Preparing Your Supply Chain for Brexit

Understanding Supply Chains

With Brexit potentially going to take effect as early as March 2019, it is imperative that companies now start mapping their supply chain if they have not done so already.

In this regard it is critical to understand, on a product-by-product basis:

  • WHO IS THE SUPPLIER
  • WHAT WILL BE THE IMPACT ON THEIR SUPPLY TO YOU
  • WHERE ARE THE GOODS MANUFACTURED
  • WHERE THE GOODS ARE SHIPPING FROM
  • HOW ARE THEY BEING SHIPPED
  • ARE THEY TRAVELLING THROUGH THE UK LANDBRIDGE
  • WHAT IS YOUR HAULIERS POSITION
  • WHERE ARE THE GOODS SHIPPING TO
  • ASSESS DUTY AND CUSTOMS COMPLIANCE COSTS ON AN AS IS BASIS AND IDENTIFY OPPORTUNITIES FOR COST REDUCTIONS

We recommend this is completed as a first step in any Brexit review.

For further information please contact BDO.

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Customs Training Ahead of Brexit

Brexit is officially underway and there is now a serious need to ensure that all exporters and importers dealing with the UK understand Customs Rules.

Most companies who are facing importing to and exporting from the UK have limited knowledge of customs procedures. Many companies over the last twenty five years have operated within the Single Market which has removed the requirement to understand how to complete customs forms.

Along with this, in order to move goods with the minimum customs requirements possible, companies are going to have to look to get approved as Authorised Economic Operators (AEOs) or Trusted Traders as this is often referred to.

One of the recently introduced conditions for AEO status is that the applicant, or the person in charge of their customs affairs must have customs knowledge and training.

For example;

a. They must have 3 years’ experience as a guide

or

b. They must have Professional qualifications, undertake training and have passed an examination, consistent with the extent of their involvement in customs activities.

The essential features of training involve:

  1. Completing Import and Export Documentation
  2. How the clearance system works
  3. Information required by Revenue
  4. SAD auditing
  5. Classification of goods and application of tariffs
  6. Understanding Trade Agreements (particularly in the event of a new UK-EU Agreement)
  7. Qualifying for reduced rates under Trade Agreements
  8. Dealing with Customers and Suppliers
  9. Understanding the movement of goods whether by Road, Sea or Air
  10. Developing Customs Reports
  11. Understanding Duty Saving Opportunities

For further information please contact BDO.

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Brexit – Funding and Supports

As a follow on to our piece on this last year we find companies often ask what supports are out there to prepare for Brexit.

There are a number of loans, grants and training programmes which are on offer and it’s a good idea to take advantage of these to start preparing for Brexit.

These can be summarised as follows:

Intertrade Ireland

Intertrade Ireland offers a voucher of up to €2,000 (or £2,000 if applying from Northern Ireland) to help SMEs seeking support and advice in relation to Brexit.

It is important to be mindful of the time frames within which you are required to choose a Service Provider and submit a terms of reference within a month of the voucher being issued.

This money can be used to complete an initial Brexit impact assessment which will provide a guideline for your business for the next year.

 

Enterprise Ireland – Be Prepared Grant

Enterprise Ireland launched its Brexit SME Scorecard in which SMEs can register to assess their readiness for Brexit.

The Be Prepared Grant offers up to €5,000 to assist in the cost of developing a strategic response to Brexit.

This grant is available to Enterprise Ireland client companies who are directly or indirectly exposed to the UK market.

It is important to bear in mind that you do have to also match the €5,000 being spent but this enables a comprehensive Brexit analysis to be completed.

Enterprise Ireland also offer training and one-to-one workshops which companies are well advised to take advantage of.

 

Enterprise Ireland – Agile Innovation Fund

Enterprise Ireland launched its Fast Track Agile Innovation Fund to give companies rapid access to innovation funding.

The fund is targeted at companies looking to respond quickly to market opportunities and challenges posed by Brexit, helping companies develop new products, processes and services for new market opportunities and enabling exporters to respond quickly and maximise export performance.

It allows companies access grants of up to €150,000 in support for product, process or service development projects with a total cost of up to €300,000.

 

Bord Bia

Bord Bia run three month workshops for companies to assist them with developing their knowledge of customs and trade in order to expand their business outside of the European Union.

If you are a Bord Bia client we would strongly advise contacting their Brexit team to take advantage of this.

 

Brexit Loan Scheme

Preparation, innovation and adaptation are key focuses for Irish businesses facing the opportunities and challenges posed by Brexit. Such actions however require working capital.

