Disruption and Costs for Goods’ Trade

No goods whatsoever can be imported from Great Britain to Ireland without there being a prior cleared export declaration in the United Kingdom to the UK’s revenue, HMRC, and a prior import declaration to Revenue in Ireland, which is cleared only shortly before arrival at the port or airport. Equally, no goods can be exported from Ireland to Great Britain without a prior cleared export declaration in Ireland to Revenue and a cleared declaration to HMRC Great Britain which is cleared shortly before arrival at the port or airport.

The requirement for prior clearance on both the export and import side, is unfamiliar in Irish customs and trade practice, even in trade with non-EU countries. Most existing customs declarations relate to trade with distant countries, where it is necessary to engage with either import or export declarations, but not both.  

The carrier or freight forwarder is be subject to additional requirements to lodge safety and security declarations and an emanifest regardless of whether it or not the trader completes customs declarations. All or this new administration will take place in an environment where the revenue authorities, freight forwarders, carriers and traders are on a steep learning curve.

An import or export customs declaration can be made only by a business which is established in the state concerned. Therefore, there must generally be an Irish trader or agent on one side, registered willing and able to make customs declarations to Revenue, and a UK trader or agent on the other side registered willing and able to make customs declarations to HMRC.

Assuming that the UK supplier or UK customer are prepared to complete the customs declaration, significant liaison and cooperation are required to coordinate the advance returns to both Irish Revenue and UK HMRC. Many traders will use their freight forwarders or carriers to make the returns. However, it may not be feasible for them to act as agent for both the exporter and the importer in every case.

VAT (and customs duty in a no deal Brexit) must usually be paid by the buyer before the release of the goods. An Irish business selling directly to consumers and non VAT registered businesses in the UK (£85,000 annual turnover threshold) may be able to use the post for lower value consignments or have a parcel courier act as its agent or as agent for the buyer. 

Every export and every import declaration requires 25 to 35 pieces of data about every single type of item. Every item must be classified in accordance with one of approximately 17,000 unique classification codes. Every item must be valued in accordance with rules which can be sometimes artificial and unintuitive. The origin (principal place of manufacture) of every item must be specified. Precise registration details of the vessel aircraft or truck must be given. The anticipated time of arrival is required.

A certain percentage of returns must be physically checked, and their underlying documentation must be verified. Checks are necessary to ensure that the electronic “paperwork” conforms to the goods. Final import final clearance takes place only short time before arrival so a trader its carrier or its agent must be on standby to send documents to Revenue or HMRC or to ensure that the haulier can facilitate physical inspection of the port or airport. A system for communicating with drivers via an App is being put in place.

The EU UK Trade and Cooperation Agreement provides for a relatively distant relationship. A “customs” and “regulatory divergence” Brexit has occurred. There is no customs union and no single market membership for the UK, which implies customs and regulatory controls and checks.  

There are customs duties on the import of goods from Great Britain, unless the goods “originate” in the place of export. Origin is complex, but it requires manufacture or substantial processing. Distribution is not enough. 

Declarations are now require in both Ireland and the UK on every export and every import. Both involve a radical change to the terms of trade across the Irish Sea.

The expression “hard Brexit” is relative. At the beginning of the Brexit process, what has now occurred, would itself have been referred to as a hard Brexit. It will be highly disruptive and in many cases, destructive of trade. 

The label Trade and Cooperation Agreement or “free trade” agreemen” might suggest something close to the existing EU relationship or something that is not inherently destructive. However, the language is somewhat misleading. A free-trade agreement is utterly different in terms of a trading relationship, to EU membership. UK exit and the agreement has created many new barriers.

Although a free-trade agreement might lead to zero tariffs in many sectors, it would  not eliminate customs procedures. The cost of customs compliance and non-tariff barriers in many sectors is higher than the cost of the tariffs themselves. Zero duties will apply only where the goods qualify as originating in the place of export.

Regulatory divergences and consequential checks on imports will occur with a free trade agreement. In the area of agriculture and food, they are likely to be very extensive. The strong guarantees underpinning trade within the EU and striking down rules which impede trade, will disappear. These rules are such a fundamental part of the EU architecture that their importance will only become apparent when they are no longer applicable to UK trade. There will be nothing standing in the way of further subtle and not so subtle barriers to trade being erected.

