Wednesday, December 19, 2018

Freight and Road Haulage Groups Speak on New Customs and Permit Arrangements as Brexit Reality Dawns

Government Provides Funding as Revised Common Transit Deal Accepted and EC Permits Considered
Shipping News Feature
UK – A lot to cover as in the past few days there have been several important developments in the quest to settle how Brexit will actually affect the freight and road haulage industries. Matters such as customs practices and transit permits for hauliers visiting the EU as well as immigration, a subject dear to many hearts given the shortage of qualified HGV drivers the country is suffering, are all now openly being discussed.

We start by confirming the details of the £8 million government funding scheme announced in a piece earlier this month. Grants are being made available for all customs intermediaries and traders completing customs declarations. This figure includes HMRC providing an investments of £3 million to fund increasing training capacity, £3 million for IT and £2 million to fund training for intermediaries and traders completing customs declarations (or intending to complete customs declarations in the future). The grant will provide funding for up to 50% of the cost of training staff.

Having fully studied the government’s plans, the British International Freight Association (BIFA) is advising its members which believe they might benefit, to apply early. Applications will close on 5 April 2019, or earlier once all the funding is allocated. Robert Keen, director general of BIFA commented:

“During our meetings with both HM Treasury and HMRC, BIFA highlighted the concerns of our members regarding the capability of the Customs brokerage sector to increase capacity, at a time when that sector already faces a shortage of staff of suitable quality.

“We emphasised that it could take up to a year to train staff to be fully conversant to prepare a range of basic Customs declarations, even if there was a sufficient number of trainers to train those staff, as well as relevant courses for them to attend. So, the news of this funding is very welcome."

Two other major strides were made this week as the government announced that the UK is set to remain in the Common Transit Convention (CTC) following Brexit, the convention which is used when transferring goods between the EU and the EFTA countries (Iceland, Norway, Liechtenstein and Switzerland) as well as Turkey, Macedonia and Serbia.

Membership of the CTC, and its supplementary convention the Convention on the Simplification of Formalities in the Trade of Goods, reduces administrative burdens on traders by removing the need for additional import/export declarations when transiting across multiple customs territories. It also provides cashflow benefits by allowing the movement of goods across a customs territory without the payment of duties until the final destination, countries who are not in the Convention would have to pay each time their goods crossed a border.

It had been feared that, upon departing the EU, Britain would lose its status in this respect but fears have now abated, although the bigger question of moving goods freely between the EU and the UK remains. Pauline Bastidon, Head of European Policy & Brexit at the Freight Transport Association (FTA), spoke up on this point, saying:

“The invitation for the UK to join the Common Transit Convention (CTC) in its own right is great news for the country’s logistics industry, the FTA has been pressing Government and the EU to speed up the accession process for some time. In the event of no deal, traders making use of the CTC would be able to temporarily suspend the payment of duties and taxes, and to postpone customs clearance formalities until the goods reach their destination, rather than at the point of entry into the customs territory.

”This will be particularly attractive for UK businesses exporting into the EU. While it would not remove the need for border checks of a regulatory nature (such as sanitary & phytosanitary checks on agri-food products), the CTC has the potential to reduce checks of a fiscal nature upon entry into the EU. What is now vital for UK business is to ensure that all necessary arrangements for use of the convention are made so that, from 30 March 2019, traders may fully benefit from the facilities offered by the CTC.”

The question of transit permits for hauliers on continental runs has vexed UK operators with the paucity of such permits being allowed by the EU authorities. Now comes some good news should the dreaded ‘no-deal’ be the outcome of talks as, in such an event, the European Commission has proposed plans to allow UK and EU operators to maintain the movement of goods between the UK and other EU member states until the end of December 2019.