This has been acknowledged by the Irish Government who announced in October 2017 the implementation of a Brexit Loan Scheme to support Irish businesses and assist them in the preparation of their action plans.

Through this programme the government set aside up to €300 million which is available at competitive rates to SMEs (40% of which are planned to be specifically used to benefit the agri-food sector – acknowledging it as a particularly exposed sector). The scheme excludes farmers and fishermen for whom alternative schemes should be further discussed.

 

CONCLUSION

While different conditions will apply, these offerings will benefit:

  • Traders and manufacturers
  • Companies facing cross border issues
  • SME’s

BDO’s key message is to take action now and plan for Brexit with the resources that are available to you.

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Surveillance Document on aluminium imports from outside the E.U.

In response to the increase of Aluminium imports on 12th May 2018 the European Union introduced prior "surveillance" for certain aluminium products.  It was proposed in order to protect the domestic industry and to register aluminium imports.

EU imports of companies engaged in the import of aluminium products originating from third countries (including Turkey) in the 7601, 7604, 7605, 7606, 7607, 7608,7906 and 7616.999 tariff positions must obtain a Surveillance Document from the competent authorities in their own countries.

The importer should submit a copy of contract of sale or pro-forma invoice. Authorities should issue the Surveillance Document within five working days of receipt of completed applications.  The Surveillance Document is valid for four months and can be renewed. Surveillance Document are not required for shipments of net weight 2,500 kgs or less or for products originating in Norway, Iceland and Liechtenstein.

In accordance with the subject legislation to avoid delays at import customs from 12th May 2018 you must obtain a Surveillance Document prior to entry into EU territory (as is currently the case for imports of Steel to the E.U.).

Rhenus Logistics can assist in your importation of goods from global markets.

 

For further information please contact your local Rhenus Logistics office.

Lynda Barry / Tel +353 (0)1 429 2300 / [email protected]

2443

About Rhenus: Turnover at the Rhenus Group tops € 4.8 billion, making it one of the leading logistics service companies with global operations. Rhenus has business locations at more than 610 locations worldwide and employs 29,000 people. The Rhenus business areas - Contract Logistics, Freight Logistics, Port Logistics and Public Transport - manage complex supply chains and provide a wealth of innovative value-added services.

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Impact of Iran Sanctions on EU Businesses

On May 8th 2018 President Trump announced the withdrawal of the United States from the Joint Comprehensive Plan of Action (JCPOA) (i.e Iran Nuclear Deal) signed in July 2015. Grounds for the withdrawal are national security interests.

President Trump also announced a return to the existing sanctions (prior JCPOA), along with additional measures. These sanctions have an extra-territorial component restricting businesses who carry out business with the US, use US parts, US labour and/or US dollars.

They may also impact on EU businesses doing business with Iran. Indeed President Trump at the recently warned European Businesses that they would face secondary sanctions if they violated US restrictions.

Implementation of the measures

The measures should be implemented in several phases and termination of existing contracts and wind down of activities should be done within 90 or 180 days (depending on the sector). The US government targets the 4th of November 2018 for all sanctions to be re-imposed.

Licensing

US Licences applications under the JCPOA allowing the Export or Re-export to Iran of Commercial Passenger Aircraft and Related Parts and Services, will no longer be considered.  Specific existing licences will be revoked by August 6th 2018. The current licences application that have been submitted and are pending approval, will not be granted.

Impact on European Markets

Some Billions of euros deals have been announced with some of the biggest European multinational businesses such as Total, BP or Airbus since the Nuclear deal has been in force (2016) and particularly in the oil, aircraft and automotive sector

Impact on Aviation Sector

The US is giving commercial aircraft and aircraft part manufacturers 90 days to end all business with Iran. All licences to export to Iran will be revoked. Non-compliance by this date would lead to secondary sanctions imposed by the US.

As most international aircraft manufacturers rely on American aircraft parts, businesses in the EU might be pushed towards compliance with US measures to avoid sanctions. Indeed, looking at the 15 CFR Appendix Supplement No 1 to Part 740, if the destination is Iran the product will be subject to an US export licence if over 10% of the product comes from the US.

Non-US Airlines operating routes to Iran might also be impacted considering the involvement of banks and insurance businesses mostly based in the US.

EU response 

The EU has not withdrawn from the JCPOA and in particular the UK, France, and Germany are reaffirming their “continuing commitment to the JCPOA” (Joint statement from Prime Minister Theresa May, Chancellor Angela Merkel and President Emmanuel Macron).

The EU is asking for exemptions (or extensions of licenses) for the EU businesses that have been doing business with Iran since 2016, in order to ensure continuity of their economic activities and protect the sectors of energy, automotive, civil aviation and infrastructure.

