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Remarks by Commissioner Moscovici at the press conference on Customs aspects in case of ‘no-deal Brexit’

Brussels, 3 April 2019 | Translated using Google Translate. View the original post HERE

I am here to talk to you about the scenario in which the UK would leave the EU without a withdrawal agreement, and our preparation for this eventuality for EU customs.

Before getting to the heart of the matter, I would like to make several political reminders.

First, the European Commission has never wanted Brexit. We said the day after the referendum in June 2016 that we regret the choice of British voters but since it was a sovereign and popular choice, we respect it.

In addition, the Commission has never wanted the no-deal scenario. That is why we have worked tirelessly to reach an agreement that allows for an orderly withdrawal of the United Kingdom from our Union.

The withdrawal agreement signed in November 2018 is the best solution for us.

I’m not aiming for today, and I will not answer the questions that will invite me to speculate on any of the scenarios that will emerge in the coming days, nor on the somewhat laborious discussions. underway in London. You know the position of the Commission, expressed by President Juncker, who is also scheduled to speak this afternoon in the European Parliament, and by our chief negotiator, Michel Barnier.

Nevertheless, faced with the growing risk of exit without agreement on April 12, and because we are an institution responsible and guarantor of the general interest of the 27, we must, it is our absolute duty, to cover all eventualities, including including that of a “no-deal”. And in this context, customs is one of the main sectors involved. We therefore believe that it is useful to recall the preparatory work that has been done with the Member States, the customs authorities and the companies.

Of course, a withdrawal without agreement would have consequences in many other areas; a series of press conferences is scheduled with my colleagues this week on various topics (transport, health and safety, fisheries, agriculture, employment). I will focus on customs and taxation at the borders of the Union.

I want to make it clear here, in the event of an exit from the Union without agreement, the United Kingdom would become a third State overnight. It would be an instantaneous, radical and very substantial legal change for the UK, our Member States and our companies.

The Commission is ready to draw all the legal and operational consequences of an exit without agreement. We have been preparing for two years.

In the area of ​​customs and taxation, the consequences of a Brexit on the movement of goods – as well as travelers – would be potentially considerable and would cause at least four important changes.

The first change – a direct consequence of the fact that the United Kingdom would become a third country on the day of its exit from the Union – would be the immediate application of the European Customs Code on the movement of goods from the United Kingdom. In concrete terms, in the case of no-deal, new customs controls should be put in place. Today, I recall that these goods move without controls or customs formalities thanks to the single market and the customs union.

All Member States now share the idea that it is necessary to ensure the full application of the Customs Code upon leaving the United Kingdom. This clear line based on European law has been the great strength of the 27 and the Commission in this preparatory work for 2 years.

Restoring controls with the United Kingdom would be a major challenge, given the very heavy commercial traffic. As examples,
– 7 of the UK’s top 10 global economic partners are EU member countries;
– More than 4 million freight vehicles travel between Dover and Calais per year, more than 11,000 vehicles per day (Eurotunnel and Ferry combined).

Our common goal is to protect European consumers and the integrity of our internal market without disrupting the activity of European companies that regularly trade with the United Kingdom. This delicate balance must be preserved at all costs.

Of course, enforcing customs legislation, I want to reassure, does not mean controlling all shipments or trucks systematically. This is not what our customs authorities do vis-à-vis shipments from other third countries. It would be absurd for us to be tougher or stricter with a country that comes out of the European Union. Controlling goods on the basis of a risk analysis is a fundamental principle of customs controls, which I have had the opportunity to check on the ground on many occasions. The technicality and the competence of the customs officers in this respect is absolutely formidable.

There would therefore be many customs controls to be carried out, for legal and political reasons. And I want to be honest here, I prefer rigorous controls at the price of a few lanes of trucks to a health crisis or illegal trafficking! The safety of Europeans will be our top priority.

The second important change is that European companies that have been trading with the UK without barriers in the internal market so far should complete customs formalities in the event of a no-deal.

Some of our Member States have estimated increases in the number of export and import declarations from 40% to 50%.

Third change, in the case of no-deal, the customs duties, VAT and excise duties owed on all goods imported from the United Kingdom should be paid to customs by the importers. This would therefore have an impact on cash flow for companies.

In the same way, exporters should comply with the obligation to provide customs documentation to justify the export VAT exemption.

In addition, visitors from the United Kingdom would be entitled to a refund of the VAT paid on goods purchased during their stay in the EU, provided that they are presented to the customs with the VAT refund documents. when leaving the EU. Here too, there are administrative formalities, complexities of calculation that do not exist today and that would naturally be introduced.

