[Fergus Mcreynolds]

Good afternoon,

Richard and I are really excited to be answering your questions in our Q&A this afternoon. We have been sent some great questions in advance of the Q&A and throughout the next 2 hours or so we will be posting answers. If you have any questions or follow up questions any of the answers please do not hesitate to contact us.

Please note there is no audio/video the session is just a text Q&A. We are looking to explore options for more interactivity for future sessions.

You will need to keep refreshing to see more questions and answers

First some quick introductions, I'm Fergus McReynolds EEF's Director of EU Affairs. I am based in Brussels representing EEF and our member firms inside the EU institutions from the European Council to the EU Parliament and across the European Commission.

alongside me (virtually) is Richard Rumbelow will also be answering your questions today, he provides analysis, political advocacy and policy representation to senior levels of UK Government, Parliament and other influencers on the critical business and trade issues related to the UK’s discussions to leave the EU and the impact across Member firms in the UK’s manufacturing sector.

We look forward to speaking to you today. Remember there’s no such thing as a stupid question!

Cheers,
Fergus & Richard

[Fergus Mcreynolds]

First question comes from Mike Hague-Morgan at Autocraft Drivetrain Solutions

1. My question is about import duties, under WTO rules, in the event of a Hard Brexit. Do we know if the UK government will enforce the import duty? Do they have an option not to enforce it? If they did enforce it then is there any way for manufacturers to reduce, offset or defer the impact (other than try and pass the cost onto our customers!!!).

In the event of a no deal brexit, the UK would operate under a schedule for goods trade which has been laid before the WTO (the international organisation which sets global trade rules) for ratification. This is an on-going process the UK’s schedule broadly follows the current EU schedule and commits the UK to reduce tariffs and “bind” their customs duties to levels which can’t be raised. These binding duties are set out in individual WTO member’s Schedules of Commitments. The rate at which each country actually applies its tariff may be at, or below this “bound” WTO level.


The expectation is that the UK will operate under these conditions should we leave without a trade deal with the EU. Due to WTO rules, in the absence of a trade deal between the UK and the EU, should the UK wish to reduce tariff rates below those set out in the schedule they would be obliged to offer the same reduced rate to any country considered a Most Favoured Nation (MFN). This would mean that the UK would have to offer tariff reductions to countries such as US and Canada without any need for other countries to offer any benefit in return.


For more information on the impact of Tariffs under a no deal scenario, please visit EEF’s Brexit Hub for a Step-by-Step guide to preparing for Trade with the EU. EEF’s Brexit Hub here

[Fergus Mcreynolds]

The second question submitted Anonymously

• What steps should my business be talking to reassure EU nationals in my workforce?

The UK has reached an agreement in principle with the EU on the rights of citizens already in the UK, but with some details left to be decided. The deal still needs to be finally signed off later this year or early next.

The draft agreement will allow EU citizens already in the UK to stay after the UK leaves the EU on 29 March 2019 and in due course gain permanent settlement here, known as ‘settled status’. They will be able to continue to live and work in the UK permanently. Their rights to healthcare and access to benefits will also continue. This part of the deal applies to EU citizens, their families and dependents also in the UK and will be subject to a formal application process made under the new EU Settlement Scheme which includes the payment of a fee.

In addition, as it currently stands the Withdrawal Agreement provides for assurances for EU nationals in the UK setting out there rights. During a transition period provided for in the brexit deal, the ability to move workers into and out of the UK remains the same as it is now. When the draft agreement is approved by parliament, the transition period will run from March 2019 until 31^st December 2020, with a possible extension of two years until 31 December 2022.

It is not clear what shape or form that the UK’s future immigration system will take and we are eagerly awaiting the publication of the Government White Paper on Immigration. However, the Prime Minister has on a number of occasions set out a commitment to ensuring that EU nationals in the UK would be protected in any circumstance.

More information is available in our step-by-step guide to people and EEF’s online Brexit Toolkit which has recently been updated to include a module on managing your workforce.

[Fergus Mcreynolds]

Another question on managing your workforce comes this time from Kevin Rough at Daniaman

• My team travel to Europe regularly for short stays to attend meetings and conferences etc what are the implications on travel in the event of: The exit deal with the EU being agreed, and secondly a no deal scenario?
  

Under the deal, the transition period which would run from 29^th March 2019 until 31^st December 2020, unless it was agreed to be extended, provides for the same conditions of movement which apply today and the responsibilities which exist under national legislation for short stays. Beyond the transition period the Political Declaration section IX of Part Two on the Future Economic Partnership sets out the ambition of the UK and the EU to provide for visa-free travel for short-term visit and they will explore the possibility to facilitate the crossing of their respective borders for legitimate travel.

Under a no deal scenario, After 29 March 2019, UK citizens will be considered third country nationals under the Schengen Border Code and will therefore need to comply with different rules to enter and travel around the Schengen area. There are currently 26 EU and non-EU member states in the Schengen area and a small number of EU states not in the Schengen area. The EU strives at achieving full visa reciprocity with the non-EU countries, and it would follow that should the UK offer a visa-free travel the EU would aim to offer the same however it would be subject to a negotiation. For non-Schengen EU countries (Romania, Bulgaria, Croatia, and Cyprus)* access for 3^rd country nationals remains a national competence and will be subject to the entry requirements for the country you’re travelling to.

*the Republic of Ireland is also an EU member state which is not a Schengen state, but the travel provisions of the Common Travel Area will continue to apply between Ireland and the UK.