However, most European Businesses and particularly those with operations in the US would want to avoid additional sanctions imposed by the US and would tend to comply with the US requirements and cease business with Iran if exemptions are not granted by the US government.

Reluctance by European banks to clear transactions involving Iran would also incentivise businesses towards compliance with the sanctions. Businesses need to consider US involvement and in particular US made parts in their operations when engaging in Iran related business.

For further information or to arrange a meeting please contact Carol Lynch on [email protected], or any member of the Customs and Trade Team at your local BDO office.

 

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Trade War Fear

In early March 2018, the United States announced the imposition of tariffs on foreign imports of Steel (25%) and aluminium (10%). The European Union, along with Canada and Mexico, were at that time granted temporary exemptions.  These exemptions were lifted on May 31 2018, when the USA announced its intention to set new duties on Steel and Aluminium imported from the EU.  These additional tariffs are now in place.

EU Response

The EU took the case to the World Trade Organisation (WTO) on the 1st of June 2018 and announced the increase in duty of 10%, 25%, 35% and 50% on the certain products (summarized in Annexes I and II of Regulation (EU) 2018/724)) originating in the United States.

Following this, duties were applied on products listed in Annex I on June 21st 2018. Additional duties (on the products in Annex II) will be imposed on the earlier date of June 1st 2021 or the 5th day following the date of the adoption by the WTO Dispute Settlement Body of a ruling that the United States' safeguard measures are inconsistent with the relevant provisions of the WTO Agreement.

The practical effects are demonstrated as follows on some of the product coming from the US into the EU:

Surveillance System

A surveillance system was put in place in 2016 (Regulation (EU) 2016/670 on iron and Steel) and demonstrated that imports of certain steel products have been increasing.

With the US imposing restriction on steel products, the risk is an increase of import of steel products coming from other Third Countries. The surveillance programme has recently been extended to aluminium products (Regulations (EU) 2018/640).

Under the surveillance system, products concerned shall be put into free circulation in the Union only on production of a surveillance document issued by the competent authority designated by a Member State.

China

The US announced the imposition of additional tariffs on 818 items coming from China on July 6th. Retaliation from China will be on additional tariffs on over 545 US goods including sectors such as agriculture and automotive.

This discussion had been ongoing since January with back and forth submissions of further lists of products subject to additional duties between China and the USA.

The main focus seemed to be on steel, aluminium waste (making US measures on aluminium less effective as the aluminium waste would be stuck in the US) and on Pork  (then wine, fruits, steel pipe and tube; ginseng, soybean and cars…).

The US sanctions are putting on hold further trade negotiations between the two countries.

EU Impacts

Levies on European cars and Irish Alcohol are two sectors of potential concern and would have a major impact for German car manufacturer and Irish spirit producers. On the other hand, if tariffs on pork from US into China are imposed, then EU (Irish) pork producers could benefit and export to China.

For further information on how the sanctions might impact your business or to arrange a meeting please contact Carol Lynch on [email protected] or any member of the Customs and Trade Team at your local BDO office.

BDO Ireland | | 0 comments

Are you Brexit Ready?

The EU Council met during the last week in June to discuss a range of issues from Migration, to the growing Global Trade tensions and deterioration in EU-US relations along with the reform of the Economic and Monetary Unit.

The Council reviewed the state of play of Brexit negotiations and adapted conclusions on progress made.

As expected however the results were disappointing as the Brexit discussions are not progressing as planned. The Summit was scheduled to progress matters on the Withdrawal Agreement and future Trade Arrangements, however that has not been the case.

Instead the EU has issued a statement advising that Member States step up plans for all outcomes - widely interpreted as advising companies to plan for a Hard Brexit in March as a real risk at this point.

This is not to say that a Hard Brexit in March 2019 is to be expected only that, as Airbus stated:

“We have sought to highlight our concerns over the past 12 months, without success. Far from Project Fear, this is a dawning reality for Airbus. Put simply, a No Deal scenario directly threatens Airbus’s future in the UK……”

This statement has been echoed by BMW who have raised concerns about customs delays at the Borders negatively impacting their JIT model.

Are you ready?

As UK based multi-nationals start to prepare for the risk of a hard Brexit in March 2019 it is more critical than ever that Irish Exporters also prepare for the risk of customs checks as early as next year.

We strongly recommend putting together a customs plan, along with a wider VAT, Tax and Supply Chain plan to ensure any risks of delays are addressed now and the relevant procedures and simplifications put into effect to enable the efficient movement and clearance of your goods.

