On 19 November 2020, the House of Lords is due to debate the draft Customs Safety, Security and Economic Operators Registration and Identification (Amendment etc) (EU Exit) Regulations 2020. The instrument was laid under the draft affirmative procedure. This means it must be approved by both Houses before it can be brought into force.

Brexit and the Union Customs Code

The Union Customs Code (UCC) regulates customs cooperation between EU member states. The EU’s framework UCC regulation and other supplementary pieces of EU law set out the processes to be followed when goods are exported out of or imported into the EU’s customs union.

Under the terms of the withdrawal agreement, these arrangements continue to apply to the UK until the end of the transition period on 31 December 2020. After this, the UK will no longer be part of the EU customs union. Under the Northern Ireland Protocol in the withdrawal agreement, Northern Ireland will be part of the UK’s customs territory, but will continue to apply the UCC.

The framework UCC regulation and associated EU implementing and delegated regulation will become retained EU law at the end of the transition period. The Government has already made some regulations in 2019 to amend how the retained EU law would apply in domestic law. The draft regulations make amendments to the 2019 regulations to: delay the introduction of entry summary declarations for goods arriving in Great Britain from the EU; to change the list of territories that benefit from reduced deadlines for submitting entry and exit summary declarations for goods moved by short sea journeys; and to correct issues relating to economic operators registration identification requirements.

What would the draft regulations do?

Temporary waiver for entry summary declarations

Under the UCC, customs authorities must collect and risk assess data about goods before they arrive in and depart from the EU’s customs territory. This is done through the submission of entry summary (ENS) and exit summary (EXS) declarations. These are referred to as safety and security requirements. The Government has explained that this allows movements of goods such as food produce and clothing to be risk assessed to detect prohibited and restricted items before they enter or leave.

The draft regulations would introduce a temporary waiver so that the requirement for traders to submit an ENS for goods arriving from the EU would not start immediately after the transition period on 1 January 2021. Instead it would apply from 1 July 2021. The waiver would also apply to goods arriving from other territories that are not currently required to submit an ENS.

The Government has said that this is to give businesses extra time to prepare to meet the new administrative requirement and to mitigate the impact on readiness that the Covid-19 pandemic has had on the logistics industry. This is in line with the announcement in June 2020 that the Government would introduce full border controls on goods arriving in Great Britain from the EU in three stages between 1 January 2021 and 1 July 2021.

The draft regulations would introduce the temporary waiver by making amendments to the Customs Safety and Security Procedures (EU Exit) Regulations 2019 (SI 2019/715) and the Customs Safety and Security Procedures (EU Exit) (No 2) Regulations 2019 (SI 2019/1219). These existing statutory instruments are both due to come into force at the end of the transition period.

Amended deadlines for entry and exit summary declarations

The draft regulations would also change the deadlines for submitting a pre-arrival ENS and a pre-departure EXS for maritime movements to/from certain territories.

The standard deadline for submitting an ENS for maritime movements is four hours pre-arrival for non-containerised cargo and 24 hours pre-loading for containerised cargo. However, for short sea journeys the deadline is two hours pre-arrival. The standard deadline for submitting an EXS pre-departure for maritime containerised cargo is 24 hours pre-loading. However, for short sea journeys the deadline is two hours pre-departure.

The draft regulations would amend the Customs Safety and Security Procedures (EU Exit) Regulations 2019 (SI 2019/715) to change the list of territories that benefit from the later submission deadlines for short sea journeys. The Government has stated that this would ensure the provisions of the UCC that are retained in domestic law after the transition period reflect the UK’s geography rather than the EU’s. The current list of territories that benefit from the short sea journey submission deadlines includes places that are not near the UK’s customs territory, such as North Africa, and does not include places that are near the UK’s customs territory, such as France.

The Government has argued that without this change, the default ENS timing would “create significant challenges for the flow of goods through ports that use roll-on roll-off vehicle movements”. The Government says this is because a large proportion of hauliers will need to change which consignments they are picking up and/or their port or time of departure, less than four hours before arrival. If they had to wait at ports having submitted their ENS late, it could result in “significant congestion and disruption at ports”.

