UK Internal Market Bill (UK)

A highly complex bill was introduced yesterday at First Reading. This bill is here.

Explanatory Notes for the bill are here.

The Institute for Government has a useful explainer here.

I Blog posted about the possibility of an Internal Market Bill earlier this year. In the meantime, the UK Government published a policy paper and conducted a short consultation.

From 1 Jan 2021, the UK government and the devolved administrations will no longer be collectively bound by EU law. As powers over key policy areas return to the UK government and the devolved administrations, there is a possibility that different parts of the UK may in future make different rules. This could create barriers to trade between constituent parts of the UK.

The UK Internal Market (UKIM) Bill would rely on the principles of mutual recognition and non-discrimination to ensure there are no new barriers for businesses trading across the UK.

The UK government argues that this bill will be necessary to underpin the functioning of the UK internal market after the end of the transition period – but the Scottish and Welsh governments are opposed to this approach. Instead, they would prefer to manage any possible new barriers to trade through mutually-agreed common frameworks in specific policy areas.

The government is also using this bill to give ministers powers to amend how the UK could implement the Ireland/Northern Ireland Protocol of the EU-UK Withdrawal Agreement – if it can’t reach key decisions with the EU. The government has said that it will use the forthcoming Finance Bill (not yet published) to give ministers further powers with relation to the Northern Ireland protocol.

Clauses set out new monitoring responsibilities of the internal market for the Competition and Markets Authority (CMA), which will be exercised through an Office for the Internal Market (OIM).

The CMA will have powers to monitor and report on the effectiveness of the internal market, under its own initiative or at the request of the UK or devolved governments. Although its remit will be limited to regulations which fall within the scope of the earlier parts of the bill (and will exclude anything giving effect to the Northern Ireland protocol).

The government plans to pass the UK Internal Market Bill before the UK leaves the transition period at 11pm on 31 December – this means there will be limited time for parliament to scrutinise this constitutionally significant piece of legislation.

It will need to pass both the Commons and the Lords before it can become law, and both Houses will be able to table amendments.

GB-EU Border Checks (UK & EU from 1st Jan 2021)

On 14 July, the EU updated and reissued it’s 1 Jan 2021 Readiness Notice on Customs (dated 22 Nov 2019) and combined the content with the updated and replaced Readiness Notices on Preferential Rules of Origin (dated 4 June 2018) and Customs and Indirect Taxation (dated 30 Jan 2018), here.

The day before, on 13 July, the UK published its Border Operating Model, here. I Blog posted about it at the time.

The Institute for Government in the UK has published a handy explainer – here.

GB to EU trade – From 1 Jan 2021

(1) Full customs declarations (UK export declarations and EU import declarations) will be required.

(2) If applicable, tariffs and import VAT will be payable at the time of import, unless traders are eligible to defer payments.

(3) UK exit summary Safety and Security declaration (or combined fiscal and safety and security declaration) and EU entry summary Safety and Security declaration will be needed.  

(4) Checks according to international conventions (e.g. CITES) will take place.

(5) Full SPS checks will be imposed, including a requirement for UK Export Health Certificates.

(6) Additional requirements will apply to the export of other controlled goods, in line with EU and member state rules.

(7) Excise goods will be subject to the rules applied by the importing EU member state.

EU to GB trade –

From 1 Jan 2021

(1) Full customs declarations will be required for controlled goods (e.g. excise goods like tobacco and alcohol).

(2) For standard goods (most goods), simplified customs requirements will be in place from January. Traders will have to keep sufficient records of their imports, but will be able to defer full customs declarations until 1 July 2021 (although they may submit customs declarations before if they wish).

(3) If applicable, tariffs will be payable, but it will be possible to defer payment until customs declarations are made (no later than July 2021). If applicable, import VAT will be payable, although many traders will be able to defer payment.

(4) An EU exit summary Safety and Security declaration will be needed.

(5) Checks according to international conventions (e.g. CITES) will take place.

(6) Imports of high-risk live animal and plants (and animal and plant products) must be pre-notified to the UK authorities via IPAFFS, have correct health documentation and may be subject to checks. Physical checks will be carried out at the point of destination or other approved premises.

