2019 UPS Tradenomics Series: Brexit: What is the deal?

March 4, 2019
2019 UPS® Tradenomics Webinar Series
Brexit - What is the deal?
Today’s webinar will begin shortly

March 4, 2019
2019 UPS® Tradenomics Webinar Series
Brexit - What is the deal?

Proprietary and Confidential: This presentation may not be used or disclosed to other than employees or customers, unless expressly authorized by UPS.
© 2018 United Parcel Service of America, Inc. UPS, the UPS brandmark, the color brown are trademarks of United Parcel Service of America, Inc. All rights reserved.
What is the deal?
Presenters
• Panelist
• Kristen Spano
• Customs Affairs
UPS UK
• Panelist
• Salima Gasmi
• Manager STTAS,
Brexit Consultant
• Host
• Greg Maddaleni
• Customs Brokerage
Sr Manager
UPS Global
• Panelist
• Walter van der Meiren
• Customs Brokerage
Director
UPS Europe
3
NCBFAA: CCS/CES continuing education credits available; inquire upon check out Q&A?

Agenda
4
ANY QUESTION?
ASK OUR
PANELISTS USING
THE “Q&A”
FUNCTION
Introduction
Background
Prerequisites for traders
Make your life easier
Other considerations
How UPS is preparing

Proprietary and Confidential: This presentation may not be used or disclosed to other than employees or customers, unless expressly authorized by UPS. This document is for informational purposes only. It does not constitute legal advice –
please consult with your own legal counsel for such advice. Also, do not rely on this information without performing your own research.
Please note
This presentation will be available upon check out to all attendees as well as a link to the event
recording.

Proprietary and Confidential: This presentation may not be used or disclosed to other than employees or customers, unless expressly authorized by UPS. This document is for informational purposes only. It does not constitute legal advice –
please consult with your own legal counsel for such advice. Also, do not rely on this information without performing your own research.
Please note
This presentation is for informational purposes only. It does not constitute legal advice – please
consult with your own legal counsel for such advice. Also, do not rely on this information without
performing your own research.

7
Introduction
Background
How is UPS preparing
The UK withdrawal from the EU
will have an impact UPS’s current
operations and how we deliver
services to our customers.
Often lacking the capacity or
expertise for logistics in-house,
SME’s make up a large part of
our customer base.
41 000 employees in
mainland Europe and a
further 8 000 in the UK
facilitating frictionless trade.
Operating in a time sensitive
industry either by design,
customer preference, or
industry requirement.
CUSTOMERS
BREXIT
SMEsUPS

Brexit Building Blocks
8
Possible Scenarios
Customs impacts of a Hard-Brexit
What it means for businesses
UK efforts on trade beyond the EU
Who in the EU would be impacted
Why it matters to non-EU entities
Withdrawal Agreement
It sets out how the UK
leaves the European
Union in an orderly
manner, scheduled for 29
March 2019.
Meaningful vote &
No majority
On 15 January, MPs held a
‘meaningful vote’ on the
Government’s deal with the
EU, and rejected it by 432
votes to 202.
March 2018 EP
Resolution +
European Council
June 2018
European
Council
October 2018
European
Council
March 2019
UK becomes a
third country
under WTO
31 December
2020
Transition ends
Withdrawal
negotiations
Ratification
by Council,
EP, and UK Transition
Period
First draft
Withdrawal
Agreement
EU/UK
Outstanding issues
* Governance
* Other Separation
* Protocol on Ireland
* Protocol on Cyprus Final
Withdrawal
Agreement
Start of discussions
with UK on
framework of future
relationships
Further
negotiations on
the future
relationship with
UK
Continued preparation at EU27
+
Discussions with UK on future
relation
Introduction
Background
Deadlock
12 March
MPs vote again
on May’s deal
13 March
MPs vote on whether
to leave w/o a deal
14 March
MPs vote on whether
to extend article 50
No
No
No
Yes
Yes
Yes
Brexit with
May’s deal
No-deal
Brexit
Delay
Brexit