Even with a trade agreement, there are still many tariffs on EU UK trade. Tariffs have to be paid or secured by guarantee before goods can move through the port or airport to enter the country of import. The guarantee usually requires a facility from a bank or an insurance company band and usually defers duty to the 15th of the following month.

The EU UK Trade and Cooperation Agreement exempts goods from duties only if they originate in the other country (or bloc; the EU). Goods from third countries (such as China or the United States) may be subject to duties both on import into the EU and later import into the UK and vice versa unless certain customs suspension processes are used, which themselves entail potentially high costs.

The rules on origin  mean that distribution through the GB without sufficient processing in the UK will leave the goods subject to duties.  This is very common in Irish supply chains. EU content in UK goods is permissible but there must still be sufficient processing in the UK, for the goods to qualify as being of GB origin.

The same applies in respect of exports from Ireland to GB. They must be of EU origin (in the sense of manufacture and processing). It appears that Northern Ireland goods are not of EU origin (but are of UK origin), notwithstanding the NI Protocol. 

The origin of the goods must be certified in order to claim the zero or reduced duty under a trade agreement. What is required can be itself complex and varies with the types of goods concerned. There is a simplified system for self certification of origin in some cases. There is provision for certification by approved exporters. However, documents must be obtained and be available if requested, proving origin. Sometimes the cost of proving origin is more than the duty saved and therefore is not claimed.

Value-added tax must usualyy be paid or secured upon the entry of the goods into Ireland or the UK, in the same way as customs duty. If there is no customs duty, for example, under a free trade agreement, value-added tax is still paid on the customs value. The customs value may be higher than the price in some cases and will always include the full cost of insurance and transport of the goods to the border.

Both the UK and Ireland have provided for postponed accounting for VAT registered businesses, which will ease cash flow for VAT registered traders, at least for a period. It would postpone the due date to the next VAT accounting date. The pre-2020 Standard VAT deferral system required a guarantee and facility or insurance bond as above and was  for one month only. 

VAT applies to consumer imports at the point of entry. A system by which the exporter must register and pay VAT in the importer’s state for consignments (one seller to one buyer) below £135 (also the customs duty threshold) applies to UK imports. The same system is to apply to Irish / EU consumer imports for consignments below €150 after 1st July 2021. In other cases, the fast courier may arrange to pay the VAT and recoup it from the seller. 

Regardless of whether customs are completed in-house, through the carrier, freight forwarder or other agent, businesses will incur additional costs in ensuring that the relevant data is correctly compiled and that the goods conform in full to it, on every occasion. If the declarations are made by the carriers, freight forwarder or other agents fees and costs will arise, commonly estimated at approximately €40 for an export consignment and €50- €60 for an import consignment. These costs may reduce over time with efficiencies. In some cases, the costs may be higher.

An import or export declaration must be made per consignment. This is a unique sale from a given seller to a given buyer. This can have arbitrary effects. There may be a single consignment with several containers, or a single pallet could include dozens of consignments. With multiple suppliers or multiple buyers, the cost per declaration may be prohibitive.

If the trader does declarations, it will require software to connect to Revenue (and/or HMRC) which must be licensed from a relatively small number of providers (on the Irish side; 100+ in the UK). Licence fees and business models vary with use but might be of the order of an average €5 to €10 per declaration. Staff will need to be trained on customs matters.

Certain minimum information about vehicle ferry or aircraft and its time of arrival are required in order to make the declaration, which may not be available to the trader. Staff must be present to deal with documentary and other queries when the ship or aircraft arrives. A physical inspection will require the services of the carrier, for which the trader must pay.

Regardless of whether the trader makes the declarations itself or uses a carrier, freight forwarder or other customs agents to do declarations the carrier/freight forwarder will itself incur additional costs which will be passed back to the trader. Additional liaison will be required between the trader and carrier/freight forwarder to get information on the transportation and pass back details to the carrier/freight forwarder.