(7) Import licenses and other requirements will apply to the import of some high-risk goods.

(8) Businesses importing excise goods will need to pay GB excise duties using the CHIEF or CDS systems (although excise duties are already payable on excisable imports from the EU).

From April 2021

Imports of all products of animal origin, regulated plants and plant products will require pre-notification to the UK authorities via IPAFFS and must have correct health documentation. Necessary physical checks will take place at the point of destination or other approved premises.

From July 2021

(1) Full customs declarations will need to be made at the time of import for all goods. Some traders may be eligible for simplified declaration procedures.

(2) Any applicable tariffs will be payable on import, although many traders are eligible to defer payments.

(3) A UK entry summary Safety and Security declaration will be needed.  

(4) Products subject to SPS checks will need to transit through a designated Border Control Post equipped to handle the goods in question and be subject to checks. Goods will subject to an increased rate of physical checks.

Medical Supplies (UK from 1st Jan 2021)

Healthcare is devolved in the UK, but contingency planning covers all 4 nations of the UK as well as the Crown Dependencies. Yesterday, the Department of Health & Social Care (DHSC) wrote to medical suppliers. The letter is here.

Re-routing away from the short straits

A large percentage of medical supplies come from the EU or have a supply touchpoint at the short straits (between Calais/Dunkirk/Coquelles and Dover/Folkestone). The DHSC letter asserts the first priority of any contingency should be to maintain replenishment rates at necessary levels by securing capacity to reroute freight away from the short straits potential disruption points. Companies are encouraged to review their own logistics arrangements and consider making plans for avoiding the short straits as a matter of priority.

In 2019, the Department for Transport (DfT) put in place a 4-year procurement framework for freight capacity for ‘Category 1’ goods , which includes all health supplies. This framework is still in place. DHSC is seeking to secure capacity on the government secured freight capacity (GSFC) to support the health and social care sector. More information will be provided when possible, including updates on the procurement timescales and when companies can expect to be able to register and access the service.

In addition, DHSC has retained its express freight service arrangements with 3 specialist logistics providers to support the urgent movement of medicines and medical products to care providers and patients if other measures experience difficulties. This service will be in place for deployment from 1 Jan 2021 as required.

Buffer stocks where possible

We encourage companies to make stockpiling a key part of contingency plans, and ask industry, where possible, to stockpile to a target level of 6 weeks’ total stock on UK soil. DHSC stands ready to support companies with their plans if required and understands that a flexible approach to preparedness may be required that considers a mixture of stockpiling and rerouting plans as necessary.

Centralised stock build

In the run-up to EU Exit, DHSC, working with NHS Supply Chain, built up a centralised stock build (CSB) of fast-moving medical devices and clinical consumables. Some of this stock remains and accounting for likely demand trends for the time of year, the DHSC plans to build these levels back up to a target level of 6 weeks’ total stock. The devolved nations of the UK may, in addition, choose to build their own stockpiles.

The UK Government also updated its guidance (for 1 Jan 2021) to healthcare providers – here.

And updated its Government contact details for medical supply businesses – here.

Border Arrangements (Kent) (Britain from 1st Jan 2021)

On 13 July the Government published its Border Operating Model – I blog posted about it at the time.

It is the responsibility of the trader (or the trader’s agent, such as a customs agent or freight forwarder) to provide the necessary documentation to the HCV driver, and it is the HCV driver who must present the documentation at the EU ports.

Being border-ready means that an HCV driver is carrying all the necessary documentation to get through the GB and EU port (or has been provided with the appropriate information to get the documentation).

This includes:

• customs documentation:

• a master or movement reference number (MRN) from an import declaration if the goods are going to stay in the country of disembarkation (for example, goods going from GB to France), or a transit accompanying document if the goods are either staying in the country of disembarkation or going to move beyond it (for example, goods going from GB to Spain via France)

• an admission temporaire/temporary admission (ATA) carnet if the goods are temporarily going abroad (for example, goods going from GB to France and then back to GB)

• a transports internationaux routiers (TIR) carnet if goods are sealed and/or going to non-Common Transit Convention (CTC) member countries (for example, GB to India overland).