9
 The UK is no longer a member of the EU –
but in the meantime – everything stays as
it is today between the EU and the UK.
 The UK will still to be part of the European
Single Market with the free movement of
goods, capital, services, and labour.
 It is not guaranteed that non-EU trade
partners of the EU will decide to terminate
the trade agreement with UK during the
transition period.
Possible Scenarios
Withdrawal
Agreement
Possible Scenarios
Introduction
Background

10
 The UK remains a full member of the EU
until the end of the extension period.
 The length of any Article 50 extension would
ultimately depend on how much was left to
do and the EU’s willingness to overcome
some of the big obstacles.
 In particular, it would have to factor in the
European parliamentary timetable:
 As such, three time slots have been suggested:
April 2019, July 2019 or beyond.
Possible Scenarios
Withdrawal
Agreement
Extension of
Article 50Possible Scenarios
Introduction
Background

11
 That means that WTO rules apply to the
relation between the EU and the UK. And
this will bring:
o Security barriers
o Immigration checks
o Customs controls,
o Import duties
o And a lot of customs documents.
 Basically, overnight we would change
from a complete customs union and single
market into multiple relationships.
Possible Scenarios
Extension of
Article 50
Withdrawal
Agreement
Hard
Brexit
Possible Scenarios
Introduction
Background

What would a Hard-Brexit change at Customs?
12
Possible Scenarios
Non
EU
Now
No Commercial
Invoice required
Commercial
Invoice required
Non
EU
Non
EU
Non
EU
Non EU
Non EU
Non
EU
Non EU
Non
EU
Introduction
Background

What would a Hard-Brexit change at Customs?
13
Possible Scenarios
Non
EU
Non
EU
Now Post-Brexit
No Commercial
Invoice required
Commercial
Invoice required
Non
EU
Non
EU
Non
EU
Non EU
Non EU
Non
EU
Non EU
Non
EU
Non
EU
Non EU
Non EU
Introduction
Background

EXTERNAL
BORDER
TRADE
BARRIERS
LONGER LIFECYCLE OF
SHIPMENTS
OTHER
REQUIREMENTS
• No more access to
Single Market and EU
Customs Union
• Customs declarations
between the EU 27 &
the UK
• Trade, veterinary,
phytosanitary and
other restrictions and
controls imposed by
Other Governmental
Agencies
• There will be two
different customs
Tariffs
• Customs duties
between the EU 27
and the UK will be
introduced
• Preferential and
economic origin will
become relevant
• Customs
Warehouses
• Authorisations
• Bill of Discharge
• Guarantees
Export formalities in UK
• Exit summary
declaration
• Export Declaration
Import formalities in EU27
• Entry summary
declaration
• Presentation
• Temporary Storage
• Import declarations
or NCTS
14
What does it mean for businesses?
Possible Scenarios
Introduction
Background

Whose trade in EU would be impacted by the Brexit?
15
Export from the EU27 countries
to the UK
Export from the UK to the EU27
countries
Possible Scenarios
Visit UPS Brexit Resource Center & Brexit-Ready Toolkit
for preparation guidelines for your business
Introduction
Background

Why does Brexit matter to non-EU companies?
16
Import clearance in
Germany where the
importer is a UK entity
Import via the UK with
distribution to the other
EU27 countries
Import into the EU where
part of the volume is going
to the UK
Visit UPS Brexit Resource Center & Brexit-Ready Toolkit
Possible Scenarios
for preparation guidelines for your business
Introduction
Background

Deals with 7 of 69
countries covered by EU
arrangements
£101bn of UK’s £117bn
worth of trade deals are
not secured yet
Switzerland is the only
trade partner in top 10
with a secured deal
No deal secured for the top
trade partners like Turkey,
Japan, South Korea,
Canada, and Norway
17
The potential UK trade agreements
Faroe Islands
Possible Scenarios
Introduction
Background
Switzerland
Chile
Mauritius
Madagascar
Zimbabwe
Seychelles
Israel

