On January 31, 2020, the United Kingdom (UK) officially withdrew from the European Union (EU). An eleven-month transition period was enacted to negotiate trade terms between the UK and the EU, and this transition period expired on December 31, 2020.
Two scenarios that were being discussed
- A Free Trade Agreement (FTA): If an FTA is agreed upon, this could result in tariffs and quotas not to be applied on the majority of goods traded between the UK and EU. However, even with an FTA there could be customs formalities associated with clearance and documentation.
- WTO terms: If an FTA cannot be agreed upon by the end of the transition period, a.k.a. a “no deal Brexit,” the UK and the EU will trade on World Trade Organization (WTO) terms. The UK will be considered a Third Country, and Shipments will be subject to customs tariffs, clearance procedures, and inspections. Thus, duty and taxes are expected to be imposed on goods that the UK sends to EU countries and on goods EU countries send to the UK.
Update on the Dec. 24 Agreement
Negotiators from the EU and UK reached a Trade and Cooperation Agreement on December 24, 2020. This agreement was approved by 27 EU Member State Ambassadors on December 28, was voted into legislation by Britain’s parliament on December 30th and went into effect at 11pm London time on December 31. The EU legislation is expected to fully approve the deal in March.
The EU-UK Trade and Cooperation Agreement calls for a “Zero Tariff and Zero Quota” Free Trade Agreement in an effort to uphold a jointly favorable trading relationship. “Zero Tariff” meaning no taxes on each other’s goods when they cross borders (tariffs) and “Zero Quota” meaning no limits on the number of things that are traded (quota). Nevertheless, even with this FTA, Importers and Exporters will now experience customs formalities and controls as required under EU and UK laws, of which will include:
Export Declaration out of the EU
- Import procedures and declarations with UK customs (similar to what occurs from rest of world to the UK).
- UK importers will need to have an Economic Operator Registration and Identification Number (EORI)
- Rules of Origin requirements on goods traded
- VAT rules for both the EU and UK
- (Note that shipments from UK to EU will also require Export and Import clearance procedures.)
Additionally, as of January 1, 2021 the EU and UK will be two separate regulatory and legal entities. Thus, requiring all products to comply with each entity’s respected regulatory checks and controls. In specific sectors, including automotive, pharmaceuticals, chemicals, wine, and organic products the EU and UK have agreed to specific arrangements to help facilitate trade of these commodity types.
As per the European Commission’s Q&A: What was agreed to facilitate supplies of medicinal products?
- Recognition of results of inspections carried out by the authorities of the other Party in manufacturing facilities located in the territory of the issuing authority. This will avoid unnecessary duplication of inspections of manufacturers of medicinal products to assess their compliance with Good Manufacturing Practice requirements.
- Possibility for each Party to unilaterally extend such recognition for manufacturing facilities located outside the territory of the issuing authority, under specific terms and conditions.
- Further to note, Northern Ireland will remain as part of the EU’s single market, and goods arriving into Northern Ireland will be subjected to EU customs clearance rules.
How is Cryoport handling this situation
We will continue to closely monitor the situation. This new Free Trade Agreement may result in border clearance impacts in the first few months of this transition, due to higher clearance formalities being seen in the UK and EU from Brexit. However, the integrated carriers we contract with are well versed in clearance capabilities; as they currently provide clearance, in the UK and EU, from rest of the world. We will continue to work closely with our transportation partners to understand impacts as we move through the transition.
We are also in close collaboration with our subsidiary company in the EU, CRYOPDP, to help assist in transportation needs for our EU clients. CRYOPDP can also facilitate clearance on behalf of an importer into the UK.
- How to Obtain an EORI
- Help and Support for Traders Getting Ready for Brexit (UK Gov)
- UK Gov Transition Site
- European Commission: Getting Ready for the End of the Brexit Transition Period
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