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Preparing for Brexit - Future proofing your contracts

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Preparing for Brexit - Future proofing your contracts

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To address the future separation of UK and EU law, all contracts should now include transitional Brexit and change/divergence of law provisions. This webinar is an update on the key areas including currency risk, customs and trade assumptions.

To address the future separation of UK and EU law, all contracts should now include transitional Brexit and change/divergence of law provisions. This webinar is an update on the key areas including currency risk, customs and trade assumptions.


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Preparing for Brexit - Future proofing your contracts

  1. 1. Brexit webinar Future proofing your contracts 15 December 2016 Commercial, IT and Outsourcing Tom Bridgford Matthew Taylor Litigation and Dispute Resolution James Lindop Trade www.eversheds.com/brexit
  2. 2. Tom Bridgford Partner tombridgford@eversheds.com 0161 831 8231 linkedin.com/in/tombridgford Welcome, your presenters today are: Matthew Taylor Partner matthewtaylor@eversheds.com 0161 831 8245 linkedin.com/in/matthewtayloreversheds James Lindop Principal Associate jameslindop@eversheds.com 0207 919 4718 linkedin.com/in/james-lindop-34037115
  3. 3. • What is the UK Government seeking from the EU? • Mechanism for leaving the EU • EEA challenge • Trade issues • Legislative framework • Future proofing contracts − Risk assessing contracts − Drafting strategies − Enforcing agreements Agenda
  4. 4. What is the UK government seeking from the EU?
  5. 5. Eversheds LLP | 20/12/2016 | Free movement of goods Yes excluding certain agricultural & fishery products Varies by product based on bilateral agreements Yes Yes Yes subject to WTO rules Free movement of people Yes Yes - for employed persons No Possible No Free movement of services / establishment Yes Yes – industry specific No Possible No EU representation No but veto through EEA No No No No EU budget Yes (reduced) Yes (reduced) No No No Bound by EU/Third Country FTAs No - can negotiate alone or through EFTA No - can negotiate alone or through EFTA Must apply EU’s common external tariff to third countries No No Some Possible Brexit Models?
  6. 6. Eversheds LLP | 20/12/2016 |Eversheds LLP | 20/12/2016 |
  7. 7. Eversheds LLP | 20/12/2016 | • Free trade in goods and services • Ability for British companies to trade freely with and operate in the Single Market, with the ability of European businesses to do the same in the UK • UK to have freedom to negotiate own free trade agreements – out of Customs Union • Ability for the UK to decide for itself how it controls immigration • Protection of the rights of UK citizens living in the EU • No jurisdiction for EU courts in the UK • Not Norway model (EEA) or Switzerland model (EFTA plus bilateral agreements) Bespoke free trade deal covering: What is the UK Government seeking from the EU? Article 50 Negotiations
  8. 8. Mechanism for leaving the EU?
  9. 9. Eversheds LLP | 20/12/2016 | • UK must take a “decision” to leave the EU “in accordance with its own constitutional requirements” by giving two years’ notice • UK Government intends to give Article 50 notice by end of March 2017 but… • Appeal to Supreme Court (leapfrogging the Court of Appeal) to decide whether an Act of Parliament is needed before notice can be given • Hearings 5 to 8 December with judgment in early January 2017 • Key question – can the Government give notice to the European Council of the UK’s decision to leave the EU under Article 50 using its Crown prerogative powers? Article 50 Treaty on the European Union Mechanism for Leaving the EU (1)
  10. 10. Eversheds LLP | 20/12/2016 | • Inability of Royal Prerogative to repeal domestic law • No preservation of Royal Prerogative in ECA • Devolved powers – Northern Ireland, Wales and Scotland • Northern Ireland – Good Friday Agreement, Anglo-Irish Agreement and devolved powers require Northern Ireland Assembly approval for Article 50 notice • Scotland – 300 years of constitutional precedent states cannot repeal Scottish law by exerting Royal Prerogative – Claim of Right Act 1689 and Act of Union 1707 Mechanism for Leaving the EU (2) Brexit Challenge – Key Issues
  11. 11. Eversheds LLP | 20/12/2016 | • The Supreme Court could refer the question of interpretation of Article 50 to the ECJ – something which both sides have said they would like to avoid • Outcome will determine whether Theresa May’s March 2017 deadline for triggering Article 50 is achievable - some suggest that Brexit could be delayed by up to two years • Politics in France, Germany, Italy…(as well as UK) • Michel Barnier, the European Commission’s Brexit negotiator, has said: • UK will have 18 months to negotiate a deal with the EU to allow time for it to be approved by the Council, the European Parliament and the UK within the two year deadline set out in Article 50 • European Commission’s position is that the negotiations would only cover the withdrawal agreement • Negotiations will not start before notification • the Single Market and its four freedoms are indivisible – cherry picking is not an option The Article 50 legal challenges – Implications Mechanism for Leaving the EU (3) Preparing for Brexit