What is it?
The EORI number is a unique identification assigned to each importer
and exporter to monitor the movement of goods between EU and
non-EU countries.
Why do you need it?
 To continue to import or export goods to/from the EU after 29
March 2019 should the UK leave the EU without a deal
 To apply for customs simplifications for easier customs processes
What if I don’t have one?
Your goods from/to the UK will not be cleared by customs, but will be
held until you supply the complete paperwork, which could mean
significant delays and additional charges.
18
STEP 1: Register for an EORI number
Register for EORI
Meet fiscal requirements
Appoint an Importer of record (IOR)
Sign Power of Attorney for
Customs Clearance
Inform your carrier
Got it? Let
your Account
Executive
know – he will
update your
records….
Introduction
Background
Wrap-up

19
STEP 2: Meet fiscal requirements
Register for EORI
Customs Clearance
Inform your carrier
The UK government is
introducing postponed
accounting for import VAT on
goods brought into the UK.
Postponed accounting
UK businesses will continue to be
required to register for VAT in the EU
member states where sales are made.
VAT registration
This will continue to apply to
businesses as they do now
Domestic Transactions
UK aims to keep VAT
procedures as close as possible
to what they are now.
EU-UK Transactions
Low Value Consignment Relief (LVCR)
will not be extended to goods entering
the UK from the EU.
LVCR
This will no longer apply to UK
businesses that will be able to zero
rate sales of goods to EU consumers
Distance selling
VAT
Introduction
Background

20
STEP 3: Appoint an Importer of record
Register for EORI
Appoint an Importer of record
Customs Clearance
Inform your carrier
Importer Importer of Record
(IOR) = declarant
 the owner of the goods at
customs
 must be VAT registered in the
country of clearance
 responsible for customs
declarations
 must be an EU entity
 must have an EORI number
Lodging a declaration in your own name makes you ‘declarant’
with liabilities in accuracy of declaration, correct tariff
classification, and correct product valuation.
Customs
Introduction
Background

The EU controls the export,
transit and brokering of
dual-use
Excise duties on the sale or use
of specific products, such as
alcohol, tobacco and energy.
Any other information that
might impact trade of goods
moved...
OTHER?
SPECIAL PROCEDURESEXCISE GOODS
DUAL USE
21
Register for EORI
Customs Clearance
Inform your carrier
Customs procedures with
economic impact
STEP 4: Tell us everything we need to know about your
shipment
Introduction
Background

22
STEP 5: Sign POA for your goods crossing the border
Register for EORI
Customs Clearance
Inform your carrier
 By crossing the border the goods
are subject to customs supervision
and need to be registered upon
arrival
 UPS acts as representative on
behalf of the importer that
requires a Power of Attorney from
the Importer
Introduction
Background

23
Consolidate your shipments
Utilize Paperless Invoice
Assign HS codes to your products
Prepare proper Commercial Invoice
…And do it
as soon as
possible.
UPS World Ease® simplifies customs clearance by
grouping several shipments destined for the UK or
the entire European Union into a single shipment.
 Minimizes financial risk to enter the global marketplace
 No time spent on typical startup logistics
 Shortened supply chain
 Simplified paperwork
 Reduced Customs
 Enhanced cash flow
 Reduced inventory cost
 Full-visibility tracking
Introduction
Background

24
UPS Paperless™ Invoice
enables customers to upload
the commercial invoice/invoice
data or other documentation
for international shipments
(while creating the shipping
label) in order to streamline
the customs clearance
process.
Minimise
loss of
documents
MASTER INVOICE
Sold to Address
COMMODITY
Faster
customs
clearance
Eliminates
redundant
data entry
Upload any
other shipping
documents
Visibility of
forms in
Quantum View™
software
Introduction
Background