[Richard Rumbelow]

A further good question concerning the introduction of new HMRC import software (i.e. Chiefreplacement) from Numatic International Ltd

In2013–14, HMRC began the process of replacing its customssystem,known as Customs Handling of Import and Export Freight (CHIEF), followingchangesto European Union (EU) legislation. It was recognised that this change would havebeen costly and difficult to make on CHIEF’s ageing technology.

HMRC instigateda programme to replace CHIEF with a new Customs Declaration Service (CDS).Planning for the new system started before the EU referendum in June 2016. In2015, around 55 million customs declarations were made by 141,000 traders. TheUK’s exit from the EU could seethenumber of customs declarations which HMRC must process each year increasefivefold to255 million. HMRC began measures to ensure the scaling-up of the CDS service canhandle the upward forecasts of customs declarations, ensuring a viablecontingencyoptionis in place well before January 2019; and communicating this with traders.

InSeptember 2018, HMRC reported to Parliament that elements of the exportssolution processing transfer needs, would be moved back from January to March2019. They also confirmed that CHIEF would dual run alongside CDS, with theoption to run CHIEF beyond January 2019.

In October 2018, HMRC confirmed thatthey remained on track to meet the planned goal of implementing all requiredchanges to CHIEF by January 2019 to cope with any potential Day 1 volumes.HMRC has issued a range of communications to business and other groups inlate summer and early autumn 2018, and plan further communications later this yearand into 2019. The information includes advice on what businesses can do in theevent of a no deal exit from the EU, covering matters such as Customs, Exciseand VAT procedures that would apply.

[Amy Brunsdon]

Thanks @Fergus Mcreynolds & @Richard Rumbelow brilliant answers!

Just a reminder that users can still submit their questions and we encourage you to share your thoughts around the answers being provided.

Amy

[Fergus Mcreynolds]

Another great question from Kevin Rough at Daniaman, which has had me reading up on the provisions of the EU Marine Equipment Directive.

• We are currently registered to the MARed European database of suppliers for maritime equipment approvals which we believe assists customers to identify and specify our products. In a no deal hard BREXIT scenario will we continue to register and access the database?

As Mared is the co-ordination group for the Notified Bodies assigned by the Member States, under a no deal scenario the UK notified bodies will no longer be recognised by the EU. I would recommend that companies with registrations submitted through UK notified bodies consult their European network to discuss the applicability of UK registrations and the possibility to transfer these to EU based notified bodies as a precaution to prepare for no deal.

[Richard Rumbelow]

A question concerning whether tariff code auditing will happen in the aftermath of Brexit, if so howfrequently would you expect?
This has been submitted by NumaticInternational Ltd

From August 2018, the UKGovernment began the publication of Technical Notices, that set-out how the UKeconomy would operate in the event of a No Deal. HMRC published Technical Noticeson matters such as Customs, Excise and VAT procedures, with advice on the actionsbusinesses may want to consider taking to mitigate potential impacts. InSeptember, HMRC also wrote to 145,000 businesses over the VAT threshold whocurrently only trade with the EU to encourage them to look at the existing Restof the World guidance on GOV.UK to become familiar with what no dealarrangements would look like. This letter was also published on GOV.UK. I
t willbe worth looking at advice provided on the HMRC website or contacting your existing HMRC contact, to understand if they are planning any tariff code auditing exercises at the time that the UK exits the EU under a No Deal situation, or during a Transition period.

[Fergus Mcreynolds]

A final question from Kevin Rough at Daniaman

• How do I model the potential tariff implications of a no deal hard BREXIT scenario on the products we manufacture and export?

An excellent way to model the tariff implications of a no deal Brexit would be through EEF’s Brexit Toolkit. The EEF Toolkit is designed to help businesses deal with trade and migration issues arising as a result of Brexit. Our self-audit trade tool delivers a report to help companies plan for the cost of trading with the EU after the UK leaves the European Union.

The Toolkit allows you to find out the tariff code of your products and the duty amounts of the components or finished items bought or sold.

A video demonstration of the Toolkit is available here: https://www.brexittoolkit.co.uk/

The Toolkit is available to EEF core members at a cost of £250 and to members of EEF Affiliate organisations at £450

For more information please see EEF’s Brexit Hub here

[Richard Rumbelow]

A further question from Numatic International Ltd, this time on the likely impacts to the borders and precautions to make inresponse?

The Border Delivery Group—under HMRC responsibility---has a cross government role,providing co-ordination and assurance planning across all the work which is necessaryto ensure UK borders continue to be effective and efficient, as the UK exitsthe EU.
The Group has undertaken significant work in assessing the capability and resilience of UK border operations and is advanced in developing critical anddetailed contingency and scenario plans affecting the operational arrangements of UK ports,airports and other access facilities. The work models for the scenario of No Deal and a Transition period.

The Group's work has beendeveloped alongside key operators in the transport, logistics and key businesssectors. The work has also included identifying key sectors and products that would be provided with priority access at UK ports of entry/exit. They are developing a communications plan for engaging more broadly withbusesses to ensure all are adequately prepared for how border operations will be conducted affecting customs, transport andother arrangements. It is expected thatthese plans will be communicated in the near future, certainly in the event ofa No Deal.

As part of your assurance planning work, we would encourage UK business to review their existing logistics and freight movement commitments, discuss this in detail with your supply chain and customers, and endeavour to secure necessary commitments on how your product and components will be transported between the UK and EU in futute.