Last reviewed 1 December 2020

A guide to current and forthcoming changes to the import and export regulatory regime compiled by Sandra Strong of Strong & Herd, LLP.

General

EU exit update

The UK officially left the EU in January 2020 but is currently trading under a transitional arrangement that means the UK remains part of the EU Customs Union and single market for trade purposes. This implementation period started on 1 January 2020 and continues until 11pm UK time on 31 December 2021, when free movement of goods will cease to apply between the UK and the 27 EU Member States. The UK Government chose not to extend the transitional period and is now seeking to negotiate a free trade agreement with the EU, but this will not remove the need to make customs entries on all goods leaving and entering the UK from 1 January 2021. Businesses are being encouraged to prepare for the additional paperwork and security declarations as soon as possible and funding is being provided by the Government to assist in upskilling businesses so they understand these requirements. Some import easements were announced in June 2020 (see Imports section below).

Dates and action

The UK leaves the EU Implementation Period on 31 December 2020.

Great Britain-Northern Ireland protocol

Though Northern Ireland will remain part of the UK on exit from the EU implementation period, goods moving between Great Britain and Northern Ireland, and between Northern Ireland and the Republic of Ireland, will require additional documentation and controls. This is set out in the Great Britain-Northern Ireland Protocol commentary document, UK’s Approach to the Northern Ireland Protocol, issued on 20 May 2020 by the UK Government. The aim is to keep trade flowing but goods moving from Great Britain to Northern Ireland will come under new customs formalities and checks. To ensure frictionless trade between Northern Ireland and the Republic of Ireland, and the rest of the EU, Northern Ireland will come under the EU Customs rules concerning goods. The customs changes will also have an impact on how VAT is charged, collected and off-set on Great Britain-Northern Ireland transactions. EU tariffs may apply to goods brought into Northern Ireland from Great Britain, but only if the goods will subsequently be moved to the EU. HMRC is developing a new IT platform, known as the “Goods Vehicle Movement Service” (GVMS), to track the movement of goods across the Irish Sea and deal with certain customs procedures. Trials of the system are expected this summer for implementation on 1 January 2021, but it should be noted that the commentary document put forward by the UK regarding these controls has not yet been agreed with the EU.

Dates and action

Trader Support Service launched in September 2020.

GVMS being developed by HMRC for 1 January 2021.

The UK leaves the EU Implementation Period on 31 December 2020.

UK customs and trade laws

From 1 January 2021, new UK Customs laws will replace the current EU legislation for customs and international trade. The key Act is the Taxation (Cross-border Trade) Act 2018 which will replace the EU Union Customs Code (UCC). Below are some of the main regulations which have been created to support these changes.

  • UK Taxation (Cross-border Trade) Act 2018

  • The Customs (Import Duty) (EU Exit) Regulations 2018

  • The Customs (Reliefs from a liability to Import Duty) (EU Exit) Regulations 2019

  • The Taxation (Cross-border Trade) (Miscellaneous Provisions) (EU Exit) Regulations 2019

  • The Cash Controls (Amendment) (EU Exit) Regulations 2019

  • The Customs (Export) (EU Exit) Regulations 2019

  • The Customs (Record Keeping) (EU Exit) Regulations 2019

  • The Customs (Import Duty) (EU Exit) Regulations 2018

  • The Customs (Special Procedures and Outward Processing) (EU Exit) Regulations 2018

  • The Customs Transit Procedure (EU Exit) Regulations 2018

  • The Taxation (Cross-border Trade) Act 2018

  • The Customs Tariff (Preferential Trade Agreement) (EU Exit) Regulations 2019

  • The Customs Transit Procedure (EU Exit) Regulations 2018

Dates and action

The above will become law when the UK leaves the EU Implementation Period on 31 December 2020.

