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Issue 5 2016 - Freight Business Journal


form of self- assessment.


“The UK is going somewhere


no one’s ever been before. Clearly, we will end up with some form of free-trade agreement


to ensure


the movement of goods. But it’s all about the need for item-level information for security purposes. Most goods are stopped at the frontier by the UK Border Force and they could insist on having more detailed information which currently they are not legally able to insist on.” Goods moving to or from the EU


will require some form of customs entry aſter Brexit, even if the UK negotiates a so-called free trade deal, pointed out a Yorkshire freight forwarder. Adam Johnson, deputy managing director of Leeds-based Tudor International Freight said that the UK could have a status similar to Norway or Switzerland, namely a free trade area. However, the ‘free’ element refers only to the absence of tariffs; unlike the EU single market; goods crossing between the UK and the EU would still need to undergo a customs clearance process. However, neither Norway nor


Switzerland have the same volume of trade with the EU as the UK. Moreover, it is more dispersed over a number of land borders. While completing a SAD form


or similar is not complicated, especially if the process can be made electronic, the cumulative effect of every consignment needing a clearance would need to be considered and it would also introduce an element of uncertainty. Customs could in theory delay shipments to examine documentation or to carry out physical examinations. MacSwiney added that while


the result of the EU referendum had clearly taken HMRC and other authorities by surprise and that no contingency plans had been drawn up prior to the result, it need not affect either implementation of the UCC or plans for replacement of HMRC’s chief computer system. On the latter: “I don’t think it


changes anything. We need a new declaration system, and while it would be possible to use either World Customs Organisation or EU data standards, it would probably be easier for the trade to adopt the EU standards.”


MacSwiney


As for implementation of UCC, pointed


out that


adoption in each EU member state was always intended to be a progressive and flexible process. Moreover, many aspects of the new code,


including valuation,


were still unclear. “We could possibly adopt those parts of the UCC that we like and ignore the bits we don’t. We could, for example, have another look at comprehensive guarantees or movements under temporary storage – and the bill of discharge for inland processing under the UCC is considered bureaucratic.” He


concluded: “For the


moment, UCC is law in the UK and will remain until it is repealed or we decide to work with those parts of it that make sense. The issue revolves around UK Border Force requirements. With Brexit, the transitional arrangements put in place to comply with all the UCC are no longer valid so the question is decide what bits of it we like. We will end up with some form of free-trade agreement; all we need to sort out is how we deal with millions of items coming into the UK.”


///NEWS Costs and admin set to rise


Whatever new system results following Brexit, administration, time or cost increases for companies trading with EU- based organisations are certain, said David Johnson, managing director of Leeds-based forwarder Tudor International. He said that when Tudor


currently imported goods from the EU on a client’s behalf, for example, the only documentation it needed was a copy of the packing list or commercial invoice and the travel docment - a waybill, bill of lading or CMR note. He said: “No customs clearance


process or duties apply and you don’t have to pay any VAT before


the goods can be moved from the receiving port or airport.” The Freight Transport


Association (FTA) says the risk of disruption to UK supply chains should not be underestimated. The Government has two years to negotiate the new rules. FTA


is calling on the


Government to prioritise arrangements for international freight transport in its negotiations, minimising additional legislation and keeping costs as low as possible for British businesses. FTA chief executive David Wells


said: “Even though we are coming out of Europe politically, it remains our biggest export market and


the supplier of a high proportion of our imports. We cannot allow new bureaucratic burdens to hamper the efficient movement of exports heading for customers and imported goods destined for British consumers.” Mr Wells said: “The Government


has two years to ensure the conditions currently imposed on other non-EU member states such as Albania and Serbia are not imposed on UK freight flows. Norway and Switzerland have better arrangements but have accepted tough conditions including the free movement of people, so this will be a difficult negotiation.”


Will UK lose logistics role?


A significant number of multinational firms currently site European distribution centres in the UK, but that may not be the case in future, says Dominic McGough, managing partner at freight information and finance specialist EnVista. “It’s a best-kept secret,” he told


FBJ. “Smarter companies have worked out that, because there’s such a massive imbalance in truck traffic, rates from the UK to Europe are very competitive – in some cases no more than the cost of the diesel.”


With the move to Brexit and


the need for a customs clearance process between the UK and Europe, not


to mention sharply


fluctuating exchange rates, that business model could potentially change in future, he added. Dominic McGough, who is in


charge of EnVista’s EMEA and APAC regions, said that many companies had been in contact, asking what the likely outcome from Brexit would be. Many had found that they lacked information on what their current processes were for moving goods between


Is US set to Trump Brexit?


While all eyes have been on Brexit and the likely effect on the UK’s international trade, fundamental shifts in trade policy are likely on the other side of the Atlantic, points out Chris Rogers, research analyst at trade data company, Panjiva. US Presidential elections


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take place in November, and while the current Obama adminstration pursued policies to promote trade relations with the outside world, both new presidential candidates are much more protectionist in their tone and likely policies, he says. Presumptive Republican


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presidential nominee Donald Trump has in fact been stridently antipathetic to reducing trade barriers, says Rogers. “Trump is an arch-populist, and it’s easy


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for him to point the finger at organisations like NAFTA (the North American Free Trade Area).” And while the nuances of international trade relations are a lot more sophisticated than simply the erection or dismantling of trade barriers, that approach doesn’t


really


play well on the stump in Arkensas, he points out. Democrat candidate Hilary


Clinton too has been forced into an anti-trade stance by rival Bernie Sanders who, as a left winger, has voiced some anti-foreign trade rehetoric of his own. “Chinese imports equals lost US jobs” has a compelling simplicity, even if the complex real world is somewhat different. And while Clinton’s own


instincts might be much more towards trade liberalisation,


the UK and EU, let alone what they would be post-Brexit. Many do not have a good handle on what their supply chain costs currently are. McGough added: “It’s also


happened at a time when there’s a lot of change going through anyway, with AEO and the VGM rules. And I was slightly surprised at the level of activity – because of the publicity Brexit has had, there’s been a lot of interest in our supply chain redesign services. People are asking a lot of ‘what ifs’ – do we have a warehouse in Europe, as well as the UK – that sort of thing.”


there is a limit to what a US president can do in the face of opposition in the Senate and Congress. Of course, in the real world,


there is no evidence to suggest that hiking tariffs on Chinese mobile phones would create a single new US job, Rogers contends. “Would a company like Apple totally rebuild its supply chain, or would it simply put up prices to US consumers?” The difference between


Chinese and US


labour rates is so huge, that it’s highly unlikely that any tariff barrier could in itself lead to a major shift of manufacturing back to North America. Any such attempt would also


mean the US Administration spending


years locked in


negotiations with the World Trade Organisation. Meanwhile, the rest of the


world will move on, Rogers predicts. Other countries will continue to sign free trade deals with each other, with or without US participation.


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