Attention traders: Impacts of latest Brexit developments on global trade operations

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The EU’s publication of a draft Article 50 Withdrawal Agreement on February 28 sparked new discussions, especially around customs union matters and the Ireland border issue. For now, the outcome remains open.

Official next steps for the draft withdrawal agreement include reviews and discussions in the European Council and the European Parliament's Brexit Steering Group. Then, it can be officially transmitted to the UK for negotiation.To become final, the agreement next requires conclusions by both the Council and the Parliament and overall, it must comply with the UK’s constitutional requirements.

As part of the February announcement, the EU asked for clarification on the UK’s position on the framework for the future relationship – ideally by the end of March, when additional guidelines are expected to be adopted. Meanwhile, previous publications from both the EU and the UK keep trading businesses on both sides on their toes:

  • “Brexit and the future of customs” by the House of Commons looks at the major HMRC system transition from the current CHIEF to the new CDS system. It highlights prevailing concerns about the required IT capabilities to successfully manage an expected fivefold increase of customs declarations after Brexit. This IT project was planned before the EU referendum even took place, and Brexit adds much undesired pressure.

So, what is the impact of these developments on the actual flow of goods from and to the UK? The latest UK trade in goods statistics, released by HMRC on March 9, show UK exports for January 2018 at £29.3 billion, a 3% increase compared with January 2017. On the UK import side, total trade in goods for January 2018 was at £43.7 billion – up 12% from the previous month, and an increase of 14% compared with January 2017.

Zooming in on UK trade in goods with EU countries in particular, both UK import and export numbers in January 2018 were up compared with both the previous month and the previous year. The UK food and drink industry saw record-breaking export numbers  in 2017. And the aerospace industry is looking forward to a rosy future. To name just two examples.

More and more goods are moving across UK borders, and smooth crossings are crucial to ensure competitive supply chains. Businesses engaged in global trade with or in the UK cannot afford customs barriers blocking their flow of goods in – and they cannot wait for final Brexit agreements. They need to take action now.

But what should they do to future-proof their supply chain? One of the key elements of every company’s global trade programme is IT support. And while Brexit calls for urgent action in a number of areas now, it also highlights the tremendous dynamism in the area of global trade overall. Companies need to be ready for changes in such an environment, be it new trade agreements, new product classification rules, new international sanctions, or a new government customs system.

In the digital age, integrated software solutions form the foundation for both efficient and compliant global trade operations as well as for the required flexibility to adapt to changes as the environment evolves. Forward-thinking companies should make sure their global trade IT and their customs management software are capable of handling changes under Brexit, whichever way it will go.

Geoff Taylor

Geoff Taylor is Managing Director of AEB in the UK and has been with the company since 2017. Together with his team, Geoff works closely with manufacturers and traders across industry sectors to understand the impact of market developments on global trade processes and what it takes to build efficient and flexible supply chains in the digital age to ensure future success.

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