CEP operators and e-retailers warn over no-deal Brexit risk

Industry bodies representing companies involved in the e-commerce value chain are following “with great concern” the recent developments around Brexit, in particular the potential risk of a no-deal scenario.

Ecommerce Europe, the European Express Association and PostEurop underlined in a joint statement issued earlier this month that for cross-border trade it is of utmost importance to avoid any unnecessary disruption of the customs and transport network so that the movement of goods and parcels between the EU27 and the United Kingdom can continue efficiently from January 2021.

“A no-deal Brexit will lead to a serious disruption of cross-border retail, e-commerce and related trade flows,” they warned. “In such a case, we consider it essential that negotiating parties agree on introducing the necessary transport contingency measures that have been already prepared in case there will be no Free Trade Agreement reached before the end of the transition period on 31 December 2020.

“Such a decision should then be adopted and communicated well in advance, so that businesses from both sides would have the necessary time to properly prepare. This decision gains further importance since EU VAT and customs rules will no longer apply in the UK after 1 January 2021.”

Free Trade Agreement

The statement noted that should no agreement be reached within the transition period, the EU-UK relationship would fall within WTO rules and therefore the UK would be considered as a Third Country. On the other hand, should a deal be agreed in time, the UK would still be out of the EU Single Market and Customs Union and therefore the EU VAT and customs rules will not apply for cross-border retail.

Ecommerce Europe, the European Express Association (representing DHL, FedEx and UPS) and PostEurop (representing postal operators) reiterated their “strong support for the adoption of a swift Free Trade Agreement between the EU and the UK before the end of the transition period,” which would ensure a freer flow of goods and parcels across the UK, and reduce the risk of queues and delays at border crossings; otherwise, EU and UK businesses - in particular SMEs - and consumers will ultimately carry the economic burden of increased friction and reduced cross-border trade.

They added that a highly-integrated and long-term EU-UK trade relationship would help minimise frictions in supply chains and coordinate trade facilitative measures, safeguarding a continuous flow of goods and parcels.

Recommendations

The three industry bodies called on the EU and UK negotiating parties to ensure that at least the following elements will be part of the deal:

• a “zero tariff, zero quota” agreement to prevent the reimposition of tariffs on key goods;
• a continued cross-border flow of goods via land and air, by securing, as soon as possible, agreements for road and air transport, customs simplifications and mutual recognition on security requirements, without compromising safety;
• simplified rules and procedures for import and export of goods, while maintaining a high level of convergence of both parties’ customs legislation; and simplified rules to facilitate border controls, in order to avoid bottlenecks and slowdowns of the goods and parcel flows.

On this latter element, the statement drew attention to “globally adopted simplified rules, applicable to the vast majority of parcels sent between the UK and EU by 1 January 2021.

“Both the UK and the EU (by 1 July 2021) have adopted a simplified set of data-elements to be sent prior of any border crossing to the respective authorities. Postal Operators will be ready to use these data elements to send pre-declarations digitally by 1 January 2021, as well as Courier-, Express- and Parcel operators (as they are familiar with these pre-declaration already in a more extensive format),” they explained.

Time running out

The associations emphasised that the future EU27-UK relationship should overall ensure legal certainty for businesses from both sides, avoid market fragmentation as far as possible and aim at facilitating business opportunities.

“However, we doubt that the limited time left before the end of the transition period would be enough to conclude any substantial and long lasting deal between the EU and UK, also considering the ongoing health situation caused by the COVID-19 pandemic, which led to a shift to other more pressing priorities. Regardless of when and if an agreement will be reached, we consider it crucial to introduce an implementation period so that businesses from both the EU and UK will have the necessary time to adapt to the new framework.”

The statement concluded: “The undersigned industry associations and companies stand ready to support the negotiators in their work on the future EU-UK relationship, to ensure that it will be fit for the current and future challenges of the wider digital commerce sector, including traders, postal and parcel delivery operators.”

Negotiations progress

As to the current state of post-Brexit negotiations, the president of the EU Commission, Ursula von der Leyen, speaking at the end of last week, said there had been "more movement" on problematic issues after "difficult weeks with very, very slow progress," BBC News reported.

She noted that fishing rights, competition rules and how a deal would be enforced remained the "three main issues" in the negotiations, adding that progress had been made over “state aid” rules limiting government subsidies for industry.

However, von der Leyen warned there were "some metres to the finish line" to reach agreement. The more upbeat mood came as negotiations moved online after a positive COVID result among the EU's negotiating team.