  12. 12. Eversheds LLP | 20/12/2016 | • UK/EU negotiate and conclude an agreement setting out the withdrawal arrangements taking account of the framework for future relationship together • Withdrawal agreement – needs to be agreed by qualified majority of Council and simple majority of European Parliament • Trade agreement – will need: • European Parliament approval by simple majority; and • Unanimous consent and ratification of all EU Member States • Will there be parallel negotiations? • Will there be a transitional agreement? Article 50 Treaty on the European Union Mechanism for Leaving the EU (4)
  13. 13. EEA challenge
  14. 14. Eversheds LLP | 20/12/2016 | • Article 127 of Agreement on the European Economic Area • Likely to cause further disruption to UK Government • Might it offer a transitional lifeline post Brexit? The EEA Challenge
  15. 15. Eversheds LLP | 20/12/2016 | • EEA – created 1994 • UK is a member of the EEA • Iceland, Lichtenstein and Norway PLUS all EU Member States (in own right as well as through the EU) • Access to the Internal Market governed by EEA Agreement – all four freedoms but outside Common Agricultural Policy and Common Fisheries Policy • Free movement of people The latest challenge to Brexit Is Article 127 the new Article 50?
  16. 16. Eversheds LLP | 20/12/2016 | • UK Government claims UK will automatically cease to be an EEA State once it leaves the EU • Potential judicial review action by British Influence claiming: • Membership of EU is not a pre-condition of continued EEA membership – not expressly stated in EEA Agreement • UK must trigger Article 127 EEA Agreement and give 12 months’ notice to leave the EEA • No obligation for the UK to leave the EEA – Article 127 is a voluntary act • Remaining in the EEA could assist the UK’s negotiating position and prevent a “cliff-edge” Brexit EEA Challenge
  17. 17. Trade Issues
  18. 18. Eversheds LLP | 20/12/2016 | • EU is one territory without any internal borders or regulatory obstacles to the free movement of goods and services • Single market means: • ban on customs duties and formalities • ban on measures against 4 freedoms (goods, capital, services and people) unless justified • passporting • For international trade, EU is a single customs territory with a single customs tariff. EU signs treaties on behalf of member states • Single market is sustained by: • mutual recognition • harmonisation General principle behind EU laws to ensure a single market Principles
  19. 19. Eversheds LLP | 20/12/2016 | • No import taxes on goods from another member state • Imposition of a common external tariff on goods from countries outside the EU • Goods imported into the EU can move freely between EU member states without further customs checks • Therefore reduced administrative and financial trade barriers • Limits freedom of individual member states to negotiate their own trade deals Means tariff free trade EU Customs Union
  20. 20. Eversheds LLP | 20/12/2016 | http://trade.ec.europa.eu/doclib/docs/2012/june/tradoc_149622.pdf Free Trade Agreements and the EU The current state of EU trade
  21. 21. Eversheds LLP | 20/12/2016 | • On Brexit, UK will lose benefit of EU’s free trade agreements but will be able to negotiate its own free trade agreements • Already interest from a number of countries – Australia, Canada, China, Ghana, India, Mexico, New Zealand, South Korea, US • Preliminary talks with India • UK can negotiate terms of free trade agreements but cannot conclude them before Brexit – exclusive EU competence Trading with the Rest of the World
  22. 22. Eversheds LLP | 20/12/2016 | • If no UK/EU FTA, products traded between UK/EU will be subject to MFN tariffs • Each WTO member has a schedule of commitments setting out trading terms (e.g. tariffs, quotas) • Currently no UK specific schedules • Post-Brexit, UK will have to ‘disentangle’ its commitments from the EU’s • Easiest option – ‘rectification’, but no WTO member must object • Cannot copy quotas – will need to be re-allocated between the EU and the UK • WTO expects no disruption to trade Default Position: WTO model
  23. 23. Eversheds LLP | 20/12/2016 | • Under MFN, members cannot normally discriminate between their trading partners – if a concession is granted to one country, it must also be granted to all WTO members • But some exceptions • if countries have agreed a free trade agreement that applies to particular goods or services • developing countries can be given special access • countries may raise barriers against products that are considered to be traded unfairly from specific countries • National treatment - treat foreign and local supplies/products equally • Only applies once a product has entered the market – charging customs duty on an import is not a violation of national treatment even if locally produced products are not charged an equivalent tax Most Favoured Nation & National Treatment WTO principles of trade
