Commercial | Risk
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In our previous note on the complex and dynamically evolving subject of Brexit, we considered some of the rules and regulations for businesses importing goods into Great Britain and/or EU businesses looking to export their goods into Great Britain.
In this note we highlight some considerations for businesses based in GB/UK who seek to export their goods to the EU in 2021 and beyond.
The question for clients is: Which rules and regulations apply to my business?
The answer depends on:
A business may need to apply one, more, or all of these sets of rules; they are not mutually exclusive.
This note highlights in general terms the steps which should be taken by importers of goods into the UK to minimise the disruption.
For specific advice covering what your business needs to do, please contact one of our lawyers within the International and Regulatory teams, who have worked closely with businesses to help them navigate their way through the relevant rules and regulations.
When a manufacturer places a certain product on the market in the United Kingdom or in the EU, they are able to "self-declare" that their product complies with EU-wide standards set out in the specific directives. In effect, the business is providing a warranty that the product may be lawfully placed on the market through the affixing of the CE marking.
This process of self-declaration is permissible post-Brexit.
If a manufacturer also then exports their goods, then they will need to consider the customs and commercial rules below.
They should also note that it is mandatory for an external 'notifying body' to be involved in the conformity assessment process for certain products.
The EU has stipulated that where a notifying body needs to be involved (or where the manufacturer decides to involve a notifying body), this body must be recognised by the EU or have applied relevant EU standards. In practice if a business has been using a UK notifying body until now it will likely need to make sure the relevant paperwork and files have been transferred to an approved EU body.
If a business has transferred the existing certificate to an EU notified body, then they will need to update the 4-digit notified body number on the products. This will not be necessary for products already on the market or which were manufactured before the transfer took place.
Traders will eventually need separate certificates for the UK and EU.
From 1 January 2021 any business placing certain items for sale on the market in the UK will need to ensure that the UKCA marking is affixed. The UK Conformity Assessment ("UKCA") may only be affixed where product assessment has taken place either by the manufacturer directly or having engaged a UK-based notifying body.
The obligations on an EU-based distributor should also be borne in mind. Any EU-based distributor they will become an ‘importer’ from 1 January 2021. They will need to make sure:
In our earlier note we highlighted the staged approach for imports into GB (January/April/July). This phased approach will make life easier when it comes to importing goods into the UK over time.
However, such a phased approach does not apply in relation to exports!
From 1 January 2021, exporters will need an Economic Operator Recording and Identification ("EORI") number that begins with GB to move goods between GB and other countries. A business does not usually need an EORI number if they 'only' provide services or move goods between Northern Ireland and the Republic of Ireland.
A business is likely to have already been provided with an EORI number from an EU member state. Traders will need an EORI number from an EU country if their business will be making declarations or getting a customs decision in the EU.
Businesses will also need to make a customs declaration on their exports, which requires the commodity code and the approximate value of the product.
The provision of Safety and Security (S&S) information remains of the utmost importance to prove a level of comfort that the goods traded do not pose a risk to the safety or security of the state into which they are imported. Most exports will require S&S information from 1st January 2021. The UK's Border Operating Model stipulates as follows:
"Carriers have the legal responsibility to ensure that the UK customs authority is provided with pre-arrival or pre-departure S&S information. The carrier is defined as the “operator of the active means of transport”. The carrier can agree to pass the requirement onto the trader, however, the carrier will still have the legal responsibility."
The export declaration may be used to provide this information in certain circumstances although there are circumstances in which a free-standing Exit Summary declaration may be required. Such a summary will be required where, for instance, goods have remained in temporary storage for more than 14 days.
Plainly the 'Rules of Origin' are a fundamental part of the Free Trade Agreement. However, it is encouraging that traders may make a declaration themselves as to the origin of the product. Such a statement should be made out on an invoice or on any other commercial document that describes the originating product in enough detail to enable its identification.
It will be important for traders to ensure dialogue with suppliers to ensure that everyone is aware of their respective duties having regard to the nature of the product (s) being traded and the customs rules that consequently apply. They should also ensure their hauliers also understand what needs to be done to move goods successfully across the border; and that the haulier possesses the required paperwork. See link below.
Businesses exporting to the EU should note that certain products will be subject to additional controls in the form of export licences:
We have provided bespoke advice to clients operating across these different sectors and have guided them through the additional requirements and controls that apply when it comes to exporting more specialist goods. Additional customs controls are in place, for instance in relation to:
A manufacturer will also need to consider how the goods are being sold.
The UK is now a "third country" as far as the EU is concerned, meaning that there must be an economic operator established in the Union for goods to be exported to the EU where they are not sold directly to the end user.
This economic presence may take the form of an "authorised representative", appointed by the UK-based trader for the purposes of discharging the duties of the importer in the EU. All products will need to be labelled with the name and details of both the manufacturer and the authorised representative.
Alternatively, the UK-based trader may wish to establish a presence within the EU directly, through setting up a subsidiary in an EU member state, thus becoming the importer. The products would still need to be marked with the name and details of the manufacturer and the EU based importer.
It is worth noting as well that different member states have widely differing rules and requirements in relation to corporate governance and what is required for a company to be established lawfully. We are fortunate to work with experienced corporate lawyers in firms across Europe who provide the required 'local' perspective.
The rules and regulations for exporters (and importers) require careful thought and preparation. It is important to work and communicate with suppliers and intermediaries so that everyone understands their role and responsibilities, having regard to the specific framework at that moment in time and in respect of the products being transited.
While the overarching free trade agreement is to be welcomed as providing (in general terms) unrestricted access to the respective markets, in our experience the devil is always in the detail; meaning here that the product and business-specific framework must be closely borne in mind.