trader alert

More than just a UK customs plugin: Brexit impacts on supply chains

Latest debates on Brexit delivered much noise but little progress. Businesses are no wiser as to what will happen at the end of March. Why a UK customs plugin is just the tip of the iceberg and what traders can do to minimize supply chain impacts.

The UK and EU business community continues to suffer from the uncertainty around the terms of UK’s exit from the EU by the end of March. All the while discussions in the UK Parliament continue and political turmoil, including yesterday’s collective leave of seven MPs from the UK labor party, prevails. 

Various manufacturers have announced their course of action in response, especially in the automotive industry, and more industry reactions are expected to follow suit. After all, today’s supply chains cross many borders and products across markets reflect a mix of parts from all around the globe. 

A hard Brexit would result in ripping one key partner in the chain from the existing framework of regulations, processes, and systems without a contingency plan and replacement framework for continued trade. So of course, the business community needs to react – and is reacting – to the uncertainty to prevent supply chain disasters. 

Companies engaged in trade across UK borders are well aware of the options for trade after Brexit – be it the Norway, the Switzerland, the Turkey, or the Bangladesh scenario – but as reported by BBC on February 15, 2019, only 4 UK trade agreements had been signed to date, and there is still no agreed way forward for the largest portion of trade with EU member states. 

So businesses need to be ready for any scenario at this point. A hard Brexit would result in a dramatic supply chain disruption and put the flow of goods from and to the UK at serious risk – including those reported in transit that may arrive after March 29, 2019.  

But really any change to the current process as part of the EU Single Market and Customs Union means a complex change of procedures for UK parts within products in global markets and transactions across UK borders. This means that the scope of change that businesses would be facing under a hard Brexit or under a transitional agreement is pretty much the same. 

More than just a UK customs plugin

A transitional withdrawal agreement, of course, would give the business community a bit more time to implement required changes at all points in their supply chains. This includes product classification, preferential rules and new trade agreements, new customs tariffs, import and export declarations or customs broker collaboration, export control procedures, and the integration of all applicable teams, workflows, and systems. 

But even with an extension, there isn’t really much time left, considering that implementing a new framework for UK trade requires some (!) time and customs brokers, as one example of highly impacted businesses, are already overbooked. By now it’s become quite clear that implementing such new global trade framework encompasses much more than just adding a “UK customs plugin” to existing trade operations. 

To support the business community throughout developments, the UK government has made several notices and guidance document available to UK traders. These can be found in the government tracker section of the AEB Brexit Tool Kit for traders. 

Most recent announcements include Notice to Exporters 2019/03 of February 1, 2019 by the UK’s Department for International Trade regarding the UK export of dual-use items to EU member states. It explains licenses will be required to export dual-use items from the UK to EU member states in case of a no-deal exit on March 29, 2019. At the moment, licenses are not currently required to export dual-use goods within the EU. 

The key message for businesses engaged in trade across UK borders remains the same throughout: Mitigating risks and protecting supply chains is essential now. And digitizing global trade and customs processes pays off no matter which way things go. It delivers value and flexibility through automation and integration – and builds the right foundations to survive in today’s fast-paced marketplaces and dynamic global trade environments. 

Find out which areas are most affected by global trade changes and how software can help 

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