The carrier must undertake safety and security declarations both on exit from Ireland or GB and entry into GB or Ireland containing much the same data as the import and export declarations for every consignment. Although there is significant overlapping data and scope for combining data (an using other documents in lieu), this will increase the carriers / freight forwarder’s costs.

A pre-boarding Notification of all goods on the means of transport must be returned to Revenue every time. HMRC , on the UK side  rolling out an equivalent Goods Vehicle Movement System, with the same requirement.  

Under customs law and as a matter of common sense, a certain proportion of consignments must be checked by Revenue or HMRC to verify that what is declared conforms with what has moved. Export checks are rare, and import checks are much more common. Revenue and HMRC intervention may be based on risk-based factors or may be purely random.

Either the importer or exporter, depending on the contract, will bear the additional cost both in terms of the carrier’s time and services in dealing with the queries as well as port costs and charges. There may also be a risk of breach of contract, loss of goodwill and loss of custom with customers, by reason of the delay.

Customs are taxes, and every export and import declaration is a tax return. VAT must also be collected as part of the customs process. The trader must retain key documents such as the commercial invoice, transport documents, and in some cases special licences and certificates for the particular goods for four years.

Failure to self-assess correctly may be subject to a claim for substantial arrears of duties with interest and penalties. More serious breaches of customs legislation are criminal offences by the company and its directors. Deliberate and reckless breaches may incur fines and a jail sentence.

Irish Side

Customs rules apply to the movement of all animals, plants and food products. Tariff rates remain high on most animal and food products, despite the successive reductions in most other sectors. Agricultural tariffs often include an element based on value and an element based on weight and even ingredients.

Most developed countries worldwide protect their agricultural sector in various ways. Unlike in other sectors where tariffs have been reduced significantly, the trend of WTO negotiations has been to reduce agricultural tariffs modestly only and to change non-tariff barriers into tariff barriers, so that they are transparent.

Average EU third country (no deal) rates for beef and sheep meat products range from 40% to 70% with some more than 130%. Rates for pig meat are approximately 30% to 40%. Rates on poultry vary between 18 and 25%, but some rates are a little bit lower and many very significantly higher, some up to 80%.

Animal products, beverages, tobacco and confectionery, are between 17% and 20%. Rates for cereals vary considerably between 15% and 51%, most being at the higher end. Average tariffs for dairy products are approximately 35% (with considerable variation per product type). Fish products are typically about 12% while fruit vegetables and plants are commonly about 13%.

The UK no deal Brexit notes proposed rates approximately two-thirds of the EU equivalent ranging from 10 to 20% on the low-end but with some categories of poultry meat products at 40% to 80%. These UK rates also incorporate elements of value and weight.

The proposed UK rates for beef products and sheep meat range from slightly lower than the EU rates, ranging from about 30% to 40% although in some cases, more. UK rates for pig meat were relatively low at about 6%. The UK proposes zero tariffs on most dairy products but with tariffs of approximately 15% on butter and 7-9% on some dairy products. It proposes zero tariffs on cereal.

Sometimes there are quotas whereby a certain amount of a product may be imported at a relatively lower rate, while a higher rate applies to import in excess of the quota. The quota may be subject to licensing and may be on a first-come-first-served basis.

Agricultural products are the least liberalised in trade agreements. Under the EU Canada free-trade agreement, often held up as a model for the UK negotiations, the EU and Canada committed to eliminating 90% of their agricultural tariff lines progressively. Some sensitive products are subject to a tariff quota or are excluded from liberalisation. 

The EU eliminates 92% of its agricultural tariffs increasing to 94% over seven years. On some products, there is a zero duty, but a tariff quota such as for beef and pork. Sensitive products, including chicken and turkey meat eggs and egg products, have been entirely excluded. The EU liberalised dairy tariff lines, but the level of imports from Canada is relatively low due to distance.

In addition to the high tariff rates, health and safety rules for animals, products of animal origin, plants, vegetables and high-risk food (referred to as sanitary and phytosanitary requirements) are very onerous as regards imports from non-EU countries. These requirements are in addition to customs requirements and are administered through the customs system with personnel from Revenue working with personnel from the Department of Agriculture and its UK equivalent for Irish and UK imports respectively.

