Tag: Border Control

Border Check Postponement

It has been confirmed that there has been a (further) postponement to the introduction of the remaining border controls for imports into the UK from the EU.  The Minister responsible, Jacob Rees-Mogg, issued a statement to the House of Commons on 28th April which set out the reasoning behind these delays and the UK Government’s plans for the future operation of its border controls.

Mr Rees-Mogg claimed that introducing additional controls from July would have replicated the controls that the EU applies to its global trade which would have meant ‘complex and costly’ checks which would have to be altered in the future when the UK implements its transformation programme (including greater digitisation) for the operation of its border controls with both the EU and non-EU countries.

This means that no further controls on EU goods (notably agri-food products) will be introduced in 2022.  Instead, the UK Government plans to publish a Target Operating Model in  the autumn that will set out its new regime of border import controls.  Thereafter, the new import controls regime would be introduced by the end of 2023.  In effect, the following controls will now not be introduced:

  • A requirement for Sanitary and Phytosanitary (SPS) checks on EU imports to be done at a Border Control Post (BCP) (currently done at destination)
  • A requirement for safety and security declarations on EU imports
  • A requirement for further health certification and SPS checks for EU imports
  • Prohibitions and restrictions on the import of chilled meats from the EU

As alluded to in previous articles, it is no surprise that there is a further delay to the implementation of border controls on imports from the EU as the required infrastructure, particularly IT systems, were simply not ready.  In light of this, business organisations have broadly welcomed the announcement.  However, some firms had already spent quite heavily on preparing for the introduction of more controls from July, and potentially, this money will effectively be wasted.  This latest announcement is also different to previous delays in that a more fundamental review of import controls on all UK trade (EU and non-EU) is taking place.  Certainly, there are areas where greater efficiency is possible, particularly around the use of e-certification processes, which is widely used by New Zealand.

Within the farming sector, several organisations have rightly highlighted the lack of a level playing-field – in that UK exports to the EU are subject to the full range of regulatory checks, whilst UK imports from the EU continue to need far fewer checks.  This has put UK Farming Plc at a significant disadvantage.  In this context, it would surely have been better for the UK Government to have reached a veterinary agreement with the EU, to drastically lower the levels of checks on both sides?  Such an agreement would not have stopped the UK from introducing a separate border control regime in the future, but would have supported UK exporters. 

UK Border Operating Model

On 13th July, UK published its plans for how the customs border between GB and the EU will function from January 2021 onwards when the Transition Period ends.  Although there is a lot of detail in the 206-page document, many agri-food businesses are still scratching their heads as to how they can operationalise its contents in the months ahead, especially as more information is still required in several areas including sanitary and phytosanitary (SPS) regulatory checks.  The document did not cover how the Irish Protocol would be implemented and further detail is expected on this in the near future.

Key Aspects of the UK Border Operating Model

A full copy of the UK Border Operating Model (BOM) is accessible via: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/899991/200713_BPDG_-_Border_Operating_Model_FINAL_1320_edit.pdf

The key points from an agri-food perspective are:

  • Three-stage approach to introducing UK border controls: our June article set out how border controls on imports to the UK would be phased-in.  However, UK exports to the EU (and goods going from GB to NI) will be subject to full controls from 1st January 2021. To recap, the phasing of import controls will be as follows;
    • January 2021: businesses will need to keep records of imported goods and consider how to account for VAT on imported goods.  They would then have six months to complete customs declarations on these consignments with applicable tariffs only becoming payable once the customs declarations have been made.  Safety and security declarations would not have to be made initially.  Regulatory checks would be required on products of animal origin and other high risk products (e.g. plants).
    • April 2021: pre-notification and health documentation required for all products of animal origin and all regulated plants and plant products.
    • July 2021: declarations required at the point of importation for all goods and tariffs must be paid.  Full safety and security declarations will be required.  Increased checks for animals, plants and their products which will take place at GB Border Control Posts (BCPs).
  • The ‘Core’ Model: sets out the requirements that will apply to all goods moving between GB and the EU.
    • Customs declarations: will be required on EU imports and exports. Some ports will require pre-lodgement of customs declarations prior to the movement of goods, which will particularly affect ‘roll on-roll off’ (RoRo) movements.
    • Customs duties (imports): to pay the UK Global Tariff (where applicable) importers will need to determine the origin, classification and customs value of their goods.  There are options to defer any payment that is due as noted above.
    • VAT: will be applied on imports from the EU.  VAT registered businesses can avail of postponed VAT accounting.  Non-VAT registered importers have the same options available to report and pay import VAT as they do for customs duties.
    • Safety and security declarations: will become applicable to all EU imports and exports.  They will apply to exports from 1st January and to imports from 1st July once the UK BOM is fully operational.  For goods leaving the UK for the EU, these declarations will need to be submitted 2 hours in advance of departure for short-sea journeys (e.g. Dover to Calais), 1 hour via Eurotunnel, 30 minutes via air and 24 hours for containerised shipments.
  • Additional Requirements: relates to controls applied to specific goods movements.  These frequently relate to foodstuffs and agricultural products and includes the following items:
    • International Conventions: such as Endangered Species of Wild Fauna and Flora (CITES) and temporary import of non-perishables without the application of customs charges (ATA Carnets).  CITES will apply to some agricultural products.  It will require additional authorisations to import and export via designated points of entry/exit.  These will be overseen by the Animal and Plant Health Agency (APHA).  ATA Carnets are useful for temporarily importing/exporting samples, equipment for tradeshows etc.  They simplify the customs processes.  However, it does not exempt traders where additional export permits and licenses (i.e. non-customs related) are applicable.
    • Sanitary and Phytosanitary (SPS) regulations: will apply to animal products (products of animal origin (POAO) and animal by-products); fish, shellfish and their products; high-risk food and feed not of animal origin (HRFNAO); live animals and germinal products; equines; plants and plant products.  These will obviously have a major impact on agri-food traders.  The BOM has set out specific requirements for each category and agri-food companies should review the sections relevant to their businesses.  For imports into the UK, requirements will include:
      • Import pre-notifications: importers give advanced notice of consignments arrival into GB to the relevant regulatory authority.  This will be done via the Import of Products, Animals, Food and Feed System (IPAFFS) and importers should register to join IPAFFS via: https://www.gov.uk/guidance/import-of-products-animals-food-and-feed-system
      • Health certification: must accompany the consignment during its passage and each species/type of product must have a different health certificate.  This has scope to create significant challenges for consignments containing multiple products (e.g. for retail).
      • Regulatory checks: documentary and identity checks will be applicable to goods arriving from the EU.  Physical checks to ensure imported products are complying with GB SPS and labelling requirements will be carried out on a proportion of consignments (which will vary by product).  A proportion of physically checked products will also be sampled (e.g. for laboratory testing).
      • Entry via Border Control Post (BCP):  a BCP is an inspection post designated and approved in line with that country’s relevant legislation for carrying out checks on animals, plants and their products arriving from the EU.  Goods subject to SPS checks will need to enter GB via a BCP.  The capabilities of each BCP to receive and check goods vary.  Accordingly, importers need to ensure that imported consignments enter via the appropriate BCP when this step becomes mandatory (from July 2021).
    • Controlled goods: include ammonium nitrate-based fertilisers, fish,  plants and plant-based products which present biosecurity risks and need to enter via a BCP.  From January 2021, traders must submit a standard customs declaration (or a simplified customs declaration if they are authorised to do so).
  • Devolved competences: the BOM notes that areas of food safety, the protection of human, animal and plant health, and the environment, are devolved to the governments of Wales and Scotland which may lead to differences in precise requirements and enforcement bodies. Although the UK Government claims to be working with the devolved administrations on these issues, it could give rise to friction within the UK internal market, particularly for agri-food, an issue explored further in our accompanying article. 

Business Preparations

The Government listed several actions that businesses need to take to prepare for the changes ahead. It emphasised that the UK’s negotiations with the EU will have ‘no impact’ on the need to take these actions. Key points include:

  • Apply for a GB EORI number: VAT registered businesses with EU trade have been previously enrolled with an EORI number. Businesses should check for this before applying.
  • Apply for an EU EORI number: businesses exporting to the EU will need to apply for this number irrespective of whether they use a customs intermediary.
  • Get a customs intermediary: the UK Government rather blithely stated that “customs declarations are complicated” and that businesses should procure the services of an intermediary (e.g. Freight Forwarder).  The challenge is that the demand for these services is set to heavily outweigh their supply. The Government estimates that 50,000 extra private sector customs agents will be required.  Whilst additional personnel can be trained up, this takes time and new personnel are more prone to making errors.  This, in turn, can add further strain and costs to businesses in addressing such errors.
  • Apply for a Duty Deferment Account (DDA): this will need to be authorised by the HMRC but would enable businesses to defer payment of duties as opposed to making payments for each consignment.
  • VAT on imported goods: businesses need to be prepared to pay or account for VAT on imports from the EU.  For VAT registered traders this can be done via postponed VAT accounting from January 2021.  Non-VAT registered businesses, or businesses not using postponed VAT accounting will need to report and pay import VAT via customs processes.
  • Commercial Arrangements: businesses are advised to work with their supply chains to ascertain how best to navigate the new requirements.  International traders are also advised to check the contractual obligations for international commercial transactions which are outlined in the Incoterms rules.  This because some of the changes under the BOM may alter the default legal responsibilities and requirements that such traders are expected to undertake with respect to EU trade.

What is clear from the UK BOM is that significant changes are afoot, even if there is a trade deal with the EU.  The obligation is on businesses to ensure that they have undertaken the necessary preparations ahead of January.  The Government  estimates that 215 million additional customs declarations will need to be made to UK authorities for imported and exported goods (costing £7 billion), with additional documentation needed for most agri-food products.  Many of the IT systems intended to manage these procedures are still under development, let alone being tested.  No wonder there is grave concern that there will not be enough time to make the necessary preparations. 

There is also evidence that some businesses have begun to stockpile so that adequate supplies are available on the GB side or the EU side of the border so that they could cope in a worst-case scenario.  Similar trends were also witnessed last year as the prospect of a No Deal Brexit emerged.  However, for perishable agri-food products, stockpiling is not very viable.