Regulatory Compliance updates 12/21

Brexit: The Border Operating Model

A guide to how the border works with the European Union

The Government has updated the Border Operating Model. Doing business with Europe has changed. The UK has left the Single Market and Customs Union and new rules now apply.

Traders and hauliers must take the steps outlined in the Border Operating Model which has been updated to reflect the revised timetable for the introduction of the next stage of UK import requirements, as well as including additional detail on policies and processes.

Case studies have been created to represent end-to-end scenarios that will happen between GB and EU, importing and exporting goods from January 2021. These show not just the journeys for standard goods, but also for journeys with additional requirements such as those using the Common Transit Convention or transporting controlled goods. This should still be used in conjunction with the Border Operating Model which will contain further details, particularly for controlled goods. We have also produced some new step by step explainers to support traders and hauliers with specific parts of UK custom requirements. 

China’s New Regulatory Requirements for Imported Food Products

The General Administration of Customs of China (“GACC”) issued Order No. 248, which sets out new requirements for the registration of qualified foreign food producers that are allowed to export food products to China, effective from 1 January 2022. This Order represents a significant move toward tightening up the regulation of foreign made food products imported into China.

As the date of coming into force of the Order is fast approaching, one of the key challenges faced by foreign food producers is in ensuring that the registration process can be completed in a timely manner so that they have sufficient time to take transitional actions such as reprinting of product labels with the relevant registration number under the new scheme.

In this regard, we observe that certain corresponding authorities of China’s trading partners in the food industry have already completed the first round of application collection from its local food producers of the 18-type category. However, a number of China’s trading partners have requested and urged China to delay the implementation of the Order to allow for sufficient transitional time to comply with the Order with a view to avoiding supply chain disruption for businesses. At the time of writing, there has been no suggestion that a delayed implementation or grace period will be granted.

China GAC revise and implement new standards for certified AEO Enterprise

The Credit Management Measures of Enterprises registered and Filed by China GAC (Decree No. 251) came into effect, and the accompanying customs standard for certified AEO Enterprise was issued and implemented at the same time.

Continuation of "1+N" certification system. According to the credit measures, the standard of General Certified Enterprise will be deleted and the certification standard system of "1+N" for Advanced Certified Enterprise will be retained. "1" is the "general standard", all enterprises applying for advanced certification are applicable to it. "N" stands for "single standard". There are 8 standards at present, including IOR/EOR of import and export goods, customs declaration enterprises, comprehensive foreign trade service enterprises, cross-border e-commerce platform enterprises, inbound and outbound express operators, water logistics and transportation enterprises, highway logistics and transportation enterprises, and air logistics and transportation enterprises. The enterprise applies one or more of the standards according to its own enterprise type and business scope.

Optimize and adjust certification standards. In consideration of the convergence with the Credit Measures, the new standards has added restrictive requirements on enterprises breaking trust, criminal penalties, and administrative penalties related to the import of prohibited solid waste to the general standards of "enterprise law-abiding"; Considering that health quarantine, animal and plant quarantine and food safety requirements should be included, the new standard changes the "management requirements" of the single standard for the consignee or consignor of import and export goods into the "management requirements" of the general standard; Considering the spread of China's foreign trade export leading index and the use of imported goods to survey work is China's customs service two important measures of macroeconomic decision and the effect is significant, extensive, new considering the spread of China's foreign trade export leading index and the use of imported goods to survey work is China's customs service two important measures of macroeconomic decision and the effect is significant, extensive, new standard of the related indexes from the universal "regulatory requirements" adjustment as the general standards of "additional standard", from "reduced sub-index" into "indicators" points, In this way, sample enterprises are encouraged to actively participate in the survey, so that the questionnaire data can be more accurate and reflect the actual situation of import and export.

Focus on revised certification standards:

1. Internal control

• Delete the Quality Management standard
• Delete the index item of "document custody" of a single standard for the consignee or consignor of import and export goods 
• Added the "Access Control" standard-establish a security access control system, and pre-check whether import and export goods have security access requirements and whether they meet security access requirements, so as to ensure that the goods, origin, production enterprises, recipients and consignors meet China's security access requirements.
• New cross-border e-commerce platform enterprises and inbound and outbound express operator’s single standard "information system" indicators

2. Financial condition

New standard initiative to adapt to the development and changes of the situation, adjust the financial health standards, advanced standard authentication enterprise financial situation aggressive easing, quick ratio, cash flow considerations on comprehensive debt ratio, asset-liability ratio, operating profit margin, net assets yield reduced to only five financial indicators assessment "asset-liability ratio" a financial indicator.  At the same time, the flexibility of the assessment indicators has been increased, and the assessment requirements have been relaxed from the liability ratio "reaching the target every year", that is, "never failing to reach the target in any one year" to the liability ratio "failing to reach the target in three consecutive years".  According to the new standard, if the enterprise only a single year or within 3 years only 2 years of the asset liability ratio exceeds the standard, still meet the standards of advanced certification enterprises.

