As Brexit negotiations stumble forward, a new series of votes could extend the deadline or guarantee a hard-Brexit. The uncertainty remains, but the time to prepare is slipping away fast.
The countdown to Brexit is ticking away quickly, as the impasse in Parliament over Prime Minister May’s withdrawal agreement continues. Although the change in tack by the PM appears to try and rule out a no-deal scenario, many commentators believe it does NOT, and in fact could even make it slightly more likely.
Waiting for the gavel to fall
Prime Minister May has assured that a fresh vote on the current deal – to accept or reject – will take place in Parliament by 12 March. If accepted, the 21-month transition period would begin from the 29th March. There appears to be a likelihood of rejection, as it seems unlikely the required assurances on the controversial Northern Ireland backstop policy will be provided by the EU – and they must be legally binding in order for some MPs to agree.
If rejected, MPs would be offered two separate votes: a vote on the following day showing whether they would accept or reject a no-deal Brexit, and another on 14 March for an extension to Article 50 if support for no-deal is voted down. The vote on the 13th for a no-deal Brexit, however unlikely, if accepted would mean explicit consent from the House for the UK to crash out of the EU. The more likely outcome – that it too will be rejected by MPs, and would lead to a vote for an extension the following day.
If Parliament rejects the deal and the extension, the default scenario of a hard-Brexit becomes likelier regardless if MPs vote to not support it. If the extension passes, it then reverts to the 27 European Union member state leaders.
The EU 27 must also agree on the extension, which PM May has said would be limited to 29 June. The EU has already said that they will not renegotiate the terms of the withdrawal agreement. This may well be political posturing, but an extension would provide the UK time to get MPs to agree to the deal that’s on the table. If the EU doesn’t agree to an extension, other options still include the introduction of a new referendum or the withdrawal of Article 50 altogether.
Take action – don’t delay
The Brexit deadline is nearing, agreeable options are dwindling, and the reality of a hard-Brexit is becoming likelier by the day. The only thing that hasn’t changed since day-one is uncertainty. Uncertainty for citizens, businesses, the trade community, governing bodies, and what potential ramifications may lay in the wake of Brexit.
In the customs field, the uncertainty can be broken down as follows:
- Delays at the border
- Increased customs duty – the double duty hit
Although HM Revenue and Customs (HMRC) is introducing “easements” – temporary processes to deal with potential issues like delays at the UK border – they are temporary and to a certain degree, a knee-jerk reaction.
Processes that already exist still provide the best solutions to mitigate against the potential time and cost hits that Brexit may bring.
For example, processes like Customs Warehousing, the Customs Freight Simplified Procedures (CFSP) electronic inland-import declaration process, the National Export System’s (NES) electronic export equivalent, and others provide benefits as they stand. Brexit just multiplies and amplifies those benefits.
Time is running out
Time to implement these processes by the 29 March deadline is almost up. Organisations currently utilising them are in the best position possible to cope with the customs shock of Brexit. Having these automated, embedded processes allows an importer to review other, more hidden areas of risk introduced by Brexit such as:
- Potential customs valuation increases that might be mitigated by introducing buying agent structures
- Supply chain restructuring
- Loss of preferential origin status of imported goods
At a minimum, procedures like Customs Warehousing or Inward Processing provide some safeguard against the almost inevitable duty cost increases.
Is there still time for an agreement to be made? Yes.
Is one likely? Who knows.
Is there still time to prepare your operations? Absolutely.
With the next chapter in the Brexit saga still uncertain, implementing mitigation strategies and contingency planning should be the focus for many organisations.
As experts in global customs and compliance, BluJay can help. Contact us to speak to a BluJay expert today, or visit our Brexit resource center for related information and tools. To speak to someone on our UK customs team about Brexit or any related inquiries, call +44 (0)1689 818000.
Lorenzo Rossetti is Business Product Owner, overseeing Customs solutions in the UK for BluJay. He has spent his entire career in the UK customs world, including 17 years as Customs Development Director for Grosvenor International, now a BluJay Solutions company. Lorenzo can be reached at +44 (0)1689 818000.