• import and export documentation depending on what goods are carried (it is possible that a free trade agreement or sectoral deal may change some of the requirements for import and export documentation). For example, EU member state authorities will check for the following on arrival at the EU port:

• products of animal origin require an export health certificate

• plant and plant-based products require a phytosanitary certificate

• fish require a catch certificate, export health certificate and where appropriate a captain’s certificate.

In addition, there may be other forms of import/export documentation that an HCV driver will need to carry on behalf of their trader which would not be checked at the ports. An HCV driver using the accompanied roll on roll off (RoRo) route would need a safety and security declaration before arriving in the EU. EU rules mean that they can be completed shortly before arriving in the EU.

Some EU member states have additional national requirements for goods arriving from GB, for example:

• France requires the use of the SI Brexit system, and the MRN barcodes for multiple consignments must be compiled in to a single ‘envelope’ MRN that will be scanned.

• the Netherlands and Belgium require that all movements are pre-notified using the Portbase and RXSeaport systems respectively; HCVs that are not pre-notified will not be allowed to leave Dutch or Belgian ports.

Disruption at the cross-Channel ports from 1 Jan 2021 is not inevitable, but it is a possibility for which the UK government is preparing.

Updated assessment of potential levels of disruption is ongoing, and the UK Government is now consulting on aspects of the Border Arrangements (Kent and the Short Straits) that will need to be in place from 1st Jan 2021.

The M20 Contraflow

In 2019, there was a permanent contraflow between Junctions 8 and 9 of the London-bound carriageway of the M20 with a steel barrier between lanes 1 and 2 of the northbound carriageway. That carriageway was reduced from three to two lanes with a speed limit of 50 miles per hour when Operation Brock was inactive.

From 1st Jan 2021, Highways England will deploy instead a concrete quick moveable barrier to set up the contraflow. The moveable barrier will be ready to use in December 2020 and will enable around 2,000 HCVs to be held – the same capacity as the 2019 planned contraflow. This will be available for long-term traffic management plans and is not just a response to any cross-Channel disruption at the end of the transition period.

Kent sites and revision of traffic management plans

Goods being moved from GB to the EU must be prepared for full EU import controls from 1 January 2021.

The UK Government has announced that goods moving from the EU to GB will also be subject to third country import controls, but these checks will be phased in during the first half of 2021.

For Eurotunnel and the Port of Dover, this is likely to require new inland border control posts as there is insufficient space for the new facilities at the ports.

While the inland border control posts are intended for checks conducted by HM Revenue and Customs (HMRC) and the Department for Environment, Food & Rural Affairs (Defra) on inbound and outbound goods, they could also be used as new holding sites for outbound HCVs as part of Operation Brock (HGV traffic management system).

The UK Government has purchased a new site in Ashford to support this. Construction at the site has commenced, and it will provide approximately 2,000 HCV holding spaces. The new Ashford site is being integrated into updated traffic management plans for the end of the transition period. This overall plan is still in development and is likely also to incorporate some but not all of the other parts of the 2019 approach.

Extending the sunset clause

In Oct 2019, the Government had issued three Orders (Statutory Instruments) to give the Kent Resilience Forum the ability to create traffic restriction periods that require HCV drivers to use designated roads to reach the ports (including under specific conditions), and to follow instructions from traffic officers.

There would have been four Brock phases to handle increasing levels of congestion:

• phase 1: using the Dover Traffic Assessment Protocol (TAP 20) to hold around 500 lorries on the six-mile section of A20 leading to Dover

• phase 2: queuing on the coastbound M20 (J8-J9) with a steel barrier to create the contraflow, with all other non-freight traffic going through the M2

• phase 3: Manston Airport HCV holding facility for all Port of Dover freight (Eurotunnel freight would have continued to be held on M20 J8-J9)

• phase 4: M26 queuing system coastbound and London-bound for all Eurotunnel freight

As the current set of SIs expire on 31 December 2020, the Government proposes to extend the sunset clause to October 2021 to allow Operation Brock to continue and be enforceable in 2021.