Traders must be registered with the Department of Agriculture Food and the Marine and must register to use the TRACES system.  Animals imported into the EU must be notified in advance through the EU TRACES system. This is a customs-like software system to control movements.  An entry similar to a customs declaration must be completed with more than 20 pieces of data. Logistical issues can arise in assembling the data in a timely manner. The costs of completing it through agents can be higher than customs declarations, as there are relatively few service providers.

The goods must come from an establishment abroad approved by the EU. Health certificates in the appropriate form for each type of product are required to accompany the goods. The requirements are quite precise and easy to get wrong. The goods must enter through a border inspection post. A very high percentage are subject to mandatory physical and documentary checks at the first point of entry into the EU.

Live animals may only enter with the common veterinary entry document now a common health entry document since February 2020. The CHED is created through the TRACES process. The “CHED” (Common Health Entry Document),  exists in a range of formats:

• CVED for live animals and products of animal origin
• CED for products of non-animal origin intended for animals
• CHED-PP for plants.  

Where animals, products of animal or plant origin from third countries outside the EU are imported or are in transit, the economic operator or person involved in loading the goods (responsible for the consignment) has a duty to notify Part I of the CHED (in TRACES) or CHED-PP (for plants) (in TRACES-NT). The officer at the Border Control Post, acting as the competent authority, will validate CHED Part II (the decision on the consignment) after completion of checks. All this information is sent to the health authority of the EU country of destination, to the central health authority of the transit country or countries and to all relevant inspection points.

Similar rules apply to Fruit and Vegetables. Goods must be graded packaged and marked in accordance with EU requirements. Seasonal duties may apply. Non-EU countries may be certified and approved by the EU as having an approved inspection service which means that their conformity certificates are accepted as proof of conformity with EU standards.

UK Side

The UK has indicated that it would continue to recognise transporters authorisations, certificates of competence, vehicle approval certificates and journey logs issued by EU member states for an interim period.

The transport of animals exiting the EU to the UK must comply with animal welfare in transit legislation. There are subject to verification and checks at the final point of destination in this regard.

Business operators and persons must hold transporters authorisations, certificates of approval of means of transport and certificates of competence for drivers and attendants in relation to the transit of animals. Transporters who have been granted an authorised by the UK must obtain new authorisations from another EU state.

Importers into the UK will need to use the import notification system under a new UK TRACES system in the event of a hard Brexit. The UK government had indicated in its notes that EU imports would not need to be notified on TRACES at least for a period in order to allow a smooth transition.

In order to maintain high levels of food safety, the UK would require importers of high-risk food and feed to pre-notify the Food Standards Agency of imports from the EU. It is contemplated that pre-notification may be made electronically in respect of high-risk imports of food into the EU.

The process would be managed by the Food Safety Agency. The Department of Environment Food and Rural Affairs and the Food Standards Agency are working on the requirements that would apply.

Plants and plant products imported from non-EU (non-UK post-Brexit) countries under a phytosanitary certificate may be inspected when they enter the EU(UK post-Brexit). It may be necessary to pre-notify the UK Plant Seed Inspectorate of a planned import. This sometimes applies even in the case of intra-EU movements pre-Brexit. It is done through the PEACHES system.

Wood packaging material imported from and exported to non-EU (UK post-Brexit) countries is subject to international standards and phytosanitary measures. This requires treatment and marketing. Risk-based checks are undertaken. This is not currently applicable on intra-EU trade but would commence on Brexit in the absence of agreement otherwise.

In the event of a hard Brexit, businesses may require a phytosanitary certificate from the UK Plant Authority prior to export (to outside the UK including the EU). The same is likely to apply in respect of exports from Ireland to the UK in the absence of a mutual agreement.

The UK has indicated that the majority of plants and plant products are low-risk and that they should continue to be allowed to enter from the EU even in the event of no deal. There are likely to be some exceptions. They would include plants currently subject to the EU plant passport regime which would be subject to an equivalent UK regime to ensure traceability and assurance. They would require a phytosanitary certificate in the country of export.

It is contemplated that the relevant documentary and identity checks would be carried out remotely by the Plant Health Authority without border checks where possible.

