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  October 4th, 2016 | Written by

Brexit Leaves UK Customs Transition in Limbo

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  • UK's CDS was slated for launch in Fall 2017 to ensure it met EU requirements.
  • With Brexit, UK may be delaying implementation of new customs system.
  • UK may incorporate EU requirements into CDS and then gradually withdraw them post-exit.

Companies involved in importing and/or exporting goods through the United Kingdom will want to keep a close eye on the country’s customs clearance processes, which may be entering a period of temporary limbo. The country is currently undergoing a major transformation of its import and export tracking system, CHIEF (Customs Handling of Import and Export Freight), that is likely to have a profound effect on anyone moving goods through the country.

Those who have dealt with CHIEF likely know that what was once a cutting edge solution for goods management and customs processing has now run its course, even as it continues to communicate with almost 30 other systems. In response, the UK’s Customs and Revenue department has been working toward the development of a new processing system, dubbed the Customs Declaration Services (CDS) program, to track imports, exports and their respective values—a move precipitated by a need to incorporate specific requirements for EU goods.

Initially, CDS was slated for launch in the Fall of 2017 to ensure it met its requirements for the EU. However, the recent Brexit vote, which demanded that the government begin the process of exiting the EU, is likely to alter those timelines as CDS no longer needs to accommodate EU requirements in full.

That may come as relief to some of the CDS developers who have pointed out the original timeline was ambitious and left little room to effectively test the system and work out any necessary kinks. But it’s important to remember that even after CDS is in place, the key import/export participants in the country, including customs brokers, freight forwarders, carriers and other stakeholders will then need to implement their own systems to align with CDS. Given the importance of the changeover, a strong sense of timing will be critical to success, but the Brexit vote and the political turmoil it has initiated has left many questions about what will come of CDS and when.

In order for the UK to exit the EU, it must first invoke Article 50 of the Lisbon Treaty, an action that does not yet have a clear timeline. In the interim, there are a host of voices calling for a re-do on the referendum given its close outcome, while others have brought forward alternative interpretations of Article 50 that would suggest its invocation must come only after a parliamentary vote in favor of doing so. Once Article 50 is invoked, it will put the UK on a two-year deadline to negotiate and complete its exit from the EU.

Assuming CDS can be implemented and tested in advance of the UK’s exit from the EU, there will likely be little incentive for CDS to meet the EU’s requirements as originally intended. However, the ambiguity around the invocation of Article 50 and the overall Brexit timeline may mean EU requirements are incorporated into CDS and then gradually altered or withdrawn as necessary post-exit.

The trouble is, no one really knows precisely what will happen and when, leaving all those invested in the initiative feeling a little uncertain about what the future holds for the seamless processing of goods across the UK’s borders.

What is certain is just how critical a smooth transition between CHIEF and CDS is to the country’s government coffers and the industries who rely on these systems. As it stands, CHIEF accounts for the collection of some $44 billion in government revenue each year and is a critical bulwark against the importation of dangerous, prohibited and restricted goods. It’s also the primary means of data collection related to the UK’s international trade.

All this to say there’s great reason to pay close attention to the UK’s primary goods-processing system, not only for enterprises in the UK but for the world’s shippers as a whole. Once CDS is implemented, import/export stakeholders will need to act fast to ensure they’re aligned.

Bernie Hart is the vice-president of sales for Livingston International’s Global Trade Management group and Strategic Accounts.