  24. 24. Eversheds LLP | 20/12/2016 | • Products traded between UK/EU could be subject to tariffs or quotas • Exact level of tariffs will depend on classification/origin of a given product e.g. 2.8% on certain radar apparatus, 5.5% on certain chemicals, 10% on cars and 22% on certain trucks • Impact of new/additional tariffs will be most pronounced on products traded at low margins • Increased non-tariff barriers to trade e.g. border controls, added layer of administrative regulation and ‘red tape’/delays Tariffs and Barriers to Trade
  25. 25. Eversheds LLP | 20/12/2016 | • Opportunity to revamp customs procedures and push for a complete digitalisation post-Brexit • ‘Single window’ • UK can adopt the existing EU rules Customs formalities Tariffs and Barriers to Trade Trade between EU Member States Trade between the EU and non-EU countries Registration with customs systems No Yes Goods in temporary storage No Yes – up to 72 hours Documentation For exports:  Intra-community supply declaration For imports:  Intra-community acquisition declaration An extensive set of documents is required. For exports:  Export declaration For imports:  Commercial invoice  Freight documents  Valuation statement  Conformity certificate/CE marking  Import declaration  Packing list  Proof of origin requirements
  26. 26. Legislative issues
  27. 27. Eversheds LLP | 20/12/2016 | Impact of Brexit on UK laws deriving from the EU? EU Law Acts of Parliament Secondary Legislation RegulationsTreaties Directives European Communities Act Other Acts of Parliament Statutory Instruments Statutory Instruments International Law International Treaties and Conventions
  28. 28. Legislative issues “Great Repeal Bill” to remove European Communities Act 1972 and enshrine all existing EU law into UK law
  29. 29. Eversheds LLP | 20/12/2016 | • Government has stated that a Great Repeal Bill (the “Bill”) will be put before Parliament designed to: • repeal the European Communities Act 1972; and • convert the entire body of existing EU law, wholesale, into domestic law. • Parliament will then be free to repeal/amend/improve the body of existing EU law at its leisure. • The Bill needs Parliamentary consent and may face opposition particularly from devolved administrations (eg under the Sewell Convention) • The Bill deals only with EU generated law – it will not have an impact on reciprocal rights under multi-lateral treaties The Great Repeal Bill – proposal Legislative issues Preparing for Brexit
  30. 30. Eversheds LLP | 20/12/2016 | • Even if the Bill receives Royal Assent there may be problems • References to EU regulatory authorities to which the UK will not have access will need to be amended to prevent legislation being legally unworkable • Legislation in its current form not designed to be used or enforced by a non member state – will other member states reciprocate? • A ‘Denmark Model’ would require UK to be bound by, or at least pay due account to, decisions of the CJEU – unlikely to be acceptable to the Government under current plans • But if the UK is no longer subject to the jurisdiction of the CJEU we face divergence of interpretation in EU generated legislation • The UK is a signatory to the Hague Convention on Choice of Court Agreements and the Lugano Convention only by virtue of its membership of the EU • If the UK does not accede to these conventions in its own right it will lose the benefit of reciprocal arrangements on jurisdiction and enforcement with non-EU countries: • EFTA countries (Norway, Iceland and Switzerland) under Lugano • Mexico and Singapore under Hague The Great Repeal Bill – potential problems Legislative issues Preparing for Brexit
  31. 31. Future Proofing Contracts
  32. 32. Eversheds LLP | 20/12/2016 | • Impact on supply chain • Trade: border measures such as tariffs, customs procedures, new costs and delay • Rules of Origin • Contract terms – eg delivery • Availability/cost of labour • Cost impact • Currency issues • Regulatory issues? • Eg REACH/CLP/Biocides Impact on existing contracts? How could Brexit impact your contracts? Is your business considering:
  33. 33. Eversheds LLP | 20/12/2016 | • for scope to vary / clarify now? • Change control • Governance clauses • for grounds to get relief for / renegotiate newly onerous contracts • eg material adverse change clauses; force majeure; hardship clauses • provisions for change in law/material regulatory change • price adjustment clauses • warranties on regulatory conformity (or specs written based on assumptions of particular conformity) • for termination rights? • for areas of dispute • Eg grant of licence to use in “EU” – does that include UK? Review your agreements: Reviewing existing agreements Risk assessment of existing agreements
  34. 34. Eversheds LLP | 20/12/2016 | • Treat “Brexit” as something that affects ability to perform (including delay and imposition of quotas or new anti-dumping rules that makes it impossible or difficult for you to supply)? • Treat it (simply) as a costs issue? • Treat it as something to be resolved (eg it becomes subject escalation/dispute resolution)? • who can be the expert here? • Treat it as something that gives you additional rights (such as the right to exit)? • Allow someone else to perform (a designated entity/affiliate/ subcontractor)? Possible approaches to drafting new agreements New contracts