The smart freight (SF) service

SF is an online service for the RoRo freight industry being developed by the UK Government. The service will help to simplify and automate the process of establishing the border-readiness of an HCV to help mitigate the risk of delays.

It will ask questions relating to the expected EU import controls at the border to ensure the HCV driver has the necessary documents before they travel. The service will include an online portal for registration of goods movements and an operator application to check compliance with the service.

For 1 Jan 2021, two key products are being developed to upstream the border-readiness checking process to the point of loading:

1 a web-based portal for the SF service (the ‘SF portal’) which enables the HCV driver, or someone acting on their behalf, to self-declare if they have all the documentation they need to take goods across the Short Straits

2 a mobile application (the ‘SF app’) which enables enforcement officials to confirm that a vehicle is registered on the SF portal, and to see the outcome of their self-declaration

The Government’s consultation questions are found in this document – here

EU-UK Readiness post 1st Jan 2021 (EU)

On 14th July, the European Commission published a Guidance Note “Withdrawal of the United Kingdom and EU Rules in the field of Customs, including preferential origin”.

This document (35 pages) is here.

The Guidance Note summary advice to Stakeholders –

–  consider whether they need to obtain an EORI number from an EU Member State;

–  consult their competent customs authority for further advice on their individual situation; and

–  adapt input and supply chains to take account that UK input will be non-originating for the purposes of tariff preferences with third countries.

Some points (this is not a full list, please read the document) –

(1) From 1st Jan 2021, UK EORI numbers will cease to be valid in the EU and will be invalidated in the relevant IT system EOS/EORI, including those UK EORI numbers linked to the ongoing operations covered by the Withdrawal Agreement.

Customs authorities of EU Member States should accept requests before 1st Jan 2021 and assign to them EORI numbers with the 1st Jan 2021 or thereafter as the “start day of EORI number”, according to the requests of the persons concerned.

(2) Authorisations granted by UK customs authorities are not valid in the EU from 1st Jan 2021. From 1st Jan 2021, the UK customs authorities are not an EU competent customs authority.

The UK is a Contracting Party to the Convention on a Common Transit Procedure (CTC), so from 1st Jan 2021 authorisations granted by the UK for transit simplifications are not valid in the EU Customs Decisions system, but need to be treated in the UK’s national system as a Contracting Party to the CTC. Where then the UK communicates to the Member States which of those authorisations continue to be valid within the framework of the CTC, the Member States are to accept those authorisations as valid.

(3) Authorisations granted to economic operators with UK EORI numbers are not valid in the EU from 1st Jan 2021, unless the economic operator has an establishment in the EU, has the possibility to obtain an EU EORI and to apply for an amendment of the authorisation to include the new EU EORI instead of the UK EORI number. Where an authorisation cannot be amended by replacing the UK EORI by an EU EORI, the economic operator should apply for a new authorisation with his new EU EORI.

(4) UK content (material or processing operations) is “non-originating” under EU preferential trade arrangements for the determination of the preferential origin of goods incorporating that content.

Note the specific different arrangements that apply in Northern Ireland from 1st Jan 2021.

EU-UK Readiness post 1st Jan 2021 (UK 1st Jan 2021)

Yesterday, 13 July, the UK published its Border Operating Model (206 page Policy Paper) that will apply from 1st Jan 2021 for GB trade with the EU – here.

In addition, HMRC information for traders importing or exporting goods between Britain (GB) and the EU after 1st Jan 2021 is published – here.

HMRC also has guidance on declaring goods brought into GB from the EU after 1st Jan 2021 (update from 10 July) – here.

Specific instructions –

(1) Plants and plant products (update from 10 June) – here

(2) Animals, animal products and high-risk food and feed not of animal origin (update from 10 June) – here

In addition, the Forestry Commission’s guidance on importing wood, wood products or bark from non-EU countries is updated – here.

Protocols for GB trade with NI, and NI trade with the EU (including Ireland) will be published later this month (the UK government said yesterday 13 July).

I Blog posted a few days ago on EU-UK Readiness on the EU side.