Brexit removes the four basic EU freedoms, in the case of trade with the United Kingdom. They are the free movement of goods, people, services and capital. It removes the basic right to go to the UK as a worker or self-employed person, to establish a business or to sell goods or services into the United Kingdom.

Although most of the above freedoms will continue to exist in fact, they will no longer be underwritten by enforceable EU Treaty rights. At present, EU citizens and businesses may assert these rights against the UK state and state agencies to sweep aside obstacles to the exercise of these freedoms. Both EU legislation and decisions of the EU courts have built on the general Treaty rights, to give them real substance and effect.

Action can be taken prior to Brexit in any court including the UK courts, to invalidate practices and laws which interfere with these freedoms that are not strictly justified on limited grounds of exemption. Compensation can be awarded to traders for breach of treaty and other EU rights. The EU Commission polices the rules against states and state bodies to ensure obstacles to trade, open or hidden are removed.

These powerful rules may be replaced by commitments in much more general terms, built on existing WTO agreements. However as with the position of  customs, what might apply under an agreement or under a no-deal exit under the default of the existing WTO agreements, is qualitatively and very significantly different to the present EU rights for traders.

The very terms of WTO and free trade agreement commitments are themselves more limited, and where they apply, they are in much more general and less precise terms. Moreover, they can usually be enforced only by a state to state complaint.

Even if a complaint is eventually upheld, there is no direct remedy for the traders affected. The state concerned is usually permitted to take proportionate countermeasures against traders in the other jurisdiction. There is no direct method of “righting” the wrong. The countermeasure exists largely in the economic and diplomatic sphere.

The EU is seeking to have strong “level playing field” rules, subject to direct and effective methods of enforcement. However, the EU is unlikely to succeed to this extent. The ultimate rules in any agreement are likely to be at state to state-level in any future UK EU trade agreement.

Instead of the possibility of a complaint to the EU Commission or direct legal action against an offending state or state body, businesses may complain to the EU Commission with a view to it taking trade action and sanctions against the UK. The very most that might occur is that at the end of a potentially long process, is that the EU (or the UK) would be permitted to take countermeasures by way of retaliation.

EU rights of free movement of goods will continue to apply to Northern Ireland. However, the other freedoms will not apply. The Common Travel Area creates rights in respect of free movements of Irish and UK citizens in the other state as well as the right to go to the other state and have immediate settled status. The common travel area exists by Convention, and its extent is undefined. It exists at state to state-level. It is not directly enforceable by citizens in private legal action, save as made part of domestic law.

In addition to the basic EU Treaty freedoms to do business, there are thousands of EU laws which provide common rules across particular sectors and all sectors which facilitate business. Many are dealt with in other parts of this website. They deal with the most fundamental aspects of doing business and regulation.

Almost all EU laws have been re-enacted in the UK, as UK laws. However, the UK is free to diverge in areas in which the EU state has decided that common rules are sensible and necessary. EU legislation and practices may make it difficult or impossible for particular lines of trade to continue with the UK.

The removal of the treaty rights and enormous body of common EU rules facilitates subtle and not so subtle barriers to trade.All international experience shows that sectoral interests within states pressurise governments to erect barriers, often hidden, to competition from other states. Most such barriers appear neutral but have the (convenient) effect of protecting domestic (e.g. UK) trade against external (e.g. EU/Irish) trade.

A particularly invidious aspect of Brexit is that it is likely to affect small to medium-size businesses disproportionately, relative to larger scale and multinational businesses. Most employment is in such small businesses, and many have carved a business model based directly or indirectly on trade with the United Kingdom. The same, of course, applies to SMEs in the United Kingdom in respect of trade with Ireland and other EU members.

The rule of origin impact SMEs disproportionately. Many SMEs purchase from GB distributors or other supplies suppliers, where the goods will not qualify for GB origin. Therefore they will be subject to full tariffs, which may put pressure on their business model and viability.

Many larger businesses have footholds both in Ireland and in the United Kingdom. This may facilitate them taking advantage of Brexit. Customs challenges are far less impactful. Many will have the personnel and capacity to undertake customs declarations in-house.

Having an establishment on both sides means that they may move goods from one group company to another. Their consignments are larger so that customs costs are less. Logistically, they have greater visibility on their movements so that the compilation of the customs data is more feasible.