Economic operators registration identification

Businesses need an economic operators registration identification (EORI) number to move goods between the UK and non-EU countries. The Government has stated that from the end of the transition period, they will also need one to move goods between Great Britain and the EU and may also need one to move goods to or from Northern Ireland.

The Government has explained that in preparation for Brexit, the UK needed its own legislation to require economic operators to register with HMRC, in essence replacing the UCC rules requiring businesses interacting with EU customs law to register with a customs authority. The Government made the Customs (Economic Operators Registration and Identification) (Amendment) (EU Exit) Regulations 2019 (SI 2019/714) to amend the retained EU law and create a UK registration system. These regulations were due to come into force at the end of the transition period.

However, the Government has now identified some issues with these existing regulations, noting that:

  • They did not cover a registration requirement on non-economic operators where there is a requirement to register in other UK legislation.
  • There is an overlap between the regulations and the Customs Safety and Security Procedures (EU Exit) Regulations 2019. Both instruments made changes to the same part of the retained EU law.

The draft regulations seek to resolve these issues. They would:

  • Revoke the Customs (Economic Operators Registration and Identification) (Amendment) (EU Exit) Regulations 2019.
  • Insert into the Customs Safety and Security Procedures (EU Exit) Regulations 2019 those provisions from the revoked regulations that were not already contained in the Customs Safety and Security Procedures (EU Exit) Regulations 2019.
  • Maintain a registration requirement where such a requirement is set out in other UK legislation.

Northern Ireland

Although the territorial extent of the regulations is the whole of the UK, the regulations would apply differently to Northern Ireland. The Government stated in the explanatory memorandum that:

The safety and security elements of this instrument [ie provisions dealing with exit and entry summary declarations] only apply to businesses and intermediaries importing goods from the European Union (EU) into Great Britain (GB). The Northern Ireland Protocol means the unamended, current version of the UCC will continue to apply in respect of movements to and from NI.

The registration requirements of this instrument apply to those businesses established in Great Britain, making declarations in Great Britain or seeking a customs decision from HMRC.

The question of whether exit summary declarations would be required on goods being moved from Northern Ireland to Great Britain is one that has attracted attention. The Government’s view is that “it makes no sense for Northern Ireland businesses to be required to complete an export or exit summary declaration as they send goods directly to the rest of the UK”. The Government sought to give itself powers in the United Kingdom Internal Market Bill to allow it to make provisions relating to exit procedures without being constrained by provisions in international or domestic law that would otherwise apply. The House of Lords voted to remove these provisions at the bill’s committee stage. The Government has indicated it will seek to reinstate them.

As part of its scrutiny of the draft regulations, the House of Lords Secondary Legislation Scrutiny Committee asked HMRC whether entry and exit summary declarations would be required for goods moved between Northern Ireland and Great Britain. HMRC responded:

The NI Protocol requires HMG [Her Majesty’s Government] to implement the Union Customs Code in NI. As a result of this, some movements between GB and NI will attract a safety and security requirement, but the full extent of this is the subject of ongoing negotiations between the UK and the EU.

Parliamentary scrutiny

The Secondary Legislation Scrutiny Committee drew the draft regulations to the special attention of the House on the ground that they are politically or legally important and give rise to issues of public policy likely to be of interest to the House. The committee commented:

The operation of new customs arrangements after the end of the [transition period] is a key aspect of the UK’s withdrawal from the EU. While this instrument proposes a temporary waiver for ENS declarations, HMRC expects significant one-off costs and ongoing administrative burdens for businesses when the waiver has expired. In addition, the arrangements between NI and GB, including in relation to safety and security declarations, are still [the] subject of ongoing negotiations with the EU. These are significant issues that may be of interest to the House.

The Joint Committee on Statutory Instruments did not report the regulations to both Houses.

A date has not yet been set for the regulations to be debated in the House of Commons.

Cover image by Alexander Kliem from Pixabay.