Britain is due to withdraw from the EU at 23.00 on Friday the 29th of March. With a complete lack of certainty as to how this will happen, how will the logistics industry fare in the event of a no-deal Brexit?
What is a no-deal Brexit?
After invoking Article 50 of the Treaty on the European Union on the 29th of March 2017, the UK began the process of withdrawing from the EU. It heralded a two year negotiation period at the end of which EU treaties ceased to apply to the country. Any leaving agreement needs to be passed both through the UK government, along with 20 remaining EU countries with a combined population of 65%. If this does not occur, negotiations can be extended further if all 27 countries agree. If they do not agree, then the UK would leave the EU with no-deal. This is also known as a cliff-edge Brexit and hard Brexit.
Without a formal withdrawal agreement all EU treaties will cease to apply to the UK from the 30th of March 2019. The UK would immediately lose 70 international trade deals, and for each deal that had not been renegotiated then they would have to fall back on World Trade Organisation trade tariffs, ultimately increasing the price of imports and exports. It would also affect numerous other rules and regulations.
How would the logistics industry be affected?
1. All companies importing or exporting goods to the EU would now require an EORI number
Economic Operators Registration and Identifications are a system of unique numbers that are used to monitor and track shipments coming into and out of the European Union. They are simple to apply for; there is a 10 minute online process at www.gov.uk/eori, after which the EORI number usually arrives by email within 3 working days. However, if they do not appear on every commercial or proforma invoice goods will not be allowed through the EU customs.
2. A lack of custom facilitation deals will disrupt trade at borders, and tariffs on goods would increase
Import declarations will be required for all goods moving into and out of the EU. These can be submitted by a customs broker, freight forwarder, or logistics provider, or companies can do it themselves by acquiring the appropriate software and securing the necessary authorisations from HMRC.
Additionally, distance selling arrangements will no longer apply so associated import VAT and customs duties will be due when the goods arrive into the EU. Failure to do so will cause delays and disruption at the border. VAT rules vary for each specific EU state, so UK businesses should check HMRC tariff information and guidance or engage a suitable cross-border tax specialist.
3. Key business contracts might need to be updated
Contracts will need to be audited to ensure that they reflect the new trading conditions. For example, incoterms are a great way of making clear who is responsible for the deliveries, insurance and risk along the shipment journey, but many pan-EU contracts do not currently include them. This means that importers and exporters could be affected by timing issues or price increases after the UK leaves, and ultimately left open to trade disputes and litigation.
4. British lorry drivers would not be licenced to drive in the EU
Depending upon whether the government can negotiate new bilateral agreements or reinstate old ones, extra documentation will be required to drive in the EU and EEA. ECMT permits allow UK operators to drive in most of the EU, but there are limited numbers of permits available and applications have closed for 2019, so haulage drivers may even be required to hold an international driving permit (IDP). Further information can be found here: www.gov.uk/guidance/prepare-to-drive-in-the-eu-after-brexit-lorry-and-goods-vehicle-drivers
5. GDPR would still affect your customer data
Plus, do not forget that anybody holding the personal data of EU citizens will still be affected by the GDPR directives that came into effect last year.
Whilst this list contains a summary of some of the aspects you need to think about in the event of a no-deal Brexit, there are numerous other nuances. Further guidance from the UK governmental concerning a no-deal Brexit can be found here: https://www.gov.uk/government/collections/how-to-prepare-if-the-uk-leaves-the-eu-with-no-deal
At Metafour we are committed to ensuring that our customers are inconvenienced as little as possible no matter the type of Brexit that occurs on the 29th of March. For instance, with our flexible technology it is simple to update different pricing zones with individual VAT rates or tariffs, to easily customise your document templates, and to set proforma invoices to automatically appear when booking jobs in specific zones. If you would like further information, please contact us on 020 7912 2000 or email [email protected].