UK global trade tariff

On 19 May 2020 the UK Government released the UK Global Trade Tariff (UKGT). This will replace the EU’s Common External Tariff on 1 January 2021 and expands tariff-free trade by eliminating tariffs on a wide range of products. The new UK tariff is tailored to the needs of the UK economy and aims to support the economy by making it easier and cheaper for businesses to import goods from overseas, and will be in pounds (£), not euros. The UKGT also expands tariff-free trade by eliminating tariffs on a wide range of products, removing the EU's complex Meursing table that currently applies higher tariffs on certain products, including over 13,000 tariff variations on products such as biscuits, waffles, pizzas, quiches, confectionery and spreads, according to fat and milk content. The changes include scrapping unnecessary tariff variations, rounding tariffs down to standardised percentages and getting rid of all “nuisance tariffs” (those below 2%). The Government is maintaining tariffs on several products backing UK industries such as agriculture, automotive and fishing. This will help to support businesses in every region and nation of the UK.

Dates and action

The full list of 10-digit UK Import Codes will be released by January 2021 along with UK Trade Measures.

This becomes law when the UK leaves the EU Implementation Period on 31 December 2020.

UK trade agreements

The UK has negotiated two new independent Trade Agreements that, once ratified by all parties, will come into force once the UK leaves the transitional arrangement with the EU on 31 December 2020.

Japan

  • On 11 September 2020 the UK-Japan Comprehensive Economic Partnership Agreement (CEPA) was agreed in principle and it was signed by both parties in Tokyo on 23 October 2020. It was the first deal that the UK negotiated as an independent trading nation. This trade agreement covers trade in goods and services, including provisions on rules of origin, preferential tariffs and quotas, intellectual property, including geographical indications, technical barriers to trade, sanitary and phytosanitary measures, customs and trade facilitation, competition transparency, dispute settlement and government procurement.

Ukraine

  • On 9 November 2020, the UK and Ukraine agreed the terms of a new political, free trade and strategic partnership agreement. As with the EU-Ukraine agreement, the UK-Ukraine agreement is a broad agreement which provides a framework for continued political, foreign and security cooperation and includes a deep and comprehensive preferential trade agreement. The agreement covers both trade in goods, including provisions on rules of origin, preferential tariffs and quotas, and trade in services. It also contains commitments in areas often covered by free trade agreements, including intellectual property, geographical indications and government procurement. Finally, the agreement replicates the institutional framework of the EU-Ukraine agreement with minor modifications.

UK Continuity trade agreements

The Withdrawal Agreement sets out how the UK can continue to be covered by EU-third country trade agreements until 31 December 2020. After that date, EU trade agreements will not apply to the UK, but to ensure continuity of trading arrangements for UK businesses, the UK is seeking to reproduce the effects of existing EU agreements. On 25 November 2020, the Department for International Trade (DIT) stated that the following UK trade agreements should be available from 1 January 2021:

  • Andean countries (Colombia, Ecuador and Peru)

  • Canada (agreement in principle)

  • CARIFORUM trade bloc:

    • Antigua and Barbuda

    • Barbados

    • Belize

    • The Commonwealth of the Bahamas

    • The Commonwealth of Dominica

    • The Dominican Republic

    • Grenada

    • The Republic of Guyana

    • Jamaica

    • Saint Christopher and Nevis

    • Saint Lucia

    • Saint Vincent and the Grenadines

    • The Republic of Trinidad and Tobago

    • The Republic of Suriname (approved in principle)

  • Central America:

    • Costa Rica

    • El Salvador

    • Guatemala

    • Honduras

    • Nicaragua

    • Panama

  • Chile

  • Eastern and Southern Africa (ESA) trade bloc (Madagascar, Mauritius, Seychelles and Zimbabwe)

  • Faroe Islands

  • Georgia

  • Iceland and Norway (these will be influenced by the agreement the UK reaches with the EU)

  • Israel

  • Jordan

  • Kosovo

  • Lebanon

  • Liechtenstein

  • Morocco

  • Pacific states (Fiji and Papua New Guinea)

  • Palestinian Authority

  • South Korea

  • Southern Africa Customs Union and Mozambique (SACUM) trade bloc:

    • Botswana

    • Eswatini

    • Lesotho

    • Namibia

    • South Africa

    • Mozambique

  • Switzerland

  • Tunisia

  • Ukraine.

