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Brexit Outcomes – November Update

Brexit Outcomes – November Update

Brexit Outcomes – November Update

By David Hooper, November 19th, 2019, Category: General News

The outcome of Brexit now depends on political developments and the outcome of the General Election on the 12 December. This article aims to summarise some of the possibilities following the outcome of the General Election and identify how this will affect businesses involved in international trade with the EU.

Withdrawal Act is Approved

The Government put forward the Withdrawal Act and Parliament approves it before the end of January – this would result in the UK leaving the EU before the end of January 2020. However, under this scenario it’s likely that there would be a 12 month transitional phase. Therefore there would be no significant change to the way businesses export and import to and from the EU until the end of this transitional phase.

Withdrawal Act Removed or Rejected

The Withdrawal Act could be removed by Government or rejected again. This may lead to a further extension of Article 50. However, the EU would need to approve this. Under this scenario nothing would change but would lead to more uncertainty.

Leave with no-deal in Jan 2020

The UK could leave the EU without a deal before the end of Jan 2020. This scenario does not go away and businesses would again need to prepare in the same way as before. This would result in overnight changes to the way shipments are exported and imported to the EU at the end of January.

Revoke Article 50

The new Government could revoke article 50 and cancel Brexit. This would obviously result in the UK staying in the EU and procedures would remain the same.

Extend Article 50 or Another Referendum

A new Government could hold another referendum and ask for article 50 to be extended. Again this would be at the discretion of all the EU member states. Procedures would remain unchanged until this outcome was resolved.

In the end, all options are still very much on the table, if option 1 does go ahead and trade talks breakdown a No-Deal Brexit could still happen at the end of that period. If a Free Trade Agreement under option 1 is agreed then goods non-originating in the UK and EU would still be subject to tariff measures.

Our Advice to You

Therefore we recommend that businesses use this time to ensure they are prepared for a hard Brexit. We have already worked with a large number of our clients to ensure that they are prepared for this scenario. Some clients have also used this opportunity to start exploring new markets further afield. If you need advice or are planning on entering new markets, contact us and we can advise you on your options for sea freight and air freight to these new countries. Don’t forget we operate as a customs broker and can work with you to ensure all your paperwork is compliant.

Changes to the New International Incoterms Rules

Changes to the New International Incoterms Rules

Changes to the New International Incoterms Rules

By David Hooper, September 22, 2019, Category: General News

As most people will be aware following our recent blogs and Newsletters the Incoterms® rules have now been updated for 2020. 

On the release of Incoterms® 2020, ICC Secretary General John W.H. Denton AO said:

“Incoterms® 2020 rules make business work for everyone by facilitating trillions of dollars in global trade annually. Because they help importers and exporters around the world to understand their responsibilities and avoid costly misunderstandings, the rules form the language of international sales transactions, and help build confidence in our valuable global trading system.”

What are the main differences between the 2010 and 2020 rules?

The ICC have stated that there is a clearer demarcation and connection between the sale contract and ancillary contracts, a re-ordering within the Incoterms® rules giving delivery and risk more prominence, plus other changes which though cosmetic in appearance, are in reality substantial attempts on the part of the ICC to assist the international trading community towards smoother export/import transactions.

One of the major changes has been the change from DAT (Delivered at Terminal) to DPU (Delivered at Place Unloaded). For Incoterms 2010 there was little difference between DAT and DAP, other than for DAT the seller delivered the goods once unloaded from the arriving means of transport into a ‘terminal’ whereas in DAP, the seller delivered the goods when the goods were placed at the disposal of the buyer on the arriving means of transport for unloading. The terms have been changed to DPU to reflect the reality that the place of destination could be any place and not a ‘terminal’. If not a terminal the seller must ensure it is a place where they can unload the goods. As the seller is responsible for the unloading, the order of the terms has been changed so that DPU comes after DAP.

In terms of the actual abbreviations themselves the rest are the same as 2010, with EXW, FCA , CPT, CIP, DAP, DPU and DDP for any mode of transport and FAS, FOB, CFR, CIF for sea and inland waterway only. As before each of the Incoterms® needs to be carefully checked and agreed in the contract with the seller using the correct terminology, the port, place or point of delivery needs to be clearly stated to ensure the transfers of risks are visibly stated.

