In August 2021, the United Kingdom (UK) Government made permanent emergency measures designed to stop long queues of lorries congregating at its borders with the European Union (EU).1 What does this acknowledgement that trade between the UK and EU would continue to be disrupted mean for consumers and importers/exporters?

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 2021 Q4_ TransiNet PostBrexit 

Freedom of movement for trade ceased between the EU and UK on January 1, 2021. While the agreement of December 24, 2020, did include provisions for tariff and quota free trade between the EU and UK, it also included requirements for border controls and customs declarations.2 This led to delays and greater complexity in paperwork for businesses and the possibility of supply chain disruption, meaning some goods wouldn’t be available for consumers. 

Cross-border trade 

Moving goods between markets is complex, with multiple stakeholders that each have their own requirements. Exporters want unfettered access to larger markets. Governments want assurances that they will receive the right duties and maintain control over what goods enter their territory. Importers want to receive high quality goods from international markets but with minimal financial risk.

Without freedom of movement for trade between markets, there can be congestion at border crossings. This can be caused by paperwork controls and communication difficulties between officials and drivers. Additionally, there may be the requirement to pay taxes and VAT at the border, before the importer has received their goods, which can lead to further delays and greater financial risk.

Customs transit

A solution to this problem is Customs Transit. Under this system, exporters don’t pay tax or VAT and the importer only settles the required VAT and taxes when the goods arrive at their warehouse. Between these two points, the goods are moved under Customs Transit and the payment of levies is suspended until the importer receives their goods. 

Customs Transit requires the Holder of the Procedure (HoP) to lodge a customs declaration and financial guarantee with the customs authority in the country of departure. This is then discharged with the destination customs authority or recognized consignment premises. Every customs declaration includes an allocated period, from opening until termination. If the declaration isn’t closed within this timeframe, or the goods have been tampered with, then the authorities may request the customs debt be paid by the HoP.

Impact of Brexit

Brexit has led to massive changes for all companies involved in the import or export of goods from, through and into the UK. Customs declarations are now required for trade between the UK and continental Europe and there is the potential for shipments to need clearance at the border. 

Barriers to trade always create complexity, which in turn leads to delays and additional costs for importers and exporters. The knock-on effect of this disruption to supply chains is higher costs and less choice for consumers.

Customs Transit with a trusted service provider acting as HoP is a solution to this problem. It enables the smooth passage of goods across borders while reducing risk for the importer and ensuring all relevant duties are paid.

SGS Solution

SGS TransitNet is a universal, multimodal e-customs transit guarantee service where SGS acts as HoP on behalf of a range of clients (transporters brokers, freight forwarders, etc). We create the customs declaration and submit it alongside the necessary financial guarantees. 

TransitNet uses web-based technology. It is secure and multi-lingual, removing the potential for communication problems between drivers and customs officials. It also provides users with the ability to control and monitor all transit declarations in real time, from start to termination. It connects to 26 different customs systems, including the 24 New Computerized Transit System (NCTS) countries, and Moldova and Belarus, part of the Euro Asian Economic Union, giving businesses access to over forty countries.

TransitNet is the one-stop solution for compliance with customs, border and security controls when trading goods between European countries. 

Learn more about SGS Transitnet.

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For more information, please contact:  

Sébastien Chalumeau
e-Customs Services Development Director
Connectivity & Products – Trade Facilitation Services, SGS
t: +41 22 739 93 55

References

1 Emergency Brexit powers for lorry queues to be made permanent 
2 The Difficult Road to Brexit and its Impact on Trade & Companies say post-Brexit rules are clogging up UK-EU trade