Other agreements are under discussion, though trade agreement negotiations with countries in Customs Unions with the EU (Andorra, San Marino and Turkey) will be influenced by the agreement the UK reaches with the EU. The UK has also signed Mutual Recognition Agreements (MRAs) with Australia, New Zealand and the USA, and is discussing possible trade agreements with these countries.

Dates and action

These become law when the UK leaves the EU Implementation Period on 31 December 2020.

UK DIT and DFID to merge

After the UK Prime Minister announced in June 2020 that the Department for International Development (DFID) and the Foreign and Commonwealth Office (FCO) will be merged into one new department, the newly created Foreign, Commonwealth and Development Office (FCDO) was set up in September 2020 and is led by the Foreign Secretary. The Prime Minister said that the UK’s Trade Commissioners will come under the authority of UK Ambassadors overseas. The new department aims are to pursue national interests and project the UK as a force for good in the world. “We promote the interests of British citizens, safeguard the UK’s security, defend our values, reduce poverty and tackle global challenges with our international partners.”

Dates and action

New department was formed in September 2020.

Digital services tax (DST)

Countries across the world are rapidly extending the indirect taxes Value Added Tax (VAT) and Goods and Services Tax (GST) to the sale of electronic and digital services. The definition of e-services varies between jurisdictions, but typically includes income for the sale of streaming media and games, e-books, software, apps, web hosting and other cloud services, subscriptions to membership websites, online newspapers and journals, and online gambling. It can also include broadcast (TV and radio) or satellite services, as well as online voice and data telephony services.

After seeking public comments in July 2020, the European Commission (EC) confirmed on 12 September 2020 that it will go ahead with its own digital tax early next year if the OECD does not reach a global agreement. The first tax on instant messaging services had been announced in Spain on 11 September 2020 when the Spanish Government said it intends to tax companies providing calls and instant messaging service providers, such as WhatsApp, which have an annual turnover of more than €1 million ($1.2 million) at a level of tax not to exceed €1 per day for every €1,000 of gross revenue.

On 21 October 2020, the OECD confirmed that the deadline for its members to reach a consensus around a global digital services tax solution has been delayed until mid-2021.

Dates and action

OECD public consultation will end on the 14 December 2020.

OECD report due mid-2021.

Spain to set its own DST for 2021.

WTO Director General resigns

After the Director-General of the WTO announced he was to step down from his position at the end of August 2020, the World Trade Organization (WTO) has been working on selecting his replacement. In October 2020 the final candidates were named as Ngozi Okonjo-Iweala of Nigeria and Yoo Myun-hee of South Korea, meaning for the first time the WTO will have a woman in the role of DG. The General Council meeting scheduled for 9 November 2020 was due to submit the name of Dr. Ngozi Okonjo-Iweala as the candidate most likely to attract consensus and recommending her appointment as WTO Director-General was postponed until further notice on the 6 November 2020. Ambassador David Walker said that the meeting would be postponed until further notice for a number of reasons including the health situation and current events though they would continue undertaking consultations with delegations.

Dates and action

Awaiting rescheduling of the meeting to take a formal decision on the appointment of the next Director-General.

EU-Australia FTA

On 13 October 2020 the European Commission reported on the 8th negotiation round for the EU-Australia trade agreement that took place virtually from 14–25 September 2020. Areas of discussion included technical barriers to trade, sustainable development, goods, services, public procurement, rules of origin and intellectual property rights including geographical indications.

Dates and action

Update due January 2021.

EU-New Zealand FTA

Though no further rounds of talks have taken place since the eighth negotiating round for a trade agreement between the EU and New Zealand, it has been said recently that a key area of the agreement will be environmental “green” issues. In June 2020, thorough discussions were held in a range of areas, including market access for trade in goods and public procurement, as well as geographical indications. Discussions covered the rules of origin for goods within the agreement, covering all the outstanding elements of General Provisions (Section A) and Origin Procedures (Section B). Several key issues, such as cumulation, tolerances, duty drawback and denial of preferential tariff treatment are still open. The articles on administrative co-operation and small consignments were agreed. Detailed technical discussions on the Product Specific Rules continued, focusing on agricultural and processed agricultural products, leather, textiles and clothing, machinery and electronics. Fishery issues, including the differences in the approach to vessels conditions, were also discussed.