In contrast, smaller businesses may have neither the technical nor human resources capacity to undertake customs declarations in-house. They may not have sufficient visibility on the movement of their goods to make customs returns feasible.  They may not have personnel available to answer revenue queries. Their consignments are smaller on average so that the declaration costs are higher and, in some cases, prohibitively high, with external customs agents, freight forwarders or other logistics providers per consignment.

SMEs whose customers are consumers or small businesses may find in many cases, that those customers are unwilling or unable to make UK import declarations. For smaller consignments, postal or parcel carriers may substitute, but it is still likely in most cases that the customer would be obliged to pay VAT and possibly customs duties to have the goods released. Carriage costs will go up significantly.

If the UK customer or UK supplier is unable or unwilling to undertake customs processes then (in contrast to a larger scale entity group with companies in both jurisdictions), it would be very challenging for an Irish exporter to complete UK import customs procedures. The introduction of a UK distributor may not be economically feasible where, as is common, the margins are relatively low.

Smaller businesses are likely to find dealing with customs interventions more challenging. They may find new UK regulatory and technical requirements more difficult to fulfil, without the range of skills available to larger businesses. The consignments are much more likely to be grouped with numerous other consignments so that they are more prone to delay from intervention in relation to another consignment, than in the case of a single large consignment of homogenous products.

Brexit is a big bang happening all at once. That is, many of the most basic general rules, and the rules in many sectors will, quite literally, change overnight at the end of 2020. The interaction of so many basic changes occurring at once and the unknown responses of businesses, individuals and the markets concerned make it difficult to foresee how circumstances may unfold.

It is possible to predict many of the immediate and direct effects of Brexit as they would apply to a given business. This is because the rules that would apply both in a no-deal Brexit and in a likely free trade agreement Brexit already exist in respect of trading with non-EU countries. It is possible to see the EU rules that would apply in Ireland in relation to trade with a non-EU member (the UK after Brexit) and the new UK rules that would apply in the UK in respect of trade with the EU.

What is much more unpredictable are the secondary and further knock-on effects of Brexit. They are likely to be severe, profound, and in many cases, unexpected. Most economic commentators say that the negative effects in short to medium run are significantly higher than any potential positive effects.

All economic predictions in the UK and Ireland are that Brexit will have a significantly negative effect on national income. While some sectors may benefit from Brexit even initially, or more likely over time, many existing businesses may not be able to continue to trade until they can take advantage of new opportunities. New businesses may emerge over time which can do so.

There is likely to be a contraction in many businesses exposed to the UK market with wage cuts or employment losses. Businesses may cease to be viable and go insolvent. The secondary, tertiary and further effects and consequences are unpredictable but   are unlikely to be positive.

Businesses which do not appear to be exposed to the UK market may find that either up their supply chain to their ultimate suppliers of materials and resources, or down the supply chains to their ultimate customers or consumers, they are directly or indirectly exposed to Brexit. Apart from disruption  in relation to supplies and sales, the sudden insolvency or contraction of companies, the supply chain may have a knock-on effect on the viability of the business concerned.

There is a distinct possibility of a contraction in employment, with a knock-on effect on government finances. The EU may approve state aid in certain industries to facilitate the adjustment. However, given that the state has largely “maxed out” on its permissible and sustainable public debt, it may have limited capacity to do so. The Coronavirus  crisis has exacerbated this vulnerability.

Ultimately businesses directly or indirectly affected by the loss of buyers in the UK market may find corresponding opportunities in the Irish or EU market to which their UK counterparts have lost free access. However, in most cases, it may take a significant period of time and adjustment to meet these new opportunities. Businesses may not have the capacity to keep trading in the meantime. Other new businesses might, in time, take advantage of the opportunities.

Widespread logistical chaos is likely. Many prospective imports and exports will not take place because the relevant paperwork and declarations have not or cannot be pre-cleared or because the particular line of business is no longer viable. Nonetheless, even with a reduced volume of imports and exports, the introduction of customs procedures and barriers is likely to cause significant delays and tailbacks.

