Shanker Singham, CEO of Competere, an international trade and economic policy consultancy, and customs and trade policy lead for the Trader Support Service and Digital Trader Services, writes about Border Control post-Brexit and why the call for ‘a better management border’ is louder than ever. Read more.
One of the most significant political moments of the last four decades – the vote of the UK to leave the EU – has delivered stark changes in everything from business processes to societal debate.
The implications of the vote have continued to reveal themselves over the last five years, with the UK facing a variety of both foreseen and unforeseen challenges.
On an economical level, the most pressing and immediate area of challenge has been in the handling of the UK’s border arrangements. Worried voices have pointed to extreme disruptions in the country’s supply chain; most tellingly in the shortages of beer in pubs, of milkshakes at McDonalds, and dwindling Haribo stock. Although these are global supply chain issues, caused by the Covid-19 pandemic and ensuing lockdowns – rather than the UK border per se – the point remains that there is a premium on ensuring a smooth and well-managed customs process.
But the border is managed not only by the UK government but also by an army of private sector customs experts, brokers, lawyers and accountants – all of whom have a hand in the import/export process that are so essential to our region’s economy.
Previously, as a member of the EU, the UK did not have to think actively about an independent trade or customs policy. The EU had authority over common commercial policy and administered its customs union, of which the UK was a part.
Indeed, the UK has not run its border fully independently for 47 years. To suddenly remove this support has, unsurprisingly, left a gap between the skills available and the expertise needed when it comes to how to navigate the changed processes.
Moreover, this is a border that handles transactions at massive scale and speed. Nearly half (46 percent) of UK exports go to EU countries, and without something to facilitate these arrangements, the impact on the UK economy could be significant. Leaving a customs union inevitably causes significant additional process and potentially tariffs (for those products that do not satisfy the rules of origin legislation of the trade agreement that allows a preferential zero tariff rate). The task for advisors is to help clients navigate these new rules, quickly, easily and with the least hassle possible.
To do this effectively requires a near-microscopic understanding of the governmental changes that have been put in place to minimise trade disruption as well as the creative and innovative thinking needed to come up with ways of helping manage border processes in the most efficient manner.
Government Processes and Changes
There are several ways the UK government has sought to minimise disruption. First, it adopted a customs easement so that goods could arrive in GB under a simplified process that expires at the end of the year. The process allows an entry into the trader’s own records followed by a Supplementary Declaration with all relevant customs information within 175 days of the goods entering GB. With supply chains under increasing pressure – the transport and logistics sector, for example, has reported a shortage of 100,000 haulage drivers – Britain has delayed the implementation of some post-Brexit import controls for a second time. This has included various easements and delays to the full imposition of controls on food and agriculture. The requirements are constantly changing and evolving, and traders will need help and guidance to navigate these issues from their accountants and other advisors. On the export side, the EU has moved immediately to the imposition of full customs checks and controls, but there is some possibility of simplifications in the future based on the customs and trade facilitation provisions of the UK-EU Trade and Cooperation Agreement.
One thing is certain – sooner or later, the UK will have to operate its border like a normal third country to the EU. It is here that advisors to firms need to play their role.
Reducing Customs Complexity
The way the customs industry has traditionally operated is currently very process-and-paper heavy. But the trade supporting private sector in the UK can now establish new and better approaches to this complex process with technology and can leapfrog existing customs practices which are legacy and historic. The UK already prioritises technology when it comes to new trade agreements, putting digital services front-and-centre in negotiations. We should also advocate the potential for digital technology to improve how we trade, not just what we trade.
To move goods through customs, you need to navigate a labyrinthine set of rules and regulations, getting countless signatures and stamps from a plethora of different government agencies. But by tapping into the power of technologies like AI and machine learning, the UK could pioneer an entirely different approach to customs and borders, with technology smoothing out the complexities and reducing our reliance on scarce customs agents. With technology already a central component of our lives – both in our business and personal spheres – it seems a natural step to begin the development of digitally enabled trade solutions.
The Government has also announced its own ambitions for the best border in the world by 2025. To achieve this, transformative and disruptive thinking is required.
But when we talk about ‘digitally enabled trade’ – what do we really mean?
Crucially, we want everything – the procedures, processes, the actions, the consequences – all created and delivered through technology. Not simply a digital record or data captured in a digital format; this is about taking advantage of a digital-first mindset to automate the process. It requires new smart technology-based systems which automate customs administration procedures to create compliant error free declarations without needing to be a fully-fledged customs expert.
The use of smart, digital platforms is critical – though it is not the only factor. Separately, border operational procedures need to undergo a similar transformation to embrace a fully digital process; a step change for an industry that requires a base level of customs knowledge to be able to fill in customs declarations.
Getting goods across the border is a complex task that involves handling a vast array of forms and liaising with different government departments.
Handling this process at the scale needed is very difficult for smaller businesses and requires significant resource and deep expertise. The complexity of customs is also not simply correlated with size. Just because you are small, does not mean your problems are simple and can be easily handled. These firms will all turn to their advisors, especially their accountants to resolve issues, and knowing where to go for answers is critical. There is also pressure on third party resources and increased cost as the number of declarations that need to be made jumps dramatically. As scarcity hits the market, finding, recruiting, and retaining resources – whether in-house or externally – will spiral in cost and difficulty.
Turning to technology to simplify and streamline that process – especially when built with the end user in mind – allows for a level of scalability, where success is not penalised or limited by border controls.
By putting technology at the heart of the trading process, Britain can take its place on the global stage as a leading digital trading nation. By taking a digital-first approach, traders will have access to frictionless trade, and what once was an impassable line on a map becomes a simple administrative process between two separate custom regimes.
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