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  May 7th, 2018 | Written by

As the Brexit Clock Ticks…

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  • Enterprises considering various Brexit outcomes and their impacts will be in a better position to respond.
  • Many businesses on both sides of the English Channel are taking a wait-and-see approach to Brexit.
  • In the US and Canada, only four and six per cent respectively of SMBs have been planning for a US NAFTA withdrawal.

One would be hard-pressed to find a business in the United Kingdom and the broader European Union that isn’t at least somewhat concerned about what the outcome of the Brexit talks may yield in terms of disruption to their business operations.

But fret and preparation are not synonymous in meaning or outcome. Those enterprises that have been closely following the Brexit negotiations and considering the various outcomes and their potential impact on their business will be in an unquestionably better position to respond to that disruption in a nimbler and more strategic way.

And yet, it wouldn’t be terribly surprising to discover many businesses on both sides of the English Channel are taking a wait-and-see approach. In the face of uncertainty and ever-changing circumstances surrounding Brexit, time-crunched business owners and operators quite expectedly revert to the wait-and-see approach.

That’s certainly been the case in North America where negotiations around the North American Free Trade Agreement have been ongoing for nine months. A recent study conducted by Livingston International shows that among American and Canadian businesses, only four and six per cent respectively of small and medium-sized businesses and about 20 percent of large businesses have been actively contingency planning for a US withdrawal from NAFTA.

While it may seem Brexit stakeholders may have a more generous timeline than their North American counterparts, the reality is that a solution to Brexit is sure to be stamped out during 2018, leaving those affected with only about months to adapt to the new trade relationship between the UK and EU.

By far, the most affected aspect of  supply chains will be the customs process which will be entirely overhauled come Brexit day with no guarantee of sufficient increase in human resources at border crossings to cope with the influx of queries, misunderstandings, violations et al. Strategically minded UK traders have already been assessing the impact of this change to their processes and, in many cases, considering  Authorised Economic Operator (AEO) status as a means to enable the speedy release of goods. The AEO allows traders to receive preferential status at border crossings to expedite customs processes and to take advantage of reduced levels of monetary guarantees required to secure duty and tax payments with HM Revenue and Customs.

However, to take real advantage of reduced port clearance times, traders should consider the use of periodic reporting known as Customs Freight Simplified Procedures (CFSP). This is a facilitation from customs that enables a trader to obtain the release of goods with only a summary declaration being submitted at the port of entry; the final declaration is then completed and submitted to customs in the month subsequent to the importation.

CFSP has been used extensively for some years now by high volume importers. However, with Brexit imminent, the value of being able to determine when goods are going to be available for manufacture and/or resale will become ever-more attractive, particularly to low-volume traders who may have previously believed =they were either unable to use CFSP or that their low volume of imports wasn’t worth the administrative burden of applying for CFSP.

The use of CFSP requires the implementation of software systems to control the calculation of duties, taxes and communications with HM Revenue and Customs. There are several providers that offer the CFSP software and CFSP Bureau operators who will represent a trader with customs.

Yet strategic businesses won’t wait until Brexit Day on March 29, 2019 to determine whether or not AEO and CFSP makes sense for their business models, particularly since the application process will become longer and more cumbersome as Brexit Day approaches and a greater influx of applications flood HM Revenue Customs offices for approval.

It is therefore in traders’ best interest to review their trade lanes and the timelines within them to establish the cost of potential delays in the receipt of goods and the benefits of taking advantage of post import customs checks that are available within CFSP.

David Merritt is a director in the Global Trade Consulting division of trade services firm Livingston International. He can be reached at