Our next Blog will again look at Incoterms but from the perspective of Brexit, as when we leave the EU, customs procedures will become common and the Incoterms® will become extremely important in the future.

To keep up to date with other freight-related news and articles please visit our website and follow us on LinkedIn to stay informed.

If you have any upcoming projects that we can support you on, please contact us directly on +44(0) 2476 343 037 and we’d be happy to help manage your freight journey.

5 things you need to know about customs after Brexit

5 things you need to know about customs after Brexit

5 things you need to know about customs after Brexit

By David Hooper, September 5, 2019, Category: General News

As the political situation stands, the UK is set to leave the European Union on the 31st of October 2019, regardless of whether the government secures a deal.

  “It is therefore important that you have some understanding of what to expect after this time to enable you to make the necessary preparations.”

1. An end to the customs union

The customs union that is currently in place makes sure that every member of the EU equally charges import duties to those outside the EU. This means that members of the EU are free to trade without being checked at borders. However, Brexit will see an end to this union. This means that you can expect customs checks at borders for both air and sea freight.

1. An end to the customs union

The customs union that is currently in place makes sure that every member of the EU equally charges import duties to those outside the EU. This means that members of the EU are free to trade without being checked at borders. However, Brexit will see an end to this union. This means that you can expect customs checks at borders for both air and sea freight.

2. Be aware of the origin of your goods

Ensure you know the country of origin for your goods being exported – for the goods to be classed as being of UK Origin they must have been wholly produced in the UK or are items that have been sufficiently transformed during a manufacturing process. The Tariff Heading of the product will determine which rule applies.

3. A change of business in Ireland

One of the many areas of contention regarding the UK’s exit from the EU is Ireland. In the event of a no-deal Brexit, or an EU exit with ‘unfavourable’ terms, exports could be subject to high tariffs and border checks could be introduced, making trading extremely difficult. Since the Irish ‘backstop’ is yet to be agreed upon, exactly what trading will look like post-Brexit is unlikely to be made clear until this time comes.

4. You may need an import licence

On certain goods after Brexit, you may require an import licence to be able to import your goods into the UK. You will need to pay for customs clearance and declare your imports. A commercial invoice from your supplier, which states exactly what has been sold and the cost of the item, is also likely to be required.

5. A new trade authority

The current system which manages trade complaints with the EU is managed by the European Commission. If the UK leaves the EU without a deal, it is believed that a UK Trade Remedies Authority (TRA) will replace this infrastructure. This body will similarly investigate trading practices and increased imports which are deemed as unfair and that may have a negative effect on UK trade.

At Independent Freight, we will endeavour to continue to assist with your freight shipping, regardless of whether we leave the EU with or without a deal. We are the best freight forwarders that can help you to continue to successfully operate your business, even in times of significant change.

A Canada Style FTA post Brexit – what are the positive and negatives from this arrangement?

A Canada Style FTA post Brexit – what are the positive and negatives from this arrangement?

A Canada Style FTA post Brexit – what are the positive and negatives from this arrangement?

By David Hooper, August 08, 2019, Category: General News

In 2016 Boris Johnson, now the UK Prime Minister stated that:

  “I think we can strike a deal [with the EU] as the Canadians have done based on trade and getting rid of tariffs. It’s a very, very bright future I see.”

He was at the time referring to the fact that the UK could agree a deal with the EU based on the Free Trade Agreement the EU had agreed with the UK.

Some argue a deal like this could still be reached with the EU either before we leave on the 31st October or afterwards. However, even if a deal like this is agreed which most would agree is better than ‘No Deal’ this is still not the frictionless trade which many Politicians carelessly suggest.

The practicalities and complexities may actually be the same as no deal for other trying to prove that goods qualify under preferential rules of origin it could be even more bureaucratic.

POSITIVES:

Unlike ‘No Deal’ Tariffs would be eliminated on most products wholly produced or manufactured in the UK and EU – however, see rules of origin under negatives.

Public Procurement – businesses in the both UK and EU may still be able to bid for public contracts

NEGATIVES:

Businesses would need to do a Customs Declaration at import/ export – Incotmers would become even more important in understanding where risk and responsibility starts and finishes.

