before the withdrawal date should continue after the withdrawal date in accordance with the provisions of Union law applicable before the withdrawal date’, this includes the use of ‘the verification of proofs of origin issued or made out by third country authorities or exporters’, under preferential trade arrangements (1).
In her Florence speech on 22 September 2017 Prime Minister May accepted that any time limited arrangements for an implementation period (‘transitional period’ in EU parlance) would need to be implemented within ‘the existing structure of EU rules and regulations’. She went on to add ‘how long the period is should be determined simply by how long it will take to prepare and implement the new processes and new systems that will underpin that future partnership’ (2). Prime Minister May noted how to make this process ‘smooth and orderly’ there was a need to ‘agree the detailed arrangements for this implementation period as early as possible’ (2).
| Comment and Analysis
While this appears a highly specialist issue it can provides certain pointers on the types of customs cooperation issues which will need to be addressed if ACP triangular trade is not to be disrupted as a result of the Brexit process. The main point of note emerging from the EC proposal for these limited transitional arrangements is that for the continued smooth functioning of onward trade between the EU27 and the UK, this trade has to be undertaken within the framework of the applicable EU regulations. Following Prime Minister May’s Florence speech this has been accepted by the UK government. Indeed, the UK government appears to have gone further accepting any transitional trade arrangement during the ‘implementation period’ will take place within ‘the existing structure of EU rules and regulations’ (i.e. within the framework of the applicable EU regulations as proposed by the EC). This acceptance by the UK of this point in principle potentially provides the basis for the ACP to push for a similar accommodation of ACP interests during the transitional period both at the level of administrative arrangements for the conduct of the ACP export trade with the UK and the tariff treatment to be accorded ACP exports to the UK during this ‘implementation period’. This would appear to address concerns which had emerged over whether the UK authorities would continue to recognise the validity of the EUR1 movement certificate which accompanies ACP exports to the EU and other similar EU SPS and food safety approval requirements. However, this will need to be pinned down in a formal agreement between the ACP/EU and UK for the certainty required by ACP exporters to be secured. Such a formal agreement could then lay the basis for a longer term understanding around the treatment to be accorded ACP products exported to the UK via a EU27 member state and to an EU member state via the UK, so as to avoid any disruption of these triangular trade flows. This emerging consensus on transitional issues would appear to provide a more extensive period of time the refitting of existing ACP EPAs into bilateral trade agreements with the UK, in ways which take account of the need for EPA+ dimensions to accommodate the market consequences of possible changes in UK trade and agricultural policies post-Brexit. It remains to be seen how this continued application of ‘the existing structure of EU rules and regulations’ once the UK has formally departed from the EU on 30th March 2019 will go down with Brexit hard-liners in the Conservative Party. Against this background, building on Prime Minister May’s Florence speech a firm political commitment should be sought from both the UK and EU authorities to take all steps necessary to ensure disruption is minimised of ACP exports along triangular supply chains, during an extended transitional period during which ACP exporters are supported in adjusting to the changed trading realities brought about by Brexit. |
Source:
(1) EC, ‘Position paper transmitted to EU27 on Customs related matters needed for an orderly withdrawal of the UK from the Union’, TF50 (2017) 13 – Commission to EU 27, 6 September 2017
https://ec.europa.eu/commission/sites/beta-political/files/customs-related-matters_en.pdf
(2) Bloomberg.com, ‘Theresa Mays speech on Brexit delivered in Florence, Italy’, September 22 2017
https://www.bloomberg.com/news/articles/2017-09-22/u-k-prime-minister-theresa-may-s-speech-in-florence-text
| Key Words: Brexit, customs cooperation, EUR1 Area for Posting: Brexit |