  35. 35. Eversheds LLP | 20/12/2016 | • Definitions • Clauses that deal with increased costs/price adjustments/ hardship • Clauses that deal with delay/inability to perform/force majeure • Change control/renegotiate/rewrite clauses • Termination clauses • Other clauses/issues • Dispute resolution Various types of clauses New contracts
  36. 36. Eversheds LLP | 20/12/2016 | • Dangers of using the term Brexit? • “Brexit” • Article 50 definition/“withdraws from the EU”? • But what if the UK stays in EEA or if there are transitional arrangements? • Focus on impact that will arise from 2019/the effect you want to achieve • A “Brexit Event” • imposition of a “Barrier” (trade and non trade) • a specific piece of legislation is repealed/amended • a particular licence is lost or a particular consent is required Possible definitions New contracts
  37. 37. Eversheds LLP | 20/12/2016 | • “Barriers” (eg non trade barriers) • any restriction on investment or operation • any discriminatory measure • loss of mutual recognition/principle of equal national treatment and MFN treatment • change to regulatory standards • “Trade Barriers”: tariffs, quotas, loss of any free or preferential treatment, customs requirements, rules of origin, any requirement that must be met by a party before the contract goods or services are able to circulate freely within the EU/EEA • “Loss of access to a free trade agreement” • the UK (and therefore UK companies) no longer being able to benefit from a trade agreement between the EU and a third country – impact on this agreement? Possible definitions New contracts
  38. 38. Eversheds LLP | 20/12/2016 | • Does it merely change performance / price or does it make performance illegal? • General change in law arising from “Brexit” • A change in law that results in a specific loss of an existing “freedom” under the EU Treaties • loss of participation in the Customs Union under Articles 28 and 30 TFEU • loss or reduction in free movement of goods • loss or reduction in free movement of services • loss of right of freedom of establishment • loss of free movement of workers • A change/repeal of a specific regulation or loss of a licence granted under a specific regulatory regime Approaches to change in law Possible definitions New contracts
  39. 39. Eversheds LLP | 20/12/2016 | • “Brexit Change in Law” • a new law introduced or implemented as a result of the invocation of Article 50, as a result of Brexit or in contemplation of or with the intention of Brexit occurring • a change in law or a repeal of an existing law which amends or repeals (but does not replace or re-enact on the same terms) an EU regulation of direct effect, a law implemented because of an EU directive etc or a law which overrides any UK national law or legal principle (does this catch what is to be the Great Repeal Act?) • a new law or a change in law which affects [materially] the provision or supply of the contract goods or services [as a result of the UK no longer being able to access the single market on the same terms as it was able to access it prior to Article 50 being triggered] (does this catch loss of a FTA?) • Complications • devolved authority to regional Parliaments • potentially separate deals for Scotland/Wales/Northern Ireland? Possible definitions New contracts
  40. 40. Eversheds LLP | 20/12/2016 | • Territorial considerations • EU “from time to time” vs listing the countries you mean • Do references to the EU include the UK going forwards? • UK – impact of Scottish devolution? • What about RPI? Possible definitions New contracts
  41. 41. Eversheds LLP | 20/12/2016 | • “Brexit Costs”: any additional or increased costs incurred by a party arising directly or indirectly as a result of a Brexit Event/Brexit Change in Law/a new Trade Barrier/non-trade barrier/imposition of a tariff • should it cover transaction/compliance costs of customs procedures, including rules of origin requirements? • ensure the definition picks up all tariff issues if components originate from or are routed through EU • should it cover the consequences of delay/needing a longer time to deliver goods or supply services because of new or increased regulatory hurdles (and/or deal with in delivery dates section) • doesn’t cover effect of quotas that might be imposed (treat as FM?) • A “Costs/Exchange Rate Event” eg sterling falls/rises below a certain level/certain assumptions used in pricing become incorrect – who bears these? Costs New contracts
  42. 42. Eversheds LLP | 20/12/2016 | • Increased staffing costs if EU labour no longer available • Costs provisions won’t deal with issues arising when you cannot obtain labour at all • Regulatory divergence costs? • Restructuring costs? • Verifying these additional costs – audit? Costs New contracts
  43. 43. Eversheds LLP | 20/12/2016 | • “Brexit Hardship Event” • How to define – is it already capable of being contemplated? • Teeth or no teeth? • Consequences can include ability to pass on costs or termination Costs New contracts