The position will not be helped by the fact that the entire industry, traders’ customs agents freight forwarder and carriers will be on a steep learning curve as they adjust to a radically new environment. New inexperienced Revenue and HMRC staff will be learning on the job. Although checks may be light-touch, mistakes are inevitable.

A very high percentage of all trade in goods with Europe moves through the Great Britain land bridge. Airfreight is expensive and not suitable for the vast majority of exports. There are direct ferry and shipping connections from Ireland to continental Europe. However, this will not provide a solution in many, if not most cases, at least for a period of adjustment.

Capacity on direct routes bypassing the GB land bridge would need to expand significantly. This will take time and investment, including investment in port infrastructure. In many businesses, the cost and logistical considerations of the alternative route do not make it economically viable, even if it is eventually an option.

All movement of goods through the GB land bridge will be subject to procedures almost as onerous as other customs procedures. Although the goods would not be subject to tariffs in the United Kingdom, (as long as they do not leave the vehicle) they must be put under a customs process known as transit while they are outside the territory of European Union.

The transit process involves a customs declaration as well as safety and security declarations with up to 30 pieces of data declared, much the same as those applicable to an import or export customs declaration. The goods must be identified in the same granular specific way, with reference to the customs tariff.

For logistical reasons, the transit procedure is feasible only for parties holding specific authorisations, allowing them to undertake certain processes at their premises. Many businesses that might be able to make import and export declarations in-house are likely to have to rely on their freight forwarder or carrier to undertake the transit process.

There are no customs duties, but a comprehensive guarantee must be given by the holder of the process who will usually be the carrier or other logistics provider. Many of the same costs, administrative and logistical issues that apply to import and export declarations, arise. Whether or not rolled up in fees or separately charged, the freight forwarder or carrier is likely to charge for completing the transit declaration, using its guarantee and for the additional work involved.

In effect, the goods move under a seal or under trusted party custody backed up by a comprehensive guarantee through Great Britain. The guarantee covers the risk that the goods will not arrive intact back in the EU.

The goods must be accompanied by a bar-coded document which is subject to a cursory check on exit from and re-entry into the EU. There may be numerous bar-coded documents which must be verified accompanying a particular load. Although the checks are not customs checks, the land bridge traffic is likely to get caught up in general delays at UK ports, in particular on the Dover to Calais crossing.

HMRC has stated in a public consultation that there would be no special lane for EU / Irish transit traffic through Dover. It is possible some such arrangement might be secured in a trade agreement.

The predominant issue in the latter part EU UK Withdrawal Agreement negotiations was that of the Irish border. In October 2019, the UK government unexpectedly agreed to make the so-called backstop, a more permanent arrangement which ties Northern Ireland to EU rules in goods. In return, the EU made the arrangement time-limited, in that it is to be subject to democratic consent in Northern Ireland every four years.

The backstop is now a permanent or semi-permanent arrangement that has been re-named the Northern Ireland Protocol. It is due to last until at least 2025 and may be renewed with the consent of the Northern Ireland Assembly or by some other democratic means if that body is not functioning.

If the Northern Ireland Protocol is not renewed in 2024, there is a two-year standstill period during which a new arrangement upholding the principles of the Good Friday agreement is to be worked out. There is very little certainty as to what this might comprise. They would not be the negotiating leverage that existed when the Protocol was originally agreed. At that point, there might conceivably be full customs procedures on the Irish land border, with some steps being taken to mitigate it, by alternative arrangements in order to avoid a hard border.

The intention of the NI Protocol is to avoid customs declarations and procedures on trade between Northern Ireland and the Republic of Ireland/the EU. Northern Ireland is treated as if it was part of the EU customs area and is subject to the same rules in relation to goods standards. This also includes agricultural, animal and food safety standards.

The precise application of the rules are to be worked out in a joint committee of the EU Commission and the UK in 2020. Customs like checks are required on goods coming into Northern Ireland from Great Britain which are at risk of being moved on to the European Union (Ireland). Some customs like procedures may apply to goods moving from Northern Ireland to Great Britain.

There are risks that the Northern Ireland Protocol may not take effect or might not fully take effect. It is very controversial in the Unionist community, and there may be political and other opposition to it. It treats Northern Ireland differently to the rest of the United Kingdom. However, it does give Northern Ireland  potentially significant advantages which may offset the perceived disadvantages.

