ACITA National Meeting: 18th October 2017
18th October 2017
The National meeting, chaired by Corinne Nabavi, heard presentations on International Trade in the wake of the BREXIT decision.
ACITA National Meeting
Representatives from HMRC and DIT reported on progress during the BREXIT process whilst ACITA members heard the European Perspective on BREXIT and FTA's from Yves Melin. Gary Horlick briefed members the on US perspective of FTAs. Jeremy White updated members on the more
practical BREXIT issues which was followed by a panel discussion answering member's questions.
The presentations prompted intense discussions over lunch.
The key points from each presentation are highlighted below together with links to presentations, where available.
Customs Declaration Service (CDS) Programme
Stella Jarvis, HMRC
Stella is Programme Director for CDS, which will replace CHIEF. Questions or suggestions regarding CDS can be emailed to Stella or her colleague Grahame Pepper at firstname.lastname@example.org. Alternatively call HMRC's central helpline and questions will be passed to Stella.
Click Customs Declaration Service (CDS) programme to view the slides
- Although 23 years old, CHIEF is still efficient. Testing on CDS is going well. Lists of requirements have been sent to software houses and customs/community service providers (CSP) for their feedback.
- There will be a 6 month transition period between the two systems during which declarants will be moved from CHIEF to CDS.
- The aim is to have CDS up and running before 29 March 2019.
- CDS is a modular system, each module handling each different process for example “the tariff module” and “the declaration” module.
- The declaration module is an off-the-shelf package, which is supplied by the same company that supplies the Dutch tariff.
- HMRC has taken “live” declaration data from CHIEF and successfully tested it on CDS.
- Trade tests are due to start in December 2017 with 5 software houses. If trade representatives don't come forward quickly to assist, HMRC will target companies directly as testing has to be sooner rather than later and cannot be left until just prior to launch.
- There are 2 trade representatives on the HMRC panel – Peter McSwiney and Adam Long.
- HMRC have employed an additional 2000 call handlers to give 1st line support over their helpline.
- An EORI number application used to take 3 days to issue but now, due to process automation, it only takes 10 minutes!
- HMRC are sending out CDS information frequently now. Companies MUST NOT put their interpretation on the information, i.e. they must use it 'as is', otherwise the information may be misinterpreted.
Customs Policy (no slides)
Paul Bedford, HM Treasury
- HM Treasury has met a lot of businesses since the Brexit Referendum and a white paper was published in August setting out UK Customs 3 main objectives –
- To have a smooth trade between the UK and the EU
- No border between the UK and the EU
- An independent trade policy
- Aligning UCC and post BREXIT regulations will be a complicated process, aside from the possibility of “No Deal” in March 2019. A Customs Bill will be published later this year and a white paper outlining the new legislation was published a few weeks ago.
- It is imperative that HMT receives business input as they cannot dream up policy. In light of this HMT have had recent meetings but would like to hear many more views, for example on:
- A key challenge is how HMT can reach the smaller companies, SMEs which don't have a team responsible for the new legislation. Paul would really appreciate any input from ACITA members, ideas or contacts, as HMT would like to replicate the UCC as far as possible.
UK Free Trade Agreements (no slides)
David Henig, DIT
- David asked the members what barriers the Department of International Trade might come up against. DIT would like to hear from as many people as possible via CustomsStakeholders@hmtreasury.gsi.gov.uk.
- The department has increased staff numbers greatly and training is currently on-going.
- “What will make a difference?” – DIT are going to open up markets and are currently speaking to about 35 countries but the agreements may not be in force by March 2019.
- There are around 70 FTAs being replicated and these will be concluded by March 2019.
- New FTAs cannot be discussed while the UK is in the EU.
- Cumulation of Rules of Origin – don’t know at the moment, this has to be discussed but they know the importance.
- Quotas – being discussed, this is also difficult.
- Trade Disputes – these should be checked with the appropriate Trade Agreement.
- Trade Agreements currently under discussion - can continue but these need to be concluded with the EU quickly, for example the agreement with Japan probably won’t happen before April 2019.
- There are 350 people in the DIT, some of whom can negotiate agreements.
- Companies need to be able to use the FTAs if proper systems are not in place and they need to be aware of the impact and the costs, especially SME’s.
- How are FTAs selected? – David said there wasn’t a criteria but value, ease of trade and how open or closed the market was could be important factors.
- Were there any change in export licences? – David had not heard of any.
- Preferences – is the UK mirroring EU trade and can those already excluded be brought back? – David said that they are not moving away from World Bank criteria
US Free Trade Agreements (no slides)
Gary Horlick, Law offices of Gary N Horlick
- Gary gave a historical assessment of US trade policy, and how it uses trade policy as a foreign policy tool.
- The U.S. has eliminated regional trade agreements i.e. Cuba, Philippines and the UK. Under the current administration it seems that the US has no interest in, or need of, FTAs.
- The 1st FTA was set up in 1983/84 with Israel and the 2nd with Canada in 1986/87
- Negotiations with the EU were set up under the TTIP agreement. However there are some real issues, for example the USA does not comply with the Red Tractor agreement which UK uses for meat production/sales and the UK and EU pharmaceutical industries do not adhere to the same rules as the USA.
- A US-UK trade deal would need to be beneficial to the US, or otherwise it would be unlikely to be realised.
Yves Melin, Steptoe & Johnson LLP
EU Free Trade Agreements (no slides)
Yves discussed the following points:
- Renewal of EU/UK FTA
- What UK hopes to get
- Does it make sense?
The EU has an FTA with approximately 70 countries, some took many years to negotiate.
Continued membership of the Customs Union for an additional 2-3 years would be the only transition deal acceptable to the EU – anything other than this would probably be unacceptable to the EU.
The EU is moving into a new era of protectionism, which is reflected in the way that member states and the Commission act.
One benefit of BREXIT to the UK is that it would aid protectionism. For example a case just has to be made to the UK Government rather than be agreed by the EU.
As it takes too long to negotiate new FTA’s the best strategy is to renegotiate within the EU because:
- UK won’t have to travel far for negotiations!
- It will be quite easy to re-negotiate the current FTA’s
Whilst it would be possible to negotiate individual FTAs on the current basis there will be significant problems with the Rules of Origin, which would no longer be 'protected' by the EU and will particularly hit SMEs but also some large companies.
There are also many practical issues, for example the French farmers would be against an agreement that allows British produce equal access to their markets.
Politically there is no way the UK could rejoin the EU. One simple reason is, following BREXIT, the EU will be able to implement decisions which the UK opposed.
Anti-dumping disputes will still be resolved in Geneva.
BREXIT means……..: “what do we do now?”
- SME’s will likely fold or sell to larger companies due to the new
Jeremy White, Pump Court Tax Chambers Barrister
systems additional staff and overheads required to deal with new legislation.
- Jeremy urged companies to help HMT to identify the SME’s who needed help and guidance.
- More details are included in Jeremy's presentation notes: EUTU and Brexit and Future customs arrangements.
The Panel discussion was chaired by Corinne Nabavi, third from the right in the panel pictire
Q In the event of a “no deal” – does the UK have a fallback position i.e. so that business doesn’t come to a grinding halt?
- JW – The legal machinery is in place.
- DH – There are "all manner of things" going on in Government.
- GH – Someone will have to make a decision, if it is thought that legislation will make that decision – it won’t. It will have to be a decision not done by statute.
Q Is there a possibility of an alternative i.e. reverse Brexit and remain in the EU?
- YM – Yes, anything is possible, but the EU wouldn’t want the UK to come back and vote!
- DH – It will be what the Government decides. The EU is upset at losing a member and some would welcome the UK back.
Q AEO lite – does that just apply to the UK?
- JW – It is what is acceptable to the Commission and would only happen if the UK were to adopt their own version of AEO. We would most likely have an issue with “AEO Lite” as if it didn’t meet the current standards then we wouldn’t get mutual recognition.
Q If a UK company has AEO Lite but with a full AEO in the Netherlands – what would the electronic messages be in 2021
- JW – There are always challenges with Proofs of Origin, Customs say assume! Customs have said they don’t want UCC because of Proofs of Origin. They won’t have AEO Lite as they have not had the Trusted Trader Convention yet.
Q Authorised Operators? Different companies have different rules – could the UK put themselves up as a pilot?
- JW –They could do.
- DH –It is difficult with the EU.
- YM – It depends whether the trust is broken, there are lots of discussions on-going and some are complicated.
- GH – The U.S. perspective has plateaued as being more difficult than it’s worth, it would certainly be too much for SME’s.
- DH – What extent can logistics provide to SME’s?
Q If there isn’t a border with Northern Ireland?
- JW – Pre-arrival messages could happen beforehand.
- GH – Could waive laws with cross borders but Origins still a problem.
Q David – you asked for questions/assistance, are departments speaking to each other?
- DH – Some directly with HMRC. I deal with Foreign & Commonwealth Office, things could fall through the cracks but yes we are collaborating but it is tough!
Q If there is “no deal”, should the UK simplify and go to 6 digit tariff codes?
- JW – A project was completed for Bermuda which was successful and saved money. As a legal solution it certainly worked.
Corinne asked if any members had any preference for speakers at the next meeting in March 21st 2018 to please contact the Secretariat or a Committee member. The meeting was concluded.
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