  44. 44. Eversheds LLP | 20/12/2016 | • Impact of delays • Variable delivery dates? • Excuse events? • How best to mitigate? • Brexit as a “Force Majeure Event” (but it would have to affect, delay or hinder performance: ability rather than cost – eg financial institution losing passporting rights; eg imposition of quotas) Delay and inability to perform New contracts
  45. 45. Eversheds LLP | 20/12/2016 | • “Brexit MAC” • something that materially and adversely affects the business of a party, which could include change in exchange rates and commodity prices • Change control clauses • Governance clauses Dealing with change New contracts
  46. 46. Eversheds LLP | 20/12/2016 | • Termination clauses • Triggers – for example if: • unable to perform because of a Brexit Event/Brexit Change in Law; • costs more than x; • unable to agree costs; • unable to agree changes? • Unilateral or mutual? • Transition/handover Termination New contracts
  47. 47. Eversheds LLP | 20/12/2016 | • Risk mitigation clauses? • Hedging? • Consider allowing others to perform on your behalf? • Provision of assistance and information – eg in relation to customs formalities/origin etc • TUPE • Likely to continue to apply in medium term • Regulatory divergence Other considerations New contracts
  48. 48. Eversheds LLP | 20/12/2016 | • Products sold in the EU must comply with EU product regulations (currently embedded in UK law) • Eg WEE, CE marking directives, REACH and General Product Safety regime • CE marking on products indicates they comply with EU legislation • Post Brexit? • either access by UK to the EU harmonised regime • possible transitional period? • or regulatory divergence? • How would you deal with this in your contract? Product compliance/regulatory divergence New contracts
  49. 49. Eversheds LLP | 20/12/2016 | • Means of resolving disputes • Governing law • contractual obligations • non-contractual obligations • no change to the drafting now • Jurisdiction • exclusive jurisdiction • Enforcement • Arbitration Dispute resolution New contracts
  50. 50. Eversheds LLP | 20/12/2016 | • Current situation • At present, European law helps parties who want to bring and enforce legal proceedings against companies in other European Countries: • Service – the EU Service Regulation and the Recast Brussels Regulation • In essence, where the European regime confers jurisdiction on the English courts, then: (i) the court’s permission to serve proceedings outside the jurisdiction is not required; and (ii) service can be easily effected through the EU transmission method (typically through the courts or government other bodies) • Enforcement – Brussels Convention, the Lugano Convention and the Recast Brussels Regulation • Very straightforward since 10 January 2015 - judgments from one EU country can be enforced in another EU country without following any special regime. • Life after Brexit • As with everything else, it is far from clear what terms will be agreed about these issues as part of any Brexit deal. • Likely that agreement will be reached to continue some form of reciprocal arrangement; but this is not guaranteed. • What could this mean? • Service – no reciprocal service regimes in place such that: (i) an application may have to be made to the court before proceedings are even served on the other side just for permission to serve outside of the jurisdiction (adding costs and delays); and (ii) actually effecting service on a company in an EU country may be more difficult and take a lot longer. • Enforcement – no reciprocal enforcement regimes in place (including, potentially, the Hague Convention) such that: (i) it will be a matter of local law in every individual country; and (ii) there will be no certainty as to the ability to enforce or the costs or duration of enforcement action (potentially rendering judgments worthless). Future litigation problems? New contracts Preparing for Brexit
  51. 51. Eversheds LLP | 20/12/2016 | • Any Solutions? • Service • Think about incorporating other service options in your contracts. For example: • setting out a contractually agreed method of service which can be followed in respect of legal proceedings; or • nominate a service agent within the jurisdiction on which service can be effected. • Enforcement • Potentially very difficult to avoid these difficulties. • One option is to consider increased use of arbitration rather than court proceedings as arbitral awards can be relatively easily enforced under the New York Convention. However, there are downsides with arbitration (costs, lower disclosure obligations etc) which need to be borne in mind. • Other options? • These challenges may increase the use of alternative dispute resolution methods being built into contracts (eg binding expert determination procedures) so as to avoid service and enforcement difficulties. • If you think there could be difficulties with enforcement other contractual measures could help. For example (i) including specific rights of set-off or (ii) putting in place a retention fund for disputed sums. Future litigation problems? New contracts Preparing for Brexit
  52. 52. Questions? Comments!