Finally, fourth change, in case of “no-deal”, baggage and goods would be subject to customs controls. Travelers from the UK could not carry certain goods in the EU or only in limited quantities. I am thinking in particular of products of animal origin or cash money in excess of 10,000 euros which will now have to be declared.

All in all, it must be clear that, without an exit agreement, the activity of thousands of European companies – and to a lesser extent travelers – would undoubtedly be disrupted by the reestablishment of customs controls and new customs and tax formalities.

This would apply to Calais, Rotterdam or Zeebrugge, of course, but also to all points of entry to the Union, be it the port of Naples or the airports of Budapest or Tallinn as long as it is a question of goods and passengers from the United Kingdom. We are a customs union, so it’s a common border that applies to us.

The Commission has fully played its role of preparation and coordination for two years with a desire: to limit the impact for our states and our companies.

I can say today that we have done our utmost to prepare the 27 as best as we can. We have done a serious job as thoroughly as possible in recent months in cooperation with the Member States.

Several explanatory notes and guidelines, outlines, have been published since last year to cover issues relating to customs procedures, rules of origin, VAT or excise duties in case of no-deal . The Commission also met with industry representatives on several occasions. Most recently, the General Secretariat conducted a tour of the capitals, which took the pulse and collected questions from member states, their ministries and departments, national parliaments and social partners.

Because it is the guardian of the Treaties, the action of the Commission is decisive. But it is up to the Member States to enforce the customs rules on their territory. They alone have the physical and human means.

Member States have invested heavily in the construction of new infrastructure, the recruitment of customs personnel and communication with stakeholders.
– 386 new customs officers are being recruited in Belgium;
– 700 in France;
– more than 900 in Germany and the Netherlands;
– and more than 400 in Ireland;
– an increase in human resources of 5 to 10% in these countries;
– new customs offices have been opened in Calais and can already accommodate customs officers who will do the checks at the exit of the Eurotunnel.

These figures illustrate a colossal work done by the customs that I want to salute, in record time and in a climate of total uncertainty.

The same effort must be made on the business side. That is why I have been relentlessly saying that every company must prepare for a “no-deal” to continue trading with the UK. In particular, they should:
– Assess whether they have the necessary technical and human capacity to deal with customs procedures and rules;
– Consideration of the necessary customs authorizations and registrations in order to facilitate their trading activities the UK is part of their supply chain;
– And get in touch with their national customs authority to see what other steps can be taken to prepare.

Today, we are ready to go. It should be clear, however, that a cliff-edge scenario, which is again not one we would, would create major disruptions. We must expect that there would be queues at the tunnel exit and at the ports.

The level of traders is critical and is still a cause of concern. The fluidity of trade flows will depend largely on whether they have prepared the right documentation.

That’s why the Commission launched a trader awareness campaign in February. Here again, Member States play a crucial role and I know they have invested a lot of time and money to convey their messages to their traders, in particular those who are unfamiliar with customs procedures and may not yet be on top of the new formalities.

Let me also say a word about the Irish border. As you know, this is a complex and fundamental issue in these Brexit negotiations, if not the fundamental issue. In case of a “no-deal”, the UK would be in the UK, and both the EU and the UK would face many challenges. They would need to protect their respective markets, public health, consumer safety and legitimate businesses, and carry out the necessary checks, in the least possible disruptive manner – and as much as possible, away from the border.

What matters is how these checks take place and what we ensure the Customs Code applies everywhere in the EU. Whatever happens, we have been clear that the Good Friday Agreement will continue to apply in all circumstances. The United Kingdom will remain co-guarantor of this agreement and is expected to uphold it in spirit and in letter.

We are working closely and intensively with the Irish Taoiseach Leo Varadkar and our Irish partners in order to organize these checks in the least possible disruptive manner.

Let me conclude.

Though these past months of uncertainty have not been helped, I can assure you that the Commission and the United States have taken this challenge very seriously.

I know that Member States will be reaching out to traders until the last minute before a no-deal – which we hope will be avoided – to ensure that the market is as smooth as possible. I encourage them to continue their efforts. On the Commission side we will do the same.

I repeat what I said at the beginning: the European Commission and the EU-27 did not want Brexit in 2016 and we certainly do not want to see a no-deal Brexit in 2019. Or at all, for that matter. And we still hope this can be avoided. But we are ready to face this challenge should it come to that.

And now I have time to take a few questions.


Compliments of the European Commission