No-deal Brexit scenario shows the need for a flexible IT landscape
Sep 06, 2018 Comments (0)
On 24 August 2018, the UK government published a range of “technical notices” explaining how trade between the UK and EU countries might change in case the UK was to leave the EU (and its Single Market and Customs Union) without a deal on 29 March 2019.
In this scenario, the UK would become a third country and would have to fall back on WTO rules and tariffs. How can businesses prepare for the resulting mountain of red tape and extra costs? The answer lies in a flexible IT landscape – and the time to wait has passed now.
These recent government’s notices make it clear that anyone importing goods into the UK from the EU, or exporting goods to the EU from the UK, will have to comply with customs procedures where these were not previously necessary. That’s because they will be required to follow customs procedures in the same way that they currently do when exporting goods to a non-EU country.
In a nutshell, businesses importing and/or exporting from/to the EU will need to submit import and export declarations and, depending on the type of goods they move, may also need an import or export license. They will have to register for a UK Economic Operator Registration and Identification (EORI) number, meaning slower processing times and increased costs for euro transactions.
Importers will have to file customs declarations for goods from the EU, and exporters will have to submit an export declaration. The latter may need to be lodged in advance so that permission to export is granted before the goods leave the UK.
It’s high time for businesses now to shape up the relevant software to avoid border delays and incorrect duty payments. Companies working with (or now considering engaging) customs brokers, freight forwarders, or logistics providers to support them with these new requirements should keep in mind that a tremendous rise in service provider engagements is expected and a successful collaboration with partners also relies on a flexible global trade IT landscape and partner integration, which results in lower transactional costs and faster declaration processing times.
To complicate things even further, HM Treasury would establish a new UK trade tariff to replace the EU Common Customs Tariff (CCT) for imports to the UK. The tariff would contain rules for determining the amount of import duty applicable to those goods based on their description (the commodity code) and country of origin. It would also set out import procedures, such as how the value of a good is calculated, and which forms, codes, and procedures are to be used.
While this sounds like a bureaucratic nightmare, it is also an opportunity – and a good reason – for establishing a flexible IT landscape for global trade that can easily adopt new customs procedures. This not only saves time and money, but also builds the foundation from which to master any upcoming global trade changes – and not just Brexit.
Forward-looking businesses should be implementing solutions that drive forward their digitization agenda while mitigating risks from Brexit as much as from other global trade changes. Smart automation allows companies to accelerate the various customs processes and save valuable resources.
The right software enables internationally active companies to continue trading efficiently and in compliance with all the latest regulations – and it is an investment that won’t be wasted, whichever way Brexit will go. For businesses in the digital age, this is direly needed for survival in today’s fast-changing and competitive environments.
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.