Brexite: The EU and Britain on a confrontational course – make preparations for 01 January 2021

10. Sep 2020

The eighth round of negotiations in the tug-of-war over the future trade relationship between the EU and Britain has been concluded without success. British Prime Minister Boris Johnson increased pressure on negotiations on 7th September. If no agreement has been reached with the European Union by the EU summit on 15 October, “I do not see that there will be a trade agreement and we should both accept it and move on”. Even a failure of the negotiations and thus a relapse to trade relations according to the standards of the World Trade Organization (WTO) would be a “good result” for the kingdom, which in any case will “develop powerfully”, said Johnson. On the other hand, the EU is demanding the withdrawal of a controversial draft law by the end of the month. The British government had presented it on Wednesday in an attempt to undermine agreements in the EU exit treaty and the Northern Ireland protocol.

So the mood is tense and both sides are preparing themselves for the time after the end of the transition phase. And that is what you as a company should do! For it is already certain that there is no turning back and that the United Kingdom will finally be a “third country” from 1 January 2021. An extension of the transitional phase is no longer possible.

What do you have to be prepared for in any case?

Customs formalities are always required for the movement of goods. EU companies exporting to or importing from the UK must have an EU EORI number (Economic Operator Identification and Registration number). A British EORI number will then no longer be valid in the EU.

Even if a quota and duty-free trade agreement is agreed between the EU and the UK, the origin of goods is important. Since Great Britain is no longer a member of the EU, British materials lose their preferential originating status in relation to third country free trade partners of the EU-27. The share of UK inputs must therefore be “de-rated” from the preferential calculation for both imports into and exports from the EU. Supplier’s declarations and other proofs of origin must be adapted.

As regards trade in services, the freedom of establishment and the free movement of services within the meaning of the Union Treaties will cease to apply at the beginning of the year. In order to gain access to the EU internal market, service providers must prove that they comply with all the rules and have all the authorisations required to provide the service in the EU.

Certificates of conformity and certificates issued by UK inspection bodies are no longer valid within the EU. Furthermore, product labels may have to be adapted. On September 1, the British government published guidelines according to which goods may continue to carry CE markings until 2022, provided that the standards for goods in Great Britain remain the same.

In addition, the United Kingdom will apply import and export bans or restrictions on certain goods from 1 January 2021. These measures include chemical products, waste and dual-use goods.

If there is no agreement with the UK by the end of the year, there would still be a No Deal Brexit. Then goods delivered from the UK to the EU must be cleared through customs according to the EU’s Common Customs Tariff. Goods delivered from the EU to the UK would be subject to UK customs duties at the current rate.

What assistance is available from the EU and the UK?

In July, the European Commission published a communication to prepare for the end of the transitional period between the European Union and the United Kingdom (Readiness communication). Additionally, the so-called Readiness Notices for Companies ready. These preparatory communications are continuously updated and contain information on specific areas such as customs including preferential rules of origin, data protection legislation, finance, transport, chemicals, industrial products and much more.

For its part, the British government issued the “ Border operating model “, which lists the requirements from the UK point of view to be met for trade between the EU and the UK after the end of the transitional period. For the import sector, regulations will be introduced successively in January, April and July to give companies more time for preparations. From July 2021, however, all imported goods must be accompanied by the necessary customs declarations at the time of import. At the same time, the UK is launching a major campaign aimed directly at EU companies, informing them on relevant websites about the actions to be taken.

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