The BDO checklist below identifies the key areas that your business should be reviewing:

 

 

 

We would urgently recommend companies take on board that preparing for a potential hard Brexit is a prudent decision in order to be prepared for all outcomes.

For further information on Brexit and all customs queries please contact BDO.

For more information about our partnership with BDO Ireland click here.

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Effective Routes to Europe bypassing the UK

Effective Routes to Europe bypassing the UK

Avoid potential customs delays in the UK and move your cargo direct to Europe with Rhenus Logistics

A significant portion of Irish exports to Europe currently ship on trucks transiting the UK on the traditional land-bridge route. Post-Brexit, it remains unclear how UK Customs authorities will manage this traffic. Rhenus Logistics can help you avoid this uncertainty and potential additional customs clearance costs and delays post Brexit.

With regular groupage departures to Europe Rhenus Logistics can help you service your European customers effectively maintaining free movement of cargo for the duration of the journey.

For large or small exporters to Europe, Rhenus Logistics can arrange movement from all main ports in Ireland direct to European ports bypassing the UK. Regular departures from Dublin, Rosslare, Waterford and Cork connect with European Ports in France, Belgium and the Netherlands. You may have to plan for slightly longer transit times but maintaining supply chain certainty remains critically important. Begin your contingency planning now!

For further information please contact your local Rhenus Logistics office.

Lynda Barry / Tel +353 (0)1 429 2300 / [email protected]


Your options from Ireland bypassing the UK

About Rhenus: Turnover at the Rhenus Group tops € 4.8 billion, making it one of the leading logistics service companies with global operations. Rhenus has business locations at more than 610 locations worldwide and employs 29,000 people. The Rhenus business areas - Contract Logistics, Freight Logistics, Port Logistics and Public Transport - manage complex supply chains and provide a wealth of innovative value-added services.

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Centralised Clearance – Centralising your EU customs clearance process in Ireland

Centralised Customs Clearance is a valuable trade facilitation measure under a customs procedure of the Union Customs Code (UCC) within the EU.

It allows an approved trader to lodge at the customs office where they are established, a customs declaration for goods which are presented at another customs office within the customs territory of the Union.

Centralised Clearance allows the economic operators to centralise and integrate accounting, logistics and distribution functions with financial savings in administrative and transaction costs, thus providing a genuine simplification. Centralising payment of customs duties and related declaration costs provides real savings and efficiencies.

Multinational organisations with manufacturing or distribution centres in different EU countries can centralise their EU customs clearance administration in one location within the EU. These organisations may have to implement or purchase costly IT solutions in each member state they are importing/exporting to/from or outsource this facility to many different external stakeholders. Centralised Clearance can eliminate this costly administration burden, centralise these operations in one location, and reduce risk within your global supply chain.

As your global supply chain expands and non-EU imports increase into multiple cross country locations throughout the EU, you now should consider this very useful trade facilitation measure. Global sourcing within your industry can be complex. Making the inbound process of this function more efficient by ensuring security of supply and reducing risk should be considered.

For more information contact Brian Murphy, Head of Trade Services, Irish Exporters Association at [email protected]

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Do you have inventory supplied from outside the EU?

Rhenus Logistics can help you postpone the payment of VAT and Duty with simplified procedures

Would you like support to manage VAT and Duty liabilities on your imports from outside the EU? Reach out to Rhenus Logistics to discuss the opportunity to postpone the payment of VAT and Duty at point of entry.

Rhenus Logistics operates a Public Warehouse Type 1, utilising the simplified procedure of Entry in Declarants Records. This facility allows importers to postpone the payment of VAT and Duty until the month after they are consumed.

Rhenus Logistics offers a full suite of warehouse and logistics services such as Vendor Managed Inventory, Order Fulfilment and Line Feed, Pick & Pack etc. all from our facility off the Naas Road, Dublin. With global services by air, land and sea Rhenus Logistics can meet all your freight and logistics needs.

To discuss Simplified Procedure or any other aspect of your supply chain please speak to Rhenus Logistics today

Contact your local Rhenus Logistics office.

Lynda Barry / Tel +353 (0)1 429 2300 / [email protected]     www.rhenus.com

Revenue

About Rhenus: Turnover at the Rhenus Group tops € 4.8 billion, making it one of the leading logistics service companies with global operations. Rhenus has business locations at more than 610 locations worldwide and employs 29,000 people. The Rhenus business areas - Contract Logistics, Freight Logistics, Port Logistics and Public Transport - manage complex supply chains and provide a wealth of innovative value-added services.

Rhenus Logistics | | 0 comments

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