techUK, ADS and Dechert held a joint event on the impact of Brexit on export control, sanctions and customs where we had an excellent range of speakers from across Government and industry. Approximately 90 delegates attended the sessions and main points from the event are below:
Session 1: Brexit and Customs
- Given the “green” status of provisions on customs in the draft Withdrawal/Transition agreement, status quo will continue during until December 2020.
- As “nothing is agreed until everything has been agreed” uncertainty remains regarding the customs arrangements after transition.
- The Customs Bill, the Taxation (Cross Border Trade) Bill is in committee stage and will set the framework to allow for the UK to set out tariffs. The bill will not set policy.
- Some customs friction for EU trade will be inevitable due to the UK position on leaving the Customs Union, but HMRC are looking at how to minimise this, by looking at the options set out in the White Paper: a ‘highly streamlined’ customs arrangement where declarations are required, but more cost and admin will be required or a ‘customs partnership’ where the UK border charges EU tariffs on goods destined for the EU and UK tariffs on goods for the UK
- The UK wants to agree mutual recognition of the customs framework, including AEO status. Businesses were encouraged to conduct cost/benefit analyses of applying for AEO.
- On VAT, HMRC believes there will be a status quo during transition period, but post-Brexit VAT policy is still being planned and will be consulted on.
- HMRC are still confident CDS will be ready by Jan 2019 (with no plans to extend this into transition) and is sufficiency scalable.
- Without knowing the terms of the UK/EU FTA, it is hard to predict friction caused by Rules of Origin rules.
Session 2: Brexit and Sanctions
- The UK will still be involved in sanctions policy as it a crucial tool of foreign policy, and given the EU and UK face the same threats the UK is aiming to co-operate with the EU and be involved at UN level. As many current EU sanctions as possible will be carried over into UK law.
- The Sanctions and Anti-Money Laundering Bill is being held up, but will return in the next few weeks with the aim of passing by Summer.
- OFSI plan to publish a guide to the various sanctions in force at the end of transition and for business the three sanctions regimes of primary concern are UK, EU and USA. Some complexity is inevitable ,but the UK will aim to align sanctions designations with Europe and the USA.
- Brexit could also improve sanctions policy by clarifying ambiguities, with potentially a general licence for financial sanctions and OFSI will consult on new processes.
Session 3: Brexit and Export Controls
- The UK’s aim will be maintaining the integrity and effectiveness of the export licensing system after Brexit, to keep additional burdens on business at a minimum and to maintain the ECJU’s licensing performance.
- EU export control regulations come into the UK law, including the revised Dual-Use Regulation if it passes during transition (there are major question marks over this).
- The UK will not input into working groups and lose its voting rights during the transition period, which is when the negotiations could take place.
- Longer term, the aim is to create a new Export Control Order to consolidate the various controls into one order and simplify processes for applicants.
- We will (eventually) be able to consolidate controls from retained EU legislation into a new-look Export Control Order, but when and what this might look like is not yet known.
- For the future partnership, issues for ECJU in negotiation include co-operation, preventing undercutting (where licence rejections are valid through Europe), ensuring mutual recognition of licences until they expire and amendments to control lists.
- Businesses will need a licence for exporting Dual-Use goods into the EU, but the aim is to create a new OGEL that will not add any new reporting or admin procedures.
- The UK wants the EU to add the UK to the EU-001 licence and industry groups should push EU counterparts to make sure this is heard.
- Other issues need to be worked through including Consolidated Criteria, getting some form of enhanced status for export licencing, continued application of the Intra EU Transfers for defence and military goods and the ability of ECJU to manage increased workloads as many SMEs will have to undertake compliance processes for the first time.