It has now been more than a year since Brexit and theoretical questions are now practical issues of the day-to-day activities of entrepreneurs that have to purchase resources from EU countries or sell their products in the EU.
Following the end of the freedom of movement of goods, moving goods between the UK and the EU has become more complex. Import controls changes and rules of origin have been introduced and it will be difficult to trade with the EU if you do not know how to operate within these new regulations.
According to a recent report by a House of Commons Committee Accounts Committee, although it is not possible to isolate the impacts of Covid-19 and Brexit on the recent lower trade volumes, “it is clear that EU exit has had an impact, and that new border arrangements have added costs to business”.
As trading with the EU has become more complex, if you have not yet familiarised with the processes and paperwork small businesses need to complete when they trade with the EU, do not wait another year before you do so.
EORI Number and Importers
Businesses based in the United Kingdom that want to import from or export to the EU should get an Economic Operators Registration and Identification number starting with GB – the GB EORI number. You can apply for an GB EORI number online at the Government website.
When you export your product to an EU country, someone based in that country must formally import the product. This importer can be your client, a subsidiary of your business or an agent.
If you sell directly to customers in the EU, you must ensure that your contracts reflect what you have agreed with regards to the obligations related to the impor of your products into an EU country.
If you consider establishing a subsidiary in the EU so that you can not only import goods into the EU but also operate part of your business from there, you should check the laws and regulations that apply in the country where you want to establish your presence. This subsidiary will then need to apply for an EU EORI number in that country.
If you engage an agent to import your products and sell them in the EU, do not forget to enter into appropriate contracts which will set out what you have agreed not only in relation to the import of your products but also their resales within the IP.
No tariffs and Rules of Origin
Trading between the EU and the UK generally remains subject to no tariffs. However, businesses can only take advantage of the zero tariff regime if they can prove that their products really originate in the EU or the UK.
Different rules apply to different products. It is essential to check which rules apply to the products that you want to export to the EU and ensure your products comply with them.
Rules of origin relate to the resources used in the production of the goods. Therefore, if you want to export goods to the EU, you should analyse your supply chain and assess to what extent your suppliers are compliant with the rules of origin. If your suppliers are not compliant, changes are that your product will not qualify for “made in the UK”.
If you are importing goods from the EU, you should ask the exporter to provide evidence that their products comply with the rules of origin. These obligations regarding compliance with rules of origin and indemnities for breaches of these rules should be included in your contracts with the exporte.
Certificates, licences and customs declarations
Depending on the type of goods being exported or imported, you may need to obtain – in the UK and the EU – certificates or licences. Products subject to such certificates and licenses include goods commonly traded by SMES: animals, animal products, plants, plants products and high-risk food.
And it does not end here. You must comply with all the paperwork required for customs clearance on both sides of the English Channel. All customs declarations must be properly completed and delivered to the competent authority as part of the process of trading between the UK and the EU.
Filling in these declarations and applying for any necessary licence may be complex and time consuming. You may consider engaging a specialised agent to help you in these processes.
If you import goods from the EU, you need to ensure that your suppliers can export these goods to the UK in accordance with the post-Brexit requirements.
If you export goods to the EU, you need to ensure that the goods you export comply with the local requirements from phytosanitary rules to labelling and marketing standards. You should also confirm that your client can import these goods into the country where they are based.
It goes without saying that your agreements with your clients and suppliers should expressly deal with these requirements on certificates, licences and declarations.
Which tasks which party needs to undertake to ensure the process is properly completed and who will pay for that? If you are trading goods with the EU, your contracts should not leave these provisions out.
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