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EU Exit Update

With the recent updates and the new government campaign on the EU Exit, we at DACHSER wanted to inform you of some key points that have arisen that you may find relevant for your organisation.

While trade talks continue to progress slowly, the month of June presented the last opportunity for the UK Government to extend the transition period currently due to end on 31 December 2020.

The date passed with no request for an extension, and now the focus is on a phased introduction to customs controls in the UK as of 1 January 2021. The transition phase will allow traders to recover from the impact of COVID-19 and to prepare for the new requirements. The UK will be subject to full customs control at its borders by 1 July 2021.

Earlier this year, the UK Government took steps to remove certain customs easements, including Transitional Simplified Procedures (TSP), and Post VAT Accounting (PVA). However, they have reconsidered and understood there is a need for some customs easements to be in place.

As a result, we have seen the reintroduction of postponed VAT accounting and a new form of the import process to enable the importer of record to account for their shipments by creating an entry into their records. Further information on this process can be found on the GOV.UK website.

On 12 July 2020, the Government announced funding of £705 million to build border facilities, invest in new technology and to create 500 new jobs within the border force to give further development of the infrastructure in preparation to the EU exit. Within this amount, there is £50 million available to support with training and IT equipment to complete customs declarations which you may be able to benefit from.

There will be an EU Summit Meeting for final discussions between the UK and EU on 17-18 October 2020. Finally, on 19 October 2020, we should see the summary and conclusion of a deal or no-deal scenario. 

We should not lose sight that regardless of the outcome of these discussions, customs administration will be necessary on all goods entering and exiting the UK as of January 2021, albeit in a phased approach.

The UK Government have also announced ‘The UK’s new start: Let’s get going’ campaign which is designed to give everybody easy and quick access to information and actions that people and businesses need to take to prepare for the end of the transition period.

Download the full communication below that includes further useful links and information. 

Incoterms 2020

A new version of the Incoterms will take effect on January 1, 2020, and will include a number of changes. The terms of delivery issued by the International Chamber of Commerce regulate essential buyer and seller obligations in international trade, such as transfer of goods to the buyer, transport costs, liability for loss of and damage to goods, and insurance costs.

With the adaptation of the Incoterms 2020 to current global trading practices, the new version is very up-to-date and practice oriented. The aim of the revision was to make the Incoterms clauses more user-friendly. For example, their presentation has been revised to make it easier for users to select the appropriate clause. In addition, the order of the clauses has been changed, and revised user instructions have been added to each clause.

In terms of contents, significant changes have been made to the Intercoms 2010, in particular the following:

• Different coverage levels in CIF and CIP: As in the past, the seller is still obliged in the Incoterms 2020 to take out transport insurance at their own expense in clauses CIF (Cost Insurance Freight) and CIP (Carriage Insurance Paid). In contrast to the Incoterms 2010, however, the two clauses now provide for different minimum coverages. The minimum coverage to be observed when the CIF clause has been agreed remains unchanged. The transport insurance to be taken out by the seller must continue to at least correspond to the coverage in accordance with the (C) clauses of the Institute Cargo Clauses or similar clauses (insurance of named risks). If the CIP clause is agreed, the seller must now provide insurance coverage in accordance with the (A) clauses of the Institute Cargo Clauses (all-risk coverage). Both the CIF clause and the CIP clause allow the parties to the contract to agree on insurance coverage that differs from this.
• Inclusion of security-related requirements: Security-related requirements for the transport of goods have now been included in Rules A 4 and A 7 of each Incoterms 2020 clause. As with other the Incoterms clauses, it should be noted that the Incoterms clauses only directly apply to the parties to the sales contract and are not the subject of the contract of carriage.
• The Incoterms 2020 contain regulations for transporting with one’s own means of transport in FCA, Delivery at Place (DAP), Delivery at Place Unloaded (DPU), and Delivered Duty Paid (DDP).
• For goods sold under the FCA (Free Carrier) clause and intended for sea transport (such as goods in containers), FCA is stipulating a new option in the future. The buyer and seller may agree that the buyer shall instruct its freight carrier to issue an on-board bill of lading to the seller after the goods have been loaded. At the same time, the seller is obliged to hand over this on-board bill of lading to the buyer. This is typically done through participating banks.
• Renaming of DAT to DPU (Delivered at Place Unloaded). According to the Incoterms 2010 DAT clause, the seller delivered the goods as soon as they were unloaded from the means of transport at a “terminal.” However, according to the Incoterms 2010 application notes, the term “terminal” was not to be understood from a technical point of view but meant any unloading location. This fact was taken into account in the Incoterms 2020 by renaming the previous DAT clause to DPU (Delivered at Place Unloaded) for the sake of clarity. That means that in the future, any (agreed) place can be the place of destination.

The Incoterms apply between the parties of a (national or international) sales contract and address – but are not limited to – special rights and obligations within this contractual relationship. On the basis of a uniform definition guaranteed in this way, subsequent problems of interpretation or discrepancies between the parties to the sales contract are to be avoided. It should be noted that the Incoterms, due to their character as GT&C-like provisions, do not constitute statutory provisions and thus only become legally binding if they have been effectively agreed between the parties to the sales contract by means of a corresponding reference (for the Incoterms 2020, this is also possible before 1/1/2020). Irrespective of this, in individual cases conflicting statutory provisions still take precedence over an Incoterm clause.

The Incoterms were revised by 500 experts from more than 40 countries.The clauses are recognized worldwide and are in use in more than 30 different languages.