TARIFF
CODE
25
 Reducing time span customs release
 Reduced risk of hold
 Ensuring correct duty and taxes are
calculated
 Harmonised Tariff Code System
 Skill of the broker is of utmost importance
Introduction
Background
STTAS* supports you to classify all your products correctly and
manage your paperwork and duty optimization strategies.
* A UPS company

26
Delays can be avoided if paperwork is correctly prepared
…and that all starts with the commercial invoice.
The commercial invoice:
• Is a single point of reference
• Is the basis for customs declaration
• Clearly shows the parties involved in the transaction, origin and destination,
product tariff
…click here to access UPS’s free interactive guide to completing your
commercial invoice.
Prepare proper Commercial
Invoice
Introduction
Background

27
Future physical border in EU
How the physical border would look like in FranceIntroduction
Background
Two steps export procedure - DE
Online payments of VAT
Postponed Accounting
Goods subject to inspection
 4 million lorries carrying good crossings each year between the UK and France (EU).
 Technology solution based on anticipation of formalities customs and automation of
declarative process: the Smart border. It will be applied at all points of entry / exit
from Calais and more generally from Channel/North sea.
Production Pick-up Port Transport Port Delivery Consignee

In order to avoid disruption,
we will accept these commodities only by air, not by road.
28
Certain type of these commodities require an inspection
at the border
Introduction
Background
 Veterinary Inspection
o Commodities of animal origin, e.g. dairy products incl. milk powder, meat, fish, mussels, crabs; live
animals, fur
 Phytosanitary Inspection
o Bulbs, Flowers, Plants, fruit, vegetable, tea leaf, truffle, seeds
 CITES
o Live animals or products manufactured from live animals that are classified as endangered species, e.g.
corals, wristbands of alligator or snake leather, ivory, pearls

29
Two steps export procedure from GermanyIntroduction
Background
In Germany, for shipments
transported by road, the
exporter needs to perform
customs clearance for all
shipments valued over
1,000 euros or weighing
more than 1,000 kg.
The export declaration is
submitted electronically
via the customs
software (ATLAS) and
will be validated by the
Customs office where the
exporter is registered.

Online payments of VAT for UK imports (< £135)
As a shipper, you need to register online with HMRC in order to
report and pay the import VAT due yourself
30
 Register to pay import VAT if you:
o are based outside the UK
o intend to sell goods worth £135 or less to UK
buyers after 29 March 2019
o choose to pay the import VAT yourself
Introduction
Background
o your parcels are delayed or stopped from
entering the UK
o the UK buyer may have to pay additional tax
and fees
o you have to pay a penalty of £1,000
 If you do not register with HMRC, you may find:

Online payments of VAT for UK imports (< £135)
[Insert file name] 31
If you do not pay the import VAT due and you sell on an online
marketplace, HMRC can hold you and the online marketplace
jointly and severally liable for the import VAT you owe.
Introduction
Background

32
Postponed VAT Accounting for B2B shipments >£135
VS
Business to consumer
UPS pays import duties and VAT on
your behalf to customs authorities
At the point of import or
through a deferment account
Business to business
Walter
Introduction
Background
No import VAT payment to the
customs authorities
Declare through periodic VAT
return
Deduct the VAT through the
same return
UPS pays import duties on your
behalf to customs authorities

33
What is UPS doing to prepare?Introduction
Background
Contingency plans in place
 Product
enhancements to
support GB as
3rd country
 Staffing
 Network
adjustment
 Technology
updates both
internal and
external
 Trainings
 Licenses and
Bank Guarantees

Questions and Answers
Brexit how to prepare:
• Check Out:
• NCBFAA: CES/CCS/MES continuing education credit
• Feedback / value
• For more information contact Brexit@ups.com or Greg Maddaleni at
gmaddaleni@ups.com

2019 UPS Tradenomics Series: Brexit: What is the deal?

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