Courier firms and retailers across the UK are temporarily suspending their services to the EU to give businesses time to understand and adjust to new border controls and import taxes.
A major reason for this is that new procedural requirements at the border have been affecting turnaround time. There are now new customs paperwork requirements at the border, and courier service providers claim that they often have to return packages because senders fill out forms incorrectly or incompletely. Another reason for halting delivery services is the current delays and congestion at the UK ports.
While some are hopeful that delivery services will restart all over soon, others are more sceptical of the situation. Michael Gove, the Cabinet Office minister, said that he expected there would be a significant disruption at the UK borders due to Brexit customs requirements in the coming weeks. He expressed his concern that this disruption would be significantly greater than the slight disturbance observed so far. He said that the government had a responsibility to clarify what paperwork was required at the border.
A lot of confusion regarding exports to the UK has stemmed from a clause of the new Brexit trade deal. Though the agreement assures overall tariff-free trade between the UK and the EU, there is a catch. According to the “rule of origin” clause, the goods manufactured outside of the UK/EU or those that predominantly contain components made outside of the UK/EU are subject to VAT and import duties when sold by UK businesses to the EU.
Many UK businesses that export to the EU have their supply chains outside of the UK and EU, usually in countries like China. This means they are now facing tariffs on their products. They have halted their exports to the EU as they are trying to figure out how they can switch to components made in the UK or the EU.
This has meant that many food and clothing products that the UK used to export to the EU are no longer profitable for retailers. M&S has recently cut around 400 food products from its aisles in Northern Ireland. Debenhams and John Lewis have closed their international business. Fortnum & Mason has stopped shipments to Northern Ireland and the EU for the time being.
Tariffs are also applicable to EU-manufactured products that pass through the UK to other EU countries without further manufacturing in the UK.