How UPS is tackling post-Brexit teething problems
16 February 2021: UPS’s Walter Van Der Meiren, who spoke at an ICAEW webinar last week, explains the main issues post-Brexit and how the EU and UK governments could ease them.
UPS started preparing for Brexit as soon as the referendum result was announced back in 2016. From a customs perspective, this meant redesigning a lot of its procedures to align better with the New Computerised Transit System (NCTS), and that it was prepared for the increased documentation that would be necessary once previous trading terms came to an end.
“Given the high number of shipments we are carrying on ground, we cannot go to a customs office,” says Walter Van Der Meiren, brokerage division manager for UPS. “We have our own warehouses.”
The company applied for authorised consignee status and expanded its hub network. “It’s been four and a half years of intense internal preparations. Systems have been adjusted and we spent a lot of time communicating with and listening to our customers,” he continues.
The last-minute trade and co-operation agreement announced on Christmas Eve was welcome news. UPS had prepared for a no-deal scenario, which would have been the most disruptive. “Trade agreements are complicated things. They are, all-in-all, beneficial; the more trade agreements, the more flawless movement of goods. That's good for our customers. However, when you make a trade agreement, you create new rules. Normally, what we saw with CETA and with the Japan agreement, you have an implementation period that can last six-to-12 months. It's gradual. With this, we had little over a week.”
The immediate impact of this has been felt by consumers hit by import duties on goods bought on the internet, not knowing that they are buying goods that originated outside of the EU or the UK.
There is a range of customs formalities in place when exporting goods between the EU and the UK and vice versa, starting with an export declaration. You also need to submit safety and security data. In the bilateral agreements that the EU has with countries such as Switzerland, there is a waiver for security and safety declarations.
“The UK has a waiver of six months, where we do not have to provide entry summary declarations, but still, it is added complexity on what used to be a very easy, free movement of goods. Customs legislation in general, and certainly in the EU, has two big objectives,” says Van Der Meiren. “First of all, it needs to ensure that customs authorities can collect the revenue and do a serious risk assessment. On the other hand, customs legislation should push trade facilitation for legitimate trade.
“We’ve seen over the last year that it’s vital to have complete data much earlier than before in order to avoid delays. Compliance is a must for all parties.”
UPS is an Authorised Economic Operator, a status that should relieve it from a lot of requirements. UPS sees the importance in requirements growing, and Van Der Meiren notes that “UPS is here to work with the European Commission and the UK to ensure the customs legislation of tomorrow can work for us all.”
Before 1 January 2021, shipments with an intrinsic value of less than £15 were VAT exempt. That is no longer the case. The UK also removed the collection of that VAT from the import onto sales under £135. “That means that depending on the situation, your supplier is supposed to put them on the invoice, just like a domestic sales transaction. This is new to people.”
From 1 July, the EU will put similar measures in place, says Van Der Meiren. “We would like the legislation to streamline processes because the more complex you make it for economic operators to work, the more complex it gets to control. Issues with Northern Ireland have been well-documented, as it still aligns with the single market and customs union, which creates customs requirements between it and Great Britain.
UPS is looking to open a dialogue between it and the European Commission and the UK government to find pragmatic ways to improve the flow of goods. “There are a lot of opportunities. The EU and UK have been working together for many years. What we now need to work on are solutions that enable governments to do their job and also facilitate trade.
“There was a lot of interaction on the AI front before the UK left. So there are a lot of possibilities, like common controls or having an export declaration that you can use as an import declaration. Mutual recognition is a very obvious thing to aim for. A waiver of safety and security data like we have with Switzerland. What is also very much needed is an efficient return process.
“Let's share our experiences and our difficulties, and look forward. Bring all these good brains together to work on solutions that make moving goods between the EU and the UK an example to the rest of the world, because we have the potential to do so.”
View the full webinar: Post-Brexit exporting: practical tales from the front
Find a range of resources to help you navigate the post-Brexit environment on ICAEW’s dedicated Brexit Hub.