On June 23, 2016, the United Kingdom (UK) decided to leave the European Union. After several extensions, on January 31, 2020 at 11:00 pm, BREXIT is official, which leaves UK in a transition period until December 31, 2020. This decision had a big effect on the international trade and more specific to Ireland and Northern Ireland.
The only land border that UK has with EU is the one between Northern Ireland and Ireland. The impact of Brexit on the Irish border refers to changes in customs, trade, recognition of qualifications, local economies, immigration checks, services, medical co-operations. Since Northern Ireland is part of the United Kingdom and Ireland is part of the European Union, an exception has been agreed – Northern Ireland Protocol. Northern Ireland will continue to follow EU’s rules which means that lorries can pass the border without additional checks. The protocol is a solution to avoid a hard border with Ireland.
However, a new “regulatory ” border between Northern Ireland and Great Britain (England, Wales, and Scotland) will be needed since Great Britain will not follow anymore the EU rules in the future.
The big question is –
What will happen after January 01, 2021 and how will Ireland be affected?
Even though there is a physical border between Northern Ireland (UK) and Ireland (EU), without any bilateral trade deal, UK and EU will trade on World Trade Organization (WTO) terms in 2021. How is this impacting the goods movement between the two Irish parts?
- Goods moving between Northern Ireland and Ireland will not have any customers, tariffs or other restrictions placed on them
- Goods moving from Northern Ireland to any other part of UK should have same customs checks as if the goods were going to a non-EU country
- Goods moving from another part of UK to Northern Ireland will have customs duties and checks unless there is no risk that the goods will stay in Northern Ireland and not travel on to Ireland.
- Goods moving from and in Northern Ireland/UK and EU, the WTO terms apply until the agreements are negotiated.
From 1st of January 2021, WTO rules will apply to all members. This is known as MFN – Most Favored Nation Treatment, which means that UK and Northern Ireland cannot offer better trading terms to one country and not to another, unless through an FTA – free trade agreement.
What are the major changes in this case from a trade perspective?
- For all imports to UK – Northern Ireland you will be required to complete customs procedures and declarations.
- For the goods in transit, a tariff must be paid at the rate on the day they are imported to UK.
- When you trade under WTO rules, you are not required to prove the preferential origin of your goods. How you establish the origin of your goods for tariff purposes may change.
- When a Free Trade Agreement does not exist, non-preferential rules of origin will apply from 1st of January. This means that when you are importing goods, you will need to declare the origin. When exporting, you will need to apply the non-preferential rules of origin as set by the destination country.
- From 1st of January, the tariff you pay may be different. Overseas importers may need to pay different tariff rates on exports from the UK. The tariffs will vary by country and product. Many are duty free under WTO terms.
How can Krypt and SAP GTS help Ireland to manage BREXIT?
Companies into the global trade landscape ought to effectively & strategically manage various global trade decisions and obligations. The same holds true to mitigate the regulations of Irish Customs.
Krypt is an SAP preferred integration & implementation partner and has assisted in the success of global businesses through implementation of SAP GTS, TM, IBP & EWM
With no Free Trade Agreement in place, BREXIT will continue to bring new challenges and changes in the international trade area and more specific, to Ireland. There will be an increase in the customs filling, import/exports costs, brokerage costs due to BREXIT.
We can help you gain insight into how you can integrate all the legal changes in your business using SAP GTS and be post-Brexit compliant.
If you are worried about an increase in customs filing due to BREXIT or if you need to manage customs in Ireland, we have you covered. Our unique customs self-filing solution in Ireland works with SAP GTS or any other ERP system.
We can offer full post-BREXIT support for Ireland, adapt SAP GTS to your business needs and help you leverage your work during the creation of the future agreements.
If you wish to gain a brief insight into the far-reaching measures & changes slated for December 31, 2020 BREXIT deadline, you can read our previous blog titled – “Brexit: Customs & Regulatory fixit following UK’s exit.”