What will have the biggest impact on international trade in 2016?
It’s been tricky times for businesses planning for the future in recent years. Just as it seemed there was light at the end of the tunnel following the global recession, the prediction of a global economic slowdown, largely fuelled by reports of uncertainty in the Chinese economy, raised further alarm bells.
Fears of the slowdown still simmer away amongst many, but in general, UK business confidence is quietly positive. So for UK businesses involved in the import or export of goods, what are the big considerations for 2016?
We take a look at three of the big milestones that will effect UK companies conducting business internationally.
Union Customs Code (UCC) and Authorised Economic Operator (AEO) Status
The UCC, set to come in to force from 1 May 2016, has been designed to streamline customs legislation globally, and will provide a unified process for over 80% of countries.
For all UK companies trading globally, the biggest effect of the new UCC will be the apparent necessity for them to trade with Authorised Economic Operator (AEO) status.
Come the 1 May, companies without accreditation will require large financial commitments to cover the hefty mandatory guarantees that will be applied for both actual and potential Customs import duties that could be accrued through their trade processes. In order to take advantage of simplified customs procedures such as inward processing relief, customs warehousing, temporary storage, temporary admission or community transit, businesses will have to fulfil AEO criteria.
It is expected that companies that are not AEO accredited after 1 May 2016 may also face potentially lengthy delays in gaining clearance on items entering the UK, as additional, more rigorous checks are set to be implemented at border control; delays that could subsequently lead to an increase in rent at ports along with increased costs for clearance of goods.
Under the new UCC regulations duties will be payable against the transactional value of the goods at the point of import.
SOLAS Legislation for the Verified Gross Mass of Containers
There are just under 3 months to go until we see the implementation of the International Maritime Organisation’s new Safety of Life at Sea (SOLAS) regulations.
Coming in to effect from 1 July, the operational processes for the implementation of SOLAS have yet to be finalised by the ports and carriers. However, it would come as no surprise for shippers to experience longer timescales to point of delivery and additional costs as the procedure for verifying the gross mass of all containers comes to fruition.
Some ports have already announced that they will provide facilities for VGM, and to ensure that all weight verifications can be made in time for loading, it is likely that terminals will request earlier delivery of containers to the port.
The “Brexit” EU Referendum
You could be forgiven for not being aware of the UCC or SOLAS. But unless you have been in hibernation for the past few months, it is unlikely that you have missed the news on the third big change we’re covering, which could have a big impact to the UK global trade volumes.
One topic that has dominated the headlines, and many a conversation in pubs, work places and restaurants up and down the country in 2016 is the ‘In or out?’ debate.
At the end of June, the UK public will have their say, and take to polling stations to vote on potentially one of the biggest changes in UK politics for generations, the EU referendum.
The Pro EU camp have been vociferous to express their belief that an exit from the EU will spell doom and gloom for UK trade, through increasing trade barriers and customs charges. Those backing the campaign to exit the EU emphasise the ability to arrange own free trade agreements, and highlight that an increasing amount of UK trade is conducted with countries outside of the EU, such as India, China and African nations.
In truth, no one knows what will happen to trade levels, whatever the result come the end of June. Much the same, it is not possible be certain of the effect SOLAS or the new UCC will have on global trade. What can be certain is that here at Velta we will keep our clients up to date and informed as best as possible on any influences that could have a potential impact on their supply chains, helping them to adapt, and often take advantage of, changes in policy.