3. Law-abiding standards

• The amount of penalty will be increased from "no more than 30,000 CNY" to "no more than 50,000 CNY"; The accumulative penalty will be raised from "accumulative less than 50,000 CNY" to "accumulative less than 100,000 CNY".
• The index item of "enterprise compliance" of the consignor or consignee of import and export goods is "seizure ratio" specifically defined as "seizure ratio of general administrative filing or criminal filing, confiscation, fine, destruction, return (return), intellectual property protection and other types of seizure ratio". 
• The indicator of tax payment in the general standard will be changed from the rate of overdue tax declaration not exceeding 3 percent to the case of tax payment not exceeding the legal payment deadline.
• The index item of "No irregularities in declaration of tax-related elements in customs declaration form from January to last month in the previous year and the current year" has been added to the "enterprise compliance" of the consignor or consignee of import and export goods.

4. Trade security standards

• Delete the two indicators of emergency plan and emergency response in the general standard "Crisis Management"
• The index item of single standard for import and export goods consignee and consignor and water transport, highway and air logistics transport enterprises was added. Single standard for consignee and consignor of import and export goods: Requirements for inspection of transport vehicles requiring special treatment such as cleaning and disinfection have been added to the transport vehicle safety indicators. Single standard for water transport, highway and air logistics and transportation enterprises: Requirements on the safety of storage areas for storing and transporting high-risk biological factors (microorganisms, human tissue, biological products, blood and blood products and other special items) are added to the site safety index.

EU Publishes Draft Legislation to Address Imports of Commodities Linked to Deforestation and Forest Degradation

The EU published a draft Regulation seeking to introduce new due diligence requirements aimed at tackling deforestation and forest degradation. As set out in the proposal, deforestation and forest degradation impacts climate change and the loss of biodiversity and, as a consumer of commodities connected with this issue, the EU contributes to the problem.  The proposal forms part of the EU Green Deal initiative and is intended to complement the EU’s Sustainable Corporate Governance initiative, under which horizontal due diligence requirements are expected in respect of adverse human rights and environmental impacts in businesses’ value chains more generally.

The aim of the proposal is to “minimise consumption of products coming from supply chains associated with deforestation or forest degradation and increase EU demand for and trade in legal and ‘deforestation free’ commodities and products”. The draft legislation notes that the main driver of deforestation and forest degradation is the expansion of agricultural land to produce commodities such as cattle, wood, palm oil, soy, cocoa and coffee.

The proposal will repeal and replace the existing EU Timber Regulation (“EUTR“) which has imposed due diligence requirements on certain timber products for a number of years already.  As noted above, the new proposed Regulation will have a broad scope capturing not only wood, but the other types of commodities listed above. 

Financial sanctions, Russia

The Russia (Sanctions) (EU Exit) Regulations 2019 ensure sanctions relating to Russia are implemented effectively after the UK leaves the EU. This sanctions regime is aimed at encouraging Russia to cease actions which destabilase Ukraine, including actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine.
It imposes asset freezes on those identified as being involved in destabilising Ukraine or undermining or threatening the territorial integrity, sovereignty and independence of Ukraine. This includes persons responsible for engaging in, providing support for, or promoting any policy or action that destabilises Ukraine or undermines or threatens the territorial integrity, sovereignty and independence of Ukraine.
This also includes those obstructing the work of international organisations in Ukraine and anyone doing business with a separatist group in the Donbass region.
There are also sectoral financial sanctions which prohibit and restrict specified activities. These include restrictions on dealing with transferable securities or money-market instruments and granting or entering into arrangements to grant loans or credit. These are specific to the Russia regime. For more information, please see our guidance on Russia sanctions

Financial sanctions, Belarus

Belarus is currently subject to UK financial sanctions. This document provides a current list of designated persons. This sanctions regime is aimed at encouraging the Government of Belarus to:

• respect democratic principles and institutions and the separation of powers and the rule of law in Belarus
• refrain from actions, policies or activities which repress civil society in Belarus
• investigate properly and institute criminal proceedings against the persons responsible for the disappearances of Yury Zakharanka, Viktar Hanchar, Anatol Krasouski, and Dzmitry Zavadski comply with international human rights law and respect human rights

The regulations impose asset freezes on persons reasonably suspected of involvement in conduct enabling or facilitating the disappearances of four people or the failure to investigate properly or institute criminal proceedings against the persons responsible for those disappearances; the commission of serious human rights violations in Belarus; the repression of civil society or democratic opposition in Belarus; or other actions, policies or activities which undermine democracy or the rule of law in Belarus. For more information, please click here

The UK sanctions list

New UK sanctions regimes came fully into force under the Sanctions and Anti-Money Laundering Act 2018 (the Sanctions Act) at 11pm on 31 December 2020. The regulations establishing these regimes apply in the whole of the UK, including in Northern Ireland. Some of these regimes contain sanctions measures (for instance asset-freezes or travel bans) which apply in respect of persons or ships which have been designated or specified.

The UK government publishes the UK sanctions list, which provides details of those designated under regulations made under the Sanctions Act. The list also details which sanctions measures apply to these persons or ships, and in the case of UK designations, provides a statement of reasons for the designation.

HM Treasury’s Office for Financial Sanctions Implementation provides a consolidated list of persons and organisations under financial sanctions, including those under the Sanctions Act and other UK legislation. Find out:

• who is subject to financial sanctions
• how to challenge a sanctions decision

Publicising sanctions decisions:

When the UK government makes a decision to make, vary or revoke a designation or ship specification, it will update the UK sanctions list in accordance with the publicity provisions in the relevant sanctions regulations. For more information, please click here

Turkish Ministry of Trade introduces new amendments to Customs