The European Commission has published its Contingency Action Plan for a “No Deal” Brexit. The contingency plan seeks to mitigate significant adverse effects, but the Commission's paper emphasizes:
- Contingency measures should not replicate the benefits of EU membership, nor the terms of the transition period that would take effect if the Withdrawal Agreement were ratified; and
- Contingency measures will be temporary. They will provide only a brief respite from the “cliff edge.”
One area of major concern to the EU in the event of a “No Deal” Brexit will be that of customs and the export of goods. Likewise, this will be of great importance to US companies with European operations that export and import products between the UK and EU. So how does the commission propose handling customs and exports in the event of a “No Deal” Brexit?
If the Withdrawal Agreement is not ratified, all relevant EU legislation on imported goods and exported goods will apply as soon as the UK’s Article 50 notice expires on March 29. This includes the levying of duties and taxes and the respect of the formalities and controls required by the current legal framework. Declarations will have to be lodged, and customs authorities may require guarantees for potential or existing customs debts.
The EU Commission papers emphasize the impact of these measures on businesses with little or no existing experience of customs and border clearance formalities. The UK’s HM Revenue & Customs department estimates indicate that up to 145,000 UK businesses, including many SMEs, fall into this category. This will focus considerable attention on HMRC’s new online system for customs declarations (CDS). HMRC’s most recent evidence to the DExEU Select Committee suggests that CDS is highly unlikely to be fully operational by the end of March 2019, requiring many businesses to grapple with the existing (and largely paper-based) CHIEF system.
The need to make customs declarations would be one factor contributing to delays at ports such as Dover, though perhaps less significant than the need for regulatory checks on agricultural produce and foods, pharmaceuticals and goods.
EU law allows some flexibility for temporary premises to be used as inspection rooms or sharing commercial facilities for the storage of consignments. However, in order to be ready by the Brexit deadline, the new or extended border inspection posts must have be proposed by the Member States to the European Commission before February 15, 2019. This places significant onus on ports and other points of entry within the EU27 to accelerate contingency plans to reduce the risk of catastrophic delays.
Export of dual-use items from the EU to the United Kingdom will require individual licenses as of the withdrawal date. Dual-use items are goods, software and technology that can be used for both civilian and military applications. The EU controls the export, transit and brokering of dual-use items so it can contribute to international peace and security and prevent the proliferation of Weapons of Mass Destruction (WMD). Union General Export Authorizations (EUGEAs) allow exports of dual-use items to certain destinations under certain conditions. To facilitate controls on the export to the United Kingdom of dual-use items as of the withdrawal date if the Withdrawal Agreement is not ratified, and to ensure the good functioning of the export authorization regime for all EU27 Member States, the Commission has adopted a proposal for a Regulation to add the United Kingdom to the list of countries for which a general authorization to export dual-use items is valid throughout the EU.