Global Anti-Money Laundering Regulations and the Imperative for Business
It was reported in a UK newspaper last week that one UK proposal to avoid the contentious Backstop would be for Ireland to temporarily leave the EU Single Market and align itself with UK standards to avoid a hard border. Not surprising this does not seem to have gained much traction in Ireland or the EU especially considering Ireland appears to export more to the EU in total than to the UK*.
*https://www.cso.ie/en/releasesandpublications/er/gei/goodsexportsandimportsdecember2018/
Another alternative though that has been highlighted over the past week and thought could be the basis of a more plausible solution is for a “Regime of Dual Autonomy”. The proposal foresees the introduction of a law making it illegal to comply with the requirements of the receiving territory and creating inland “trade centres” to process customs clearance and checks. Whilst this seems a practical option for most legitimate trade (albeit still adding extra cost, bureaucracy and delays in processing exports that does not exist today) there would need to be a range of concessions from the EU for example on current rules, for example those that require food products entering from a non-member state to be checked at the point of entry into the EU, an acceptance that there is no increased risk of those that would seek to evade the law and an agreement to implement a reciprocal change to Irish law. So far the EU does not appear receptive to the proposal.
Although in the proposal there was some misunderstanding of how customs duties are paid on import quoting that “The reality of most cross-frontier trade in goods is that custom duties are not in most cases actually collected at the frontier but paid in advance when obtaining an import license”, the general principle could be imagined with the requirement that an import declaration must be submitted prior to the goods being exported and held as evidence. However, this does raise questions about the legal acceptance of that declaration and establishment of a customs debt for example when and where. Finally enforcing dual standards requires significant trust on both sides, which whilst that would be true in the current single market arrangements that is in a scenario where all countries apply the same standards, the dual autonomy approach would introduce the need for national inspectors to apply two standards (UK and EU depending on where the goods are destined) or a need for dual inspections.
In any case, even under this arrangement there would be the need to make some sort of customs declaration. As you will have read in previous blogs the UK currently proposes not to require import or export declarations for goods crossing the land border except for certain controlled goods but that could be temporary and does not address the EU side of the border. Therefore short of remaining in the customs union and single market companies operating across the Irish / UK border need to be making preparations to make customs declarations.
If you have not already made preparations for the submission of customs declarations post Brexit and are looking to submit them yourselves we would encourage you to contact us as soon as possible as the clock is ticking down quickly.
Director, Product Management