Businesses would need to meet complex rules of origin to ensure their goods 

Duty would still be payable on goods consigned from third countries imported into the UK or EU and then exported out to the UK and EU – due to the UK leaving the Customs Union. E.g. -A shipment is imported from China to the UK goods are repackaged and distributed to EU customers under this scenario duty would have to be paid twice once at import into the UK and again in the EU.

UK businesses will need to pay Import VAT albeit the Government originally stated under a ‘No Deal’ this could be deferred until the VAT return is made – however, for EU customers they may have to pay VAT before they can receive their goods. If they don’t have a deferment account this may lead to cash flow issues.

Any deal may only grant limited access to service contracts by no means comparable to access under the Single Market.

Therefore our advice all along is prepare for ‘No Deal’ now. Independent Freight Solutions Ltd is ready to support all of our valued existing and new customers in ensuring shipments will managed as smoothly as possible in the event of a ‘No Deal’ but preparing now is important to ensure you’re your business is ready. Independent Freight is a HMRC approved Authorised Economic Operator for AEO (C) Customs and (S) Security.  Out sister Company Hooper and Co can provide additional support by way of training/audits and consultancy on a whole range of international trade and customs related issues. If you would like to find out more about our Freight, Customs or Training Services – contact us

 

Reports of a Post Brexit Free Trade Agreement Between the UK and USA

Reports of a Post Brexit Free Trade Agreement Between the UK and USA

Reports of a Post Brexit Free Trade Agreement Between the UK and USA

By David Hooper, July 16, 2019, Category: General News

There has been a lot of talk in the media about a US / UK Free trade agreement post Brexit. Recent reports suggest that if Boris Johnson becomes Prime Minister this will be the first thing he will look to secure. However, how easy will this be? And how long will it take?  Some argue that the economic benefits to the UK will actually be quite small and be more beneficial to the US than the UK. It has also been commented that the US will also have the upper hand in that any agreement has to be in the interests of US firms or else what’s the point as there is no desperate requirement for the USA in the grand scheme of things. 

The Economist in 2018 also stated that one of the reasons for large scale investment by the US in the UK in the past was to access the EU Single Market a point made the US Chamber of Commerce. Therefore, in reality would the UK actually still be of interest to the USA?

What Progress has been made so far?

So what progress has there been so far behind the scenes, well the groundwork for a future deal began in 2017 with the establishment of US/UK Trade and Investment Working Group. In November 2018 President Trump notified congress that once the UK leaves the EU he intended to negotiate a trade agreement with the UK. 

The US then set out its specific negotiating objectives in Feb 2019. These objectives looked at addressing tariffs with non tariffs. For some UK companies opening up the US market could be very beneficial especially if trade tariffs were reduced to zero and other barriers to entry are lowered, however, the same applies the other way, whereby US firms unable to target the UK due to existing EU/UK tariffs and non tariff barriers could start importing into the UK. 

Concerns from the UK side

Some of the concerns raised in the UK concern the fact that the UK would need to relax certain rules around food hygiene as well as healthcare contracts. Although US firms already compete to deliver NHS contracts which go out for tender the issue is that the US uses different mechanisms for pricing medicines. There is currently a huge gap between what the NHS can afford, and the price certain US firms demand. This may be an area that President Trump will want to address before any deal is signed. Something that could impact on healthcare in the long term in the UK, The US may also demand that tariffs are scrapped on all US cars.  

It should also be noted that Mr Trump may not actually be President after 2020 and that the World may have changed again – therefore any chance of a quick deal being agreed and in place with the USA may take years to complete in reality, if at all!

For more information on the benefits and issues of exporting and importing using free trade agreements including:

  • how and when to use them 
  • paperwork for shipping and 
  • the evidence needed to support them 
  • Implication now under EU rules and in the future post Brexit

Please do not hesitate to contact us if you would like to know more.

Half Day Workshops Available

In the near future Independent Freights sister Company, Hooper and Co will be running a series of half day practical workshops on Free Trade Agreements (FTA’s). If you are interested or have employees who you may like to send, please do not hesitate to contact us.