  53. 53. Useful links Eversheds Brexit hub - www.eversheds.com/brexit Contractual risk analysis and Brexit proofing – Guiding businesses through Brexit Contractual risk analysis and Brexit proofing for your IT and Outsourcing arrangements – Guiding businesses through Brexit Consumer law risk analysis and Brexit proofing – Guiding businesses through Brexit Brexit - How this will impact on EU-wide litigation
  54. 54. eversheds.com ©2016 Eversheds LLP Eversheds LLP is a limited liability partnership Tom Bridgford Partner +44 7766 511501 tombridgford@eversheds.com Matthew Taylor Principal Associate +44 781 015 1278 jameslindop@eversheds.com Partner +44 774 019 2377 matthewtaylor@eversheds.com James Lindop

Hinweis der Redaktion

  • MFN tariffs are what countries promise to impose on imports from other members of the WTO, unless the country is part of a preferential trade agreement (such as a free trade area or customs union). This means that, in practice, MFN rates are the highest (most restrictive) that WTO members charge one another.
    Schedule of commitments The EU has been representing the UK and the other EU Member States at the WTO level (along with other EU Member States). As a result, the UK’s goods schedules, for example, are included in those of the EU under the GATT. Depending on the terms of Brexit, at least some of these schedules may need to be rewritten, because leaving the EU will affect the EU’s own commitments to other WTO members. Agreeing the UK’s new schedules will involve negotiations between the UK, the EU and other WTO members to resolve sensitive issue such as limits on agricultural subsidies and the size of tariff quotas (where certain quantities of imports are charged lower tariffs). There will be questions about how existing EU-wide quotas – of which there are currently almost 100, mostly on agricultural products – are divided up between the UK and the EU post-Brexit. 
    Unanimity The easiest option is to rectify the schedules. However, the UK’s new WTO schedules might need to be unanimously agreed by all WTO members, although the UK might argue that most of its schedules don’t need to be agreed by all. Some countries will be keen to reach a deal; in general, it is in most countries’ interests for the UK’s new trade arrangements to be settled rapidly.
    Disentangle New Zealand is currently able to export just under 230,000 tonnes of sheep meat into the EU each year without any tariff, as compared to the almost 13% tariff for exporters that aren’t part of the quota. The UK and the EU would need to decide how to divide up this quota. Countries that currently benefit from quotas will not want to see their quotas simply divided between the EU and the UK, as this will reduce their flexibility about which market they can sell to. This means that countries that currently have less favourable access to the EU, such as Brazil, will aim to have their own exports included within any new UK quotas, leading to a complicated series of negotiations around the disentanglement.
    Rules of origin are the criteria needed to determine the national source of a product. Their importance is derived from the fact that duties and restrictions in several cases depend upon the source of imports, this is an additional administrative burden for business.
    The WTO Rules of Origin Agreement requires WTO members to ensure that their rules of origin are transparent; that they do not have restricting, distorting or disruptive effects on international trade; that they are administered in a consistent, uniform, impartial and reasonable manner; and that they are based on a positive standard (in other words, they should state what does confer origin rather than what does not).

  • Complete digitalisation could go a long way in mitigating the burden of customs formalities. At the moment, the EU customs procedures are at a fairly advanced stage of digitalisation, given that most of the documentation can be lodged electronically. However, more work could be done to achieve full digitalisation. For example, many forms cannot yet be filled in online and require printing and manual filling-in before they can be lodged, which slows the process down. In addition, documents required to prove and claim preferential origin still need to be provided in hard copies. It is worth noting that customs cooperation, through the introduction of compatible digital systems and processes, can be executed at a bilateral level with individual EU Member States

    A number of customs reforms recently conducted around the world could help establish a roadmap for the UK’s customs reform after Brexit. A major example of these best practices is the so-called ‘single window’ – a digital tool that aims to streamline customs processes (we note that several countries, such as Brazil and the US, are already nearing completion of their single window gateways). It allows traders to prepare and submit electronically all the data required for determining admissibility of the goods. The data is submitted only once, in a standardised format and in a single electronic portal, instead of submitting and processing it numerous times to the various government entities involved in border controls.