Such transit is vital as it would, if agreed, allow UK movements to non-EU states without restriction and it would allow EU lorries to move freely between Ireland and the rest of the EU. The Commission has ruled out allowing cabotage in the EU, cross-trade will not be allowed, and transit movements are not referenced at all. Upon hearing the announcement Road Haulage Association (RHA) chief executive, Richard Burnett said:

“This is welcome news as it will reduce the need for ECMT permits in 2019. However, the proposal is conditional on the UK reciprocating. This is a logical and practical proposal by the Commission. However, the proposal contains several restrictions. It is time limited and the Commission has said it retains the right to cancel at any time.”

Mr Burnett advised that international members of the RHA which are in the process of making ECMT applications should continue to do so as the proposal is not law yet and there is no certainty it will apply.

Meanwhile two notes of realism in a week that, compared to previous recent ones, there has been a modicum of good news around the subject. A new White Paper on immigration has been slated by the FTA, whilst the looming prospect of no-deal prompted John Perry, managing director at SCALA, which provides management services for the supply chain and logistics sector, to comment:

“Until recently, a no-deal Brexit was seen as such a remote possibility that many businesses still don’t have contingency plans in place. However, whether a deal is agreed or not, there a strong possibility that Brexit will cause months of severe disruption to UK/EU cross-border movements that businesses should be preparing themselves for.

“We’ve heard reports in recent weeks of companies that have begun stockpiling goods and raw materials, in an effort to minimise the impact of this possible disruption. While this will certainly buy them some time, it is only a short-term solution. In addition to stockpiling, businesses should be urgently reviewing their supply chains to identify any major risk areas and implement risk-reduction strategies. Affected organisations should also consider applying to become Authorised Economic Operator’s, as it’s widely agreed that achieving AEO status is likely to be one of the most effective mitigating factors in any Brexit situation.

“If, however, Article 50 is revoked, as many are hoping it will be, this will still have been an extremely valuable exercise. After so many years of frictionless trade, it’s clear that many of us have been delaying on these big decisions. If nothing else, the past two years have proven how precarious our situation really is. Brexit should therefore act as the catalyst businesses need to re-optimise their supply chains, ensuring they are as agile as possible and prepared for any future unforeseen events.”

And so to that White Paper published this morning in which the Home Secretary, Sajid Javid, confirmed free movement of labour would end after the UK leaves the EU and that to implement this the Government would introduce the Immigration and Social Security Coordination EU Withdrawal Bill. He also announced that there will be a single immigration system for all nationalities and confirmed that the UK would introduce a skills based system to attract those who can assist the UK economy.

The proposals include scrapping the current cap on the number of skilled workers such as doctors or engineers from the EU and elsewhere, a consultation on a minimum salary requirement of £30,000 for skilled migrants seeking five-year visas (no visa requirement for EU visitors) with plans to phase in the new system from 2021.

There will be a transitional scheme to allow applicants from ‘selected low risk nations’ to enter Britain without a firm job offer to seek work for up to a year. The scheme is designed to fill vacancies in sectors heavily dependent on EU labour, such as healthcare but the concepts outlined met with immediate opposition from both sides of the debate and Sally Gilson, Head of Skills Campaigns at the FTA, was critical, saying:

”Today's White Paper on immigration after Brexit ignores the very real needs and concerns of the logistics industry, which supports every facet of the UK economy. With skills shortages already being experienced among many logistics careers, including HGV drivers (currently 52,000 short), warehouse workers and forklift operators. The loss of almost a quarter of a million European workers, currently employed in these logistics roles in the UK are no longer deemed ‘skilled’ by the government could be catastrophic.

"[This] especially for a sector which relies on these people and their particular knowledge and abilities to keep shelves stocked, factories supplied and businesses able to access the materials they need. In order to attract and retain new workers into the industry which keeps Britain trading, FTA is urging government to redirect unused apprenticeship levy funding, which cannot be accessed due to a lack of relevant apprenticeship standards, into meaningful training for those wishing to enter the sector but ineligible for traditional apprenticeship funding. Without this reallocation of funds, there will be insufficient staff to replace the European workers on which logistics depends.”