STATE OF PLAY

On 15 June, PM Boris Johnson will hold talks with European Council President Charles Michel. European Parliament President David Sassoli and Commission President Ursula von der Leyen to take stock of the current progress in the Brexit negotiations. The high-level summit comes as negotiations remain in deadlock. In a closed-door meeting, EU Chief Brexit Negotiator Michel Barnier told EU-27 ambassadors that London is not keen to discuss what Brussels wants to talk about, instead trying to “pick and choose” and make progress only on the areas it has an interest in, such as getting access to the EU’s market.

However, both sides indicated some willingness to compromise. Briefing the European Economic and Social Committee on the Brexit ‘state of play’, Barnier said he was prepared to review the nature of the EU’s “level playing field” demands. While Barnier said Brussels was clear that the level playing field must be part of any agreement with the UK, he explained that its precise form was up for discussion so long as any solution honoured the political declaration. Meanwhile, in the UK, PM Boris Johnson is reportedly ready to accept EU tariffs on a small number of goods in return for Brussels dropping its demand that the UK continues to follow EU rules.

However, at the second meeting of the Withdrawal Agreement Joint Committee (WAJC), Cabinet Minister Michael Gove formally confirmed to the EU that the UK will neither accept nor seek any extension to the Transition Period, adding that “the moment for an extension has now passed”. In a press release, the UK Government noted that “today’s meeting […] was the last meeting before the deadline to extend the Transition Period (before 1 July 2020), and therefore the last formal opportunity to discuss and agree such an extension. Only the WAJC can agree to extend to the Transition Period and it cannot do this via written procedure.”

As a result, the two sides have now agreed to hold “intensified” negotiations every week between 29 June and 31 July, in an effort to reach a compromise by September. A UK spokesperson said that this new process will involve a mix of formal negotiating rounds and smaller group meetings, both in London and Brussels, assuming public health guidelines enable this.

New timeline for border controls –

In line with today’s announcement that the transition period will end on 31 December, the UK Government has announced that it will introduce new border controls in three stages until 1 July 2021. Specifically:

– From January 2021: Traders importing standard goods, covering everything from clothes to electronics, will need to prepare for basic customs requirements, such as keeping sufficient records of imported goods, and will have up to six months to complete customs declarations. While tariffs will need to be paid on all imports, payments can be deferred until the customs declaration has been made. There will be checks on controlled goods like alcohol and tobacco. Businesses will also need to consider how they account for VAT on imported goods. There will also be physical checks at the point of destination or other approved premises on all high-risk live animals and plants.

– From April 2021: All products of animal origin (POAO) – for example meat, pet food, honey, milk or egg products – and all regulated plants and plant products will also require prenotification and the relevant health documentation.

– From July 2021: Traders moving all goods will have to make declarations at the point of importation and pay relevant tariffs. Full Safety and Security declarations will be required, while for Sanitary and Phytosanitary (SPS) commodities there will be an increase in physical checks and the taking of samples: checks for animals, plants and their products will now take place at GB Border Control Posts.

Additionally, HMRC has unveiled an additional £50m grant to support businesses with recruitment, training and supplying IT equipment to handle customs declarations, while the Government stated its intention to change rules so as to remove the financial liability from intermediaries operating on behalf of their clients and allow parcel operators to continue declaring multiple consignments in a single customs declaration. Furthermore, it committed to building new border facilities within the UK for carrying out required checks, such as customs compliance, transit, and SPS checks, as well as providing targeted support to ports to build new infrastructure. Where there is no space at ports for new infrastructure, the Government said it will build new inland sites where these checks and other activities will take place.

OTHER KEY DEVELOPMENTS

  • HM Revenue & Customs told hauliers and ferry operators this week that it will begin trialling a new online system in the autumn to assess what shipments will face customs checks as they arrive in Northern Ireland from Britain.
  • CBI Chair Carolyn Fairbairn has warned that UK firms do not have the resilience to cope with a no-deal Brexit after the battering of the coronavirus crisis.  Fairbairn said a CBI member had likened a no-deal to “setting the shed on fire” while the house was in flames. She added that any buffers to cope with the additional cost and planning of an exit from the EU customs union and single market without a deal had been exhausted by the Covid-19 pandemic.
  • Ireland and Belgium have urged the EU Commission to take into account the shock of a hard Brexit in addition to the Covid pandemic in its response to the bloc’s economic slump.
  • The UK and Japanese governments have begun negotiations on a UK-Japan Free Trade Agreement. The agreement will build on the existing EU-Japan deal and will go further by securing additional benefits in areas such as digital trade. The UK and Japan aim to have a deal in force by the end of 2020.

Many thanks to consultant Nicky Donnelly, a valued client and former public affairs and communications manager, with nineteen years’ experience in-house with a multi-national and via consultancy, in the UK, Greece, Ireland and Brussels.