EU-UK Readiness post 1st Jan 2021 (EU 1st Jan 2021)

The European Commission published a Communication “Getting Ready for Changes. Communication on readiness at the end of the transition period between the European Union and the United Kingdom” today 9th July. This document is here.

The Communication is posted on the European Commission’s End of Transition Period Readiness Page here, where other notices, with various publication dates, are posted.

Key points in the 35 page Communication (this is not a full list):

(1) As of 1 January 2021, the European Union and the United Kingdom will be two separate regulatory and legal spaces.

(2) As of 1 January 2021, licences issued to railway undertakings by the United Kingdom will no longer be valid in the European Union, and certificates or licences issued in the United Kingdom to train drivers will no longer be valid for the operation of locomotives and trains on the EU’s railway system.

[I Blog posted recently specifically re Railways]

(3) As of 1 January 2021, air carriers holding operating licences granted by the UK licensing authority for the commercial carrying by air of passengers, mail and/or cargo, will no longer be able to provide air transport services within the European Union. EU air carriers and holders of aviation safety certificates will need to ensure, and uphold compliance with European Union requirements, including airlines’ requirements on principal place of business and EU majority ownership and control, as well as the European Union aviation safety acquis.

(4) As of 1 January 2021, road transport operators that are established in the United Kingdom will no longer hold a European Community licence. In the absence of a reciprocal access agreement, the limited quotas already available under the mechanism of the European Conference of Ministers of Transport (ECMT) will be available for EU operators to conduct journeys to the United Kingdom, and for UK operators to conduct journeys to the EU.

[I Blog posted in 2019 about this topic]

(5) As of 1 January 2021, EU REACH registrations held by manufacturers and producers established in the United Kingdom will no longer be valid in the European Union. These entities will have to ensure that their substances are registered with a manufacturer or importer in the European Union or appoint an ‘Only Representative’ in the European Union as registrant for the substance.

[A UK REACH will operate in the UK, I Blog posted about this in 2019]

(6) As of 1 January 2021, downstream users in the EU will have to check whether chemical substances they use are registered by a registrant established in the European Union. Where this is not the case, they should:

* check whether the UK registrant they deal with plans to appoint an ‘Only Representative’ in the European Union; or

* register the substance in the capacity of importer.

Re Northern Ireland specifics (this is not a full list)

(1) Checks and controls will take place on goods entering Northern Ireland from the rest of the United Kingdom, for example on food products and live animals to ensure adherence to sanitary and phytosanitary (‘SPS’) requirements. Goods leaving Northern Ireland to enter the EU must comply with EU standards and rules.

(2) EU customs duties will apply to goods entering Northern Ireland unless the Joint Committee (set up under the Ireland/Northern Ireland Protocol) sets out a framework of conditions under which these goods are considered not to be at risk of entering the EU’s Single Market. Based on such a framework, no customs duties will be payable if it can be demonstrated that goods entering Northern Ireland from the rest of the UK are not at risk of entering the EU’s Single Market.

Border Controls from 1st Jan 2021 (EU Goods Imports)

The UK Government has today (12 June 2020) announced that border controls for EU goods imported into Great Britain will be introduced at the end of Transition Period in stages.

The announcement is here.

This staged approach will apply to EU goods imports to GB only. The EU will enforce the checks required by EU Law in its side of the border, there are no announcements for facilitation applicable to GB goods exports to the EU.

Per the Government announcement –

• From January 2021: Traders importing standard goods, covering everything from clothes to electronics, will need to prepare for basic customs requirements, such as keeping sufficient records of imported goods, and will have up to six months to complete customs declarations. While tariffs will need to be paid on all imports, payments can be deferred until the customs declaration has been made. There will be checks on controlled goods like alcohol and tobacco. Businesses will also need to consider how they account for VAT on imported goods. There will also be physical checks at the point of destination or other approved premises on all high risk live animals and plants.

• From 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: Traders moving all goods will have to make declarations at the point of importation and pay relevant tariffs. Full Safety and Security declarations will be required, while for SPS commodities there will be an increase in physical checks and the taking of samples: checks for animals, plants and their products will now take place at GB Border Control Posts.