Dates and action

Update due December 2020.

EU-Mercosur FTA

Since June 2020, the EU and Mercosur states (Argentina, Brazil Paraguay and Uruguay) have moved forward with their political agreement for an ambitious, balanced and comprehensive trade deal. The trade framework, part of a wider Association Agreement between the two regions, will consolidate a strategic political and economic partnership and create significant opportunities for sustainable growth on both sides, while respecting the environment and preserving the interests of EU consumers and sensitive economic sectors. The texts of the agreement were made public on 7 October 2020.

Dates and action

Next update December 2020.

EU-Indonesia FTA

Officials from the EU and Indonesia met by video conference from 15–26 June to continue negotiations for an EU-Indonesia trade agreement. Good progress was said to have been main in all areas particularly with regard to geographical indications, rules of origin and product specific rules, technical barriers to trade and general regulatory provisions as well as on subsidies.

Dates and action

Next update January 2021.

Exports

UK Sanctions update

From 11pm on 31 December 2020, the EU Sanction laws below will not be applicable in the UK but will be replaced from UK legislations. The UK will implement a range of UK sanctions regimes through regulations made under the Sanctions and Anti-Money Laundering Act 2018 (the Sanctions Act). The Sanctions Act provides the legal basis for the UK to impose, update and lift sanctions. The UK also currently implements a global human rights sanctions regime through regulations under the Sanctions Act.

EU Sanctions update

Below are the current expiry dates of EU Sanctions. These sanctions will be reviewed prior to these dates and may be extended for a further period, usually 12 months.

  • Tunisia restrictive measures against persons responsible for misappropriation of Tunisian State current expiry date 30 January 2021.

  • Russia/Ukraine restrictive measures extended for six months to 30 January 2021.

  • Zimbabwe Sanctions current expiry date 19 February 2021.

  • Belarus Sanctions current expiry date 27 February 2021.

  • Egypt Sanctions current expiry date 21 March 2021.

  • Bosnia and Herzegovina Sanctions current expiry date 30 March 2021.

  • Yemen Sanctions: UN Security Council renewed the arms embargo, travel bans and asset freezes against those “threatening peace and security in Yemen” in April 2020 so the restrictive measures remain in place into 2021.

  • Iran Sanctions current expiry date 12 April 2021.

  • Myanmar Sanctions current expiry date 29 April 2021.

  • Nicaragua Sanctions current expiry date 14 October 2021.

  • Guinea Sanctions current expiry date 26 October 2021.

  • Moldova Sanctions current expiry date 30 October 2021.

  • Burundi Sanctions current expiry date 30 October 2021.

  • Democratic Republic of Congo Sanctions current expiry date 30 October 2021.

  • Turkey restrictive measures related to unauthorised drilling activities in the Eastern Mediterranean established 11 November 2019, current expiry date 11 November 2021.

  • Venezuela restrictive measures adopted in 2017, current expiry date 13 November 2021.

Dates and action

See expiry dates in main section.

Imports

EU exit import easements announced

On 12 June 2020 the UK Government announced a new system to simplify the importing of goods from the EU 27 when the transitional period ends on 31 December 2020. Though there are some similarities, this new system must not be confused with the Transitional Simplified Procedures (TSP) announced in February 2019 in the event of the UK leaving the EU without a deal at the end of 2019.

