Brexit Bites, 23 April 2018

Apr 23, 2018

Talks continued in Brussels last week but a workable solution to avoiding a hard border between Ireland and Northern Ireland remains outstanding.  Next in our series of getting back to the basics of Brexit, we examine the Common Transit procedure which simplifies customs controls when goods move through a number of countries before reaching their final destination.

No deal if Irish border issue not solved

Talks continued in Brussels last week with a particular focus on solving the border issue on the island of Ireland.  It’s been reported that the UK faced criticism from the EU on its failure to come up with a workable solution of avoiding a hard border and there is also speculation that UK Prime Minister Theresa May is coming under pressure from party colleagues on her stance on leaving the Customs Union.

European Council President Donald Tusk said  that if agreement on how a hard border can be avoided on the island of Ireland is not reached, “there will be no withdrawal agreement and no transition”.

EU leaders have agreed to a 21 month transition period to 31 December 2020 where the UK will continue to follow EU rules and stay within the Single Market and Customs Union. However this is dependent on agreement being reached on the Irish border issue.

Back in December 2017, the EU and UK broadly agreed that there were three possible ways to keep the border open; a comprehensive trade agreement, special arrangements involving technology and unique customs arrangements or a “back stop” idea which would see Northern Ireland remain within the Single Market and Customs Union. 

The UK have said that it wants the whole of the UK to leave the Single Market and Customs Union and have therefore not fully agreed to the EU version of the back stop but have not come up with an alternative suggestion that satisfies the EU.

Defeat in Parliament

In addition to the reported dissatisfaction of the EU, Theresa May’s government suffered a defeat on the government’s EU Withdrawal Bill.  Peers in the House of Lords backed an amendment to the Brexit Bill by 348 votes to 225 which will require the UK government to explain what it has done to examine the possibility of remaining in a customs union with the EU.  The majority was a convincing 123 votes ahead.

This change will not commit or require the UK to remain in a customs union with the EU but it does put the onus on the government to explain what steps it has taken to come to the conclusion that the UK would be better off outside of a customs union.

Back to Brexit Basics - The Common Transit procedure

Last week, we looked at how customs procedures could be simplified in instances where traders obtain Authorise Economic Operators (“AEO”) status.  This week we look at Common Transit procedures which simplify customs procedures when goods move through a number of countries to reach their final destination.

Common Transit is an EU customs procedure that allows goods to move between the EU and common transit countries or between the common transit countries themselves with duty being paid in the country of final destination. 

This procedure facilitates the movement of goods by temporarily suspending duties and other charges on imported goods until they reach their final destination. Common Transit may therefore be useful for road freight that transits from Ireland through the UK to mainland EU or from the UK through the EU to Asia, for example.

The common transit countries are Switzerland, Norway, Iceland and Lichtenstein (the EFTA countries), Turkey, Macedonia and Serbia.

Each member state and common transit country has designated customs offices.  Import charges on goods that move under the common transit convention are suspended and collected at the customs office of destination in the member state and not at the external frontier.  This means multiple customs charges do not arise.

In order to avail of the benefits of the common transit area, declarations under the common transit system must be made electronically at the place of departure, using the New Computerised Transit System (“NCTS”) which is used by all common transit countries.

A Transit Accompanying Document, known as a TAD, must accompany the goods during transit and be presented along with the goods at an office of transit or at the office of destination. The movement of goods under common transit ends when the goods and the TAD are presented at the approved office of destination. 

In addition to the Common Transit procedure, there are two other transit procedures:

1. Union Transit, where the transit operation only covers the movement of goods within Union (EU) territory (and Andorra and San Marino).

2. TIR (Transports Internationaux Routiers) where the movement includes movement over Union territory and one or more third countries which are party to the TIR Convention 1975.

More information can be found in the European Commission’s Transit Manual.

Tune in next week for more Back to Brexit Basics.

Read all of our Brexit updates on the dedicated Brexit section of our website.