An EU to GB (EU goods imports to GB) border operating model will be published by the UK in July 2020.

Trade flows between Northern Ireland and Ireland, or between GB and Northern Ireland are separate and covered by the Withdrawal Agreement.

The UK Global Tariff will apply to all goods imported into the UK from 1 January 2021, unless an exception applies. The measures announced today will not apply to third countries outside of the EU. Full import controls will continue to apply on trade between the UK and third countries outside of the EU and EEA.

As I commented in earlier Blog posts, commencing August 2020, we (Cardinal Environment) will be putting some staff through the UK Customs Academy Level 4 Certificate in Advanced Customs Compliance (tariffs and customs training). This is to facilitate client queries in the foreseeable.

UK implementation of Ireland/Northern Ireland Protocol (Northern Ireland)

The UK government has today published its approach to implementing the Ireland-Northern Ireland Protocol of the Withdrawal Agreement that was signed with the European Union.

The Protocol sets up special arrangements that stem from the Withdrawal Agreement and apply in Northern Ireland from 1st January 2021, until at least 2024, when the first four-year consent vote process contained in the Protocol is initiated.

The Protocol covers a range of areas: human rights, the Common Travel Area, customs and trade, regulation of manufactured goods, the Single Electricity Market, some limited state aid provisions, and VAT and excise. The paper published today sets out the UK’s thinking in all of these areas. But the core of the Protocol is the provisions on customs and trade. It is these areas which are covered in most detail in the document.

It is the responsibility of the UK Government and UK authorities to give effect to the Protocol in Northern Ireland. The Protocol has as Annex 2, a list of EU law that will continue to apply in Northern Ireland – at least 2021 to 2024.

The UK approach is set out in a Cabinet Office Command Paper – here.

The paper sets out four key commitments that will underpin the UK Government’s approach to implementing the Protocol:

• There will be unfettered access for Northern Ireland’s producers to the whole of the UK market and this will be delivered through legislation by the end of the year.

• No tariffs will be paid on goods that move and remain within the UK customs territory

• Implementation of the Protocol will not involve new customs infrastructure – with any processes on goods moving from Great Britain to Northern Ireland kept to an absolute minimum so that the integrity and smooth functioning of the UK internal market is protected.

• Northern Ireland’s businesses will benefit from the lower tariffs delivered through our new Free Trade Agreements with countries like the United States, Australia, New Zealand and Japan – ensuring Northern Ireland firms will be able to enjoy the full benefits of the unique access they have to the GB and EU markets.

Today’s publication also sets out plans to establish a new business engagement forum, which will meet regularly to allow Northern Ireland’s businesses to put forward proposals and provide feedback on how to maximise the free flow of trade. The Northern Ireland Executive will be invited to join the forum.

The Withdrawal Agreement is administered by a Joint EU-UK Committee set up under the Agreement, and both the Agreement and the Protocol have dispute mechanisms.

More detail is expected, and accordingly I will write more Blog posts.

UK-EU Future Relations (UK)

Today sees the publication by the UK of a number of trade relevant documents –

(1) the UK Global Tariff (UKGT) that will replace the EU’s Common External Tariff from 1st January 2021 – here

(2) the draft UK legal texts in the ongoing trade talks with the EU – here

The UKGT will apply to all goods imported into the UK unless:

• an exception applies, such as a relief or tariff suspension

• the goods come from countries that are part of the Generalised Scheme of Preferences

• the country imported from has a trade agreement with the UK

This Blog does not focus on Trade or Customs. Note – commencing in July 2020, we (Cardinal Environment Limited) will be putting some staff through the UK Customs Academy Level 4 qualification, this is in order to improve our services in the areas of Trade and Customs, that impinge on goods movement.

Trade talks are underway with the EU and the US.

The UK Government will announce shortly it’s proposals for how Northern Ireland based traders will benefit from the UKGT. The Withdrawal Agreement Ireland-Northern Ireland Protocol creates special arrangements for Northern Ireland. I will Blog post separately at that point.