Eminent EU law expert Professor Catherine Barnard has highlighted the possibility of a legal challenge being made to the NI Protocol. An argument might be made that the arrangement has been made under the EU Article 50 withdrawal power, but that it is a trade agreement which should have been approved by the member states. Even if such a claim would fail, it may take a considerable period to wind its way through the courts up to the Court of Justice of the European Union for a definitive decision. This may cast doubt over the Protocol for a prolonged period.

The UK’s commitment to the Northern Ireland Protocol is effectively in the diplomatic, political and international sphere. If an EU /UK trade dispute developed, it might not take effect, or it might be suspended. Another perhaps more likely scenario might be controversy about its interpretation and enforcement. The UK may not give effect to it in the terms which the EU requires or deems sufficient to protect the EU market.

The Protocol involves the remarkable circumstances of the UK government enforcing EU law on movements as between Great Britain and Northern Ireland. If the EU was to impose countermeasures for breach of GB obligations, including those related to the Protocol, it would effectively require the UK to apply the measures against itself on NI to GB trade.

The NI Protocol applies only to trade in goods. In absolutely every other respect, Northern Ireland is leaving the European Union. It does not apply to the other freedoms. Thousands of EU derived laws which underpin the single market will cease to apply in Northern Ireland in the same way as in Great Britain. They will be replaced by much weaker and much less enforceable commitments, enforceable only between the EU and UK.

The NI rules which directly affect goods will remain EU standards. However, broader rules on the environment, labour standards health and safety and economic regulation generally, will be subject only to the same limitations that apply between Great Britain and the European Union.

Northern Ireland is subject to EU state aid and competition rules. The EU is seeking level playing field requirements in the UK EU agreement. If there is a no deal exit or the level playing field is not achieved on robust terms by the EU, the regulatory rules may differ in Northern Ireland in a manner which advantages NI traders.

The fundamental EU freedoms to trade other than in goods, will no longer apply. The rights to establish businesses in Northern Ireland and undertake trade cross border trade, will not be directly enforceable in Northern Ireland courts. They will be international commitments enforceable only between the EU and the UK and not by individual traders.

The NI Protocol applies to goods entering the EU market through Northern Ireland coming from Great Britain. Customs like controls will apply. If there are customs tariffs for example, in a no-deal, then the UK is to apply those tariffs although it is entitled to keep the revenue.

There are no equivalent tariffs applicable to goods entering the Great Britain market emanating from the EU and in particular the Republic of Ireland, destined for Great Britain. On the face of it and subject to anti-avoidance rules which are perhaps likely,  goods which might be subject to controls and tariffs on export directly from the Republic of Ireland to Northern Ireland might, subject to such anti-avoidance rules, avoid such controls and tariffs, if they exported through Northern Ireland to Great Britain.

The NI Protocol applies to goods entering the EU market through Northern Ireland coming from Great Britain. Customs like controls will apply. If there are customs tariffs for example, in a no-deal, then the UK is to apply those tariffs although this is entitled to keep the revenue.

There are no equivalent tariffs applicable to goods entering the Great Britain market emanating from the EU and in particular the Republic of Ireland, destined for Great Britain. On the face of it and subject to anti-avoidance rules which are perhaps likely,  goods which might be subject to controls and tariffs on export directly from the Republic of Ireland to Northern Ireland might, subject to such anti-avoidance rules, avoid such controls and tariffs, if they exported through Northern Ireland to Great Britain.

The NI Protocol applies to goods entering the EU market through Northern Ireland coming from Great Britain. Customs like controls will apply. If there are customs tariffs for example, in a no-deal, then the UK is to apply those tariffs although it  is entitled to keep the revenue.

There are no equivalent tariffs applicable to goods entering the Great Britain market emanating from the EU and in particular the Republic of Ireland, destined for Great Britain. On the face of it and subject to anti-avoidance rules which are perhaps likely,  goods which might be subject to controls and tariffs on export directly from the Republic of Ireland to Northern Ireland might, subject to such anti-avoidance rules, avoid such controls and tariffs, if they are exported through Northern Ireland to Great Britain.