Why Brexit easements highlight the need to fine-tune operating models

Whilst Brexit caused immediate disruption to trade between the UK and EU, the magnitude of the disruption has been mitigated to an extent by a combination of Brexit easements and pandemic travel restrictions. The end of many of these easements is approaching and is coupled with travel restrictions lifting. Businesses need to be aware of the changing regulatory landscape and plan for the changes coming.

What are Brexit easements and grace periods? 

In order to provide time for businesses to adapt to the new trading environment, the UK Government delayed the implementation of certain requirements relating to the movement of goods and placing goods on the UK market. Examples include deferred customs declarations and delayed entry into force of the UK Conformity Assessed (UKCA) mark. However, these easements are temporary so businesses should be aware of when new rules will be enforced and be adequately prepared for their implementation.

Impacted businesses should not consider preparation for individual easements ending in isolation. When looking at changes required, businesses should be looking at their overall operating model including workforce and new market opportunities.

Business travel and immigration

Brexit’s impact on mobility has been difficult to ascertain due to COVID-19 travel restrictions. To some extent, these restrictions have partially buffered employers who rely on attracting EU talent or business travel to the EU. Whilst the full impact on employers is not apparent, indications do not look positive with 41% of businesses stating they will be impacted by new restrictions on the activities UK nationals can undertake whilst in the EU without a work visa or permit.¹

The pandemic has forced employers to evaluate how they use resources and accelerated the adoption of more agile ways of working. This experience can support preparations for quick responses to Brexit-related mobility restrictions, as well as developing a long-term workforce strategy in line with the UK-EU Trade and Cooperation Agreement (TCA).

The implications of easements ending

Easements have largely been focused on reducing friction at borders and keeping products on the market. They include:

•  Border and tariffs

Under the TCA, UK exporters must be able to demonstrate that their goods qualify for preferential treatment by meeting rules of origin requirements. Many businesses, particularly SMEs had little to no experience of this. To allow time to adjust to these new requirements, the UK and EU agreed to a 12-month grace period where businesses can self-certify that their goods qualify for tariff-free trade, without the need to hold suppliers’ declarations.

From 1 January 2022, when businesses export goods to the EU and issue statements of origin, they must, where required, hold these suppliers' declarations.  

As part of a staged border control process, the UK Government allows importers to defer full customs declarations by up to six months when importing from the EU under most circumstances. Importers may submit a simplified declaration and provide supplementary information retrospectively.

The UK Government had initially stated that this easement would be available until 1 July 2021; however, it has now extended this until 1 January 2022. Businesses need to be preparing now to ensure that, from this date, they are prepared to comply with the necessary procedures in full. 

•  Animal and plant health checks

Businesses should be aware of other sector-specific temporary easements related to the trade in goods which expire in the coming months. These include the full implementation of sanitary and phytosanitary measures when moving products of animal origin from 1 January 2022 and the expiration of the grace period allowing certain chilled meats to continue to be imported into Northern Ireland on 1 October 2021.

•  Chemicals regulation

The grace period for providing the basic information of Great Britain based businesses to grandfather their EU REACH registrations to UK REACH registrations ended on 30 April 2021. However, for downstream users based in Great Britain, businesses must notify the UK Health and Safety Executive (HSE) using a Downstream User Import Notification (DUIN) if they want to continue importing substances from the EU or EEA by 27 October 2021. A new registration must then be submitted to the HSE within 2, 4 or 6 years of 28 October 2021 depending on the tonnage bands of different substances. Businesses who require these registrations must ensure that they are able to comply with the REACH regime ahead of these dates.

•  Conformity assessments

The UKCA mark came into effect in the UK on 1 January 2021. However, in order to minimise disruption to manufactured goods in the UK, the UK Government is temporarily accepting CE markings. From 1 January 2022, the UKCA mark will be required on goods placed on the market in Great Britain. To continue placing manufactured goods on the market, businesses must prepare by having the correct product registrations and conformity assessments in place.

New market opportunities

The UK Government is seeking new trade agreements with Australia, New Zealand and the US. It is also seeking to update and improve existing Free Trade Agreements with Canada and Mexico, as well as applying to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

New trade agreements present benefits to businesses able to quickly evaluate the agreement, adapt their plans and exploit new market opportunities. A dynamic international trade strategy is fundamental to enabling this but 44% of business don’t feel they have the skills to engage with government stakeholders on trade issues.² Quick wins to build confidence and readiness are detailed in EY’s international trade capability in 2021 report.

Critical actions for businesses

During the first half of 2021, businesses focussed on adjusting to the new rules for UK-EU trade with the aim of minimising disruption. Going forward, successful transformation must take a holistic approach to change. As a matter of priority, businesses should:

• Closely monitor deadlines marking the ending of UK easements and associated regulatory changes
• Understand the impact of these easements on their business and ensure sufficient timeframes to implement and test new systems
• Review their immigration strategy and workforce planning to optimise where and how employees are deployed across Europe including compliance for ‘work anywhere’ policies