Last reviewed 7 July 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

Negotiations are being held between 29 June 2020 and 31 July 2020.

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

GVMS being developed by HMRC for 1 January 2021.

Negotiations are being held between 29 June 2020 and 31 July 2020.

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

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

UK 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 29 June 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)

  • 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.

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

On 16 June 2020 the UK Prime Minister announced that the Department for International Development (DFID) and the Foreign and Commonwealth Office (FCO) will be merged into one new department, with the newly created Foreign, Commonwealth and Development Office (FCDO) to be established in early September 2020, led by the Foreign Secretary. The Prime Minister said that the UK’s Trade Commissioners will come under the authority of UK Ambassadors overseas. Speculation that the Government is proposing to integrate the Department of International Trade (DIT) into the new Foreign, Development and Commonwealth Office has been denied, though it was confirmed that there would be some alignment on the network of trade envoys. The objectives of the new overseas department will be shaped by the outcome of the Integrated Review, which is expected to conclude in the autumn and is the biggest review of foreign, defence and development policy since the Cold War.

Dates and action

New department expected 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.

In response to the growth of these taxes, the United States Trade Representative announced the initiation of a Section 301 investigation into digital services taxes to focus on the taxes being introduced or discussed in the EU Member States, Brazil, China, India, Indonesia, Mexico (where it applies to B2B and B2C), the Philippines, Turkey, the UK and many other countries.

Dates and action

Public comment needed by 15 July 2020.

WTO Director General resigns

On 14 May 2020 World Trade Organization (WTO) Director-General Roberto Azevedo said he will step down from his position on 31 August 2020 after seven years at the helm of the global trade body. He said that his decision to step down more than a year before his second term as WTO head was due to end was personal reasons and that, “as members start to shape the WTO’s agenda for the new post-COVID realities, they should do so with a new director-general”. Potential candidates are coming forward to replace Azevedo and reboot and unite the troubled organisation. The current candidates are:

  • Mr Jesús Seade Kuri, Mexico

  • Dr Ngozi Okonjo-Iweala, Nigeria

  • Mr Abdel-Hamid Mamdouh, Egypt

  • Mr Tudor Ulianovschi, Moldova

  • Ms Yoo Myung-hee, Republic of Korea.

In other news, the USA House and Senate parliamentarians have cleared the way for votes on a pair of resolutions to withdraw from the World Trade Organization (WTO) in late July 2020, after Congress returns from a two-week recess.

Dates and action

Nominations close on 8 July 2020.

Current DG steps down 31 August 2020.

EU-Vietnam FTA

The final text of the EU-Vietnam Free Trade and Investment Agreements (EVFTA) was agreed on 18 June 2020 after Vietnam’s National Assembly ratified the EVFTA and the EU-Vietnam Investment Protection Agreement (EVIPA) 10 days earlier. The European Parliament had given consent to both Agreements on 12 February 2020 and the free trade agreement was concluded by the European Council on 30 March 2020. The agreements are expected to come into force from 1 August 2020 but the benefits will be staggered over a period of 15 years, with imports into the EU still incurring customs duties at the start of the trade agreement.

Dates and action

Final text agreed 18 June 2020.

Comes into force 1 August 2020.

Implementation period until August 2035 (15 years).

EU-Mexico FTA

The EU and Mexico reached an "agreement in principle" on the main trade elements of a deal that will replace the 2000 FTA between the two areas. The new agreement will scrap high Mexican tariffs on European food and drinks and allow EU firms to sell more services to Mexico, as well as introducing some provisions to protect workers' rights and the environment. Simpler customs procedures will further benefit EU industrial sectors including pharmaceuticals, machinery and transport equipment. Negotiations on technical issues will continue throughout 2020.

Dates and action

Agreement reached 21 April 2020.

Next update October 2020.

EU-Australia FTA

Officials from the European Commission and Australia took part in the seventh round of free trade agreement (FTA) negotiations on 4–15 May 2020 via a series of videoconferences. Areas of discussion included Trade in Goods, Rules of Origin, Customs and Trade Facilitation, Trade Remedies, Technical Barriers to Trade, Sanitary and Phytosanitary measures, Services and Investment. Regarding Trade in Goods, key discussion points were market access offers for goods that were exchanged in October 2019, the open provisions of the consolidated text regarding fees and formalities, national treatment, customs valuation, remanufactured goods and non-tariff measures. Both sides also discussed general provisions on rules of origin and specific rules for some sectors.

Dates and action

Update due October 2020.

EU-New Zealand FTA

The eighth negotiating round for a trade agreement between the EU and New Zealand was held from 8–22 June 2020 by videoconference. 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 October 2020.

EU-Mercosur FTA

On 28 June 2020 the EU and Mercosur states (Argentina, Brazil Paraguay and Uruguay) reached political agreement for an ambitious, balanced and comprehensive trade deal. The new 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. Negotiations covered the following areas:

  • trade in goods

  • wines and spirits

  • rules of origin

  • government procurement

  • intellectual property (including geographical indications)

  • state-owned enterprises

  • subsidies.

Dates and action

Next update October 2020.

EU-Indonesia FTA

Officials from the EU and Indonesia met in Brussels from 2–6 December 2019 for the ninth round of negotiations for an EU-Indonesia free trade agreement. Nearly all working groups met (except TBT and Energy and Raw Materials) and further progress was recorded in almost all chapters. On the rules side, negotiators managed to agree on further text consolidation on IPR, rules of origin, good regulatory practice, government procurement, dispute settlement, trade and sustainable development, investment dispute resolution and several services texts. The next round of talks was due in March 2020 but was postponed due to Covid-19 issues, though on 17 February 2020 the EU’s draft proposal for the Chapters on Institutional and Final Provisions for the EU-Indonesia FTA was published.

Dates and action

Next update October 2020.

Exports

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.

  • Nicaragua Sanctions current expiry date 14 October 2020.

  • Guinea Sanctions current expiry date 26 October 2020.

  • Moldova Sanctions current expiry date 30 October 2020.

  • Burundi Sanctions current expiry date 30 October 2020.

  • Democratic Republic of Congo Sanctions current expiry date 30 October 2020.

  • Turkey restrictive measures related to unauthorised drilling activities in the Eastern Mediterranean established 11 November 2019, current expiry date 11 November 2020.

  • Venezuela restrictive measures adopted in 2017, current expiry date 13 November 2020.

  • 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.

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 Customs Freight Simplified Procedures (CFSP) for a period of six months, ie from 1 January 2021 until 30 June 2021. All imports under CFSP 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 CFSP 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.