The import easements will only apply to imports of RO/RO traffic from the EU at ports/ferry terminals (though it may be extended to airports). The easement will permit the movement from the ports of standard, non-controlled goods, without full customs declarations by utilising the Delayed Declaration system for a period of six months, ie from 1 January 2021 until 30 June 2021. All imports under the Delayed Declaration procedure will have to be logged in the importers’ (not the freight companies’) systems under the Entry Into Declarants Records (EIDR) procedure, and within six months of the physical arrival, a full customs declaration will have to be made along with the payment of any customs duties to HMRC. Import VAT will not be collected on arrival but will be subject to postponed accounting, and businesses will have to assess how they will manage the VAT returns/payments. There will also be physical checks at the point of destination at or other approved premises on all high-risk live animals and plants. From 1 April 2021 all products of animal origin (POAO) (for example meat, pet food, honey, milk or egg products) and all regulated plants and plant products will also require pre-notification and the relevant health documentation. From July 2021 all imports of goods will require a customs declaration at the point of importation and payment of relevant tariffs before being released into the UK, and full safety and security declarations will also be required. The use of the Delayed Declaration procedure is not mandatory and many companies are considering submitting full customs declarations on arrival as they believe it will be simpler to manage.

Dates and action

Import easements:

Phase 1 — 1 January 2021–30 June 2021.

Phase 2 — 1 April 2021: all PAOA will require pre-notification and health certificates.

Phase 3 — 1 July 2021: full customs declarations and procedures will apply to UK arrivals from the EU.

EU conflict minerals regulations

In May 2017 the EU published the regulations on the supply chain due diligence obligations for conflict mineral EU importers. The regulation applies to tin, tantalum, tungsten and their ores, as well as gold. It is expected to provide transparency and certainty as regards the supply practices of EU importers, and of smelters and refiners sourcing from conflict-affected and high-risk areas.

Due diligence requirements for EU importers of tin, tantalum, tungsten and gold will apply from 1 January 2021, but the Commission, Member States and companies will have to prepare well in advance to ensure the correct and effective implementation of the regulation. In addition, the European Commission must establish volume thresholds for tantalum or niobium ores and concentrates, gold ores and concentrates, tin oxides and hydroxides, tantalates, and carbides of tantalum.

Dates and action

Comes into force 1 January 2021.

CHIEF replacement — CDS

Work continues between UK HMRC and its delivery partners on the Customs Declaration Service (CDS) to replace the current CHIEF customs entry system. CDS went live in August 2018, though migration of services to CDS is still being worked on and will continue into 2021. A selected group of companies which remove goods from customs warehouse controls started making some types of supplementary declarations on CDS from September 2018, but it has not been rolled out to frontier declarations. CHIEF has been extended to cover the potential increase in customs declarations after the UK leaves the EU and will continue to operate in parallel while the transition of traders takes place. Some additional information will be required for declarations in order to align with the World Customs Organisation Revised Kyoto Convention (currently being implemented in the UK through the UCC):

  • additional party types, such as the buyer and seller

  • possible additional commercial references or tracking numbers.

To align UK customs data with international standards, there will also be changes to:

  • location of goods identification (SAD Box 30)

  • warehouse type code list (SAD Box 49)

  • item tax lines, including method of payment codes (SAD Boxes 47a-e)

  • unit of quantity codes (ISO) (SAD Boxes 35, 38 and 41)

  • the way customs procedures are quoted (SAD Box 37)

  • number of items on a declaration — CDS will allow a maximum of 999 items on a customs declaration instead of the current 99 items on CHIEF.

The UK Customs Handling of Import/Export Freight (CHIEF) computer was due to be retired this year but HMRC has said it will run alongside the new CDS until the end of 2021.

Dates and action

Phasing in of the CDS 2020–2021.

Export functionality of the CDS is due once the import function is in place.

Harmonised tariff schedule 2022

The last amendments to the Harmonised Tariff Schedule were published by the World Customs Organization (WCO) in 2017. HS2017 came into force on 1 January 2017 in the EU, though some countries are still changing over to this. HS2017 includes 5386 six-digit subheadings compared to 5205 in the 2012 edition.

After issuing HS2017, the WCO started work on HS2022 amendment proposals and the first proposed changes were issued in May 2018 for review. Though 2022 may seem far off, there are only two more Harmonised System Review Committee (RSC) meetings when proposals can be presented, and it can take more than one meeting to get approval. The first draft was published in April 2020 and the final draft in October 2020.

Dates and action

HS adopted by WCO Council June 2019.

First public draft issued April 2020.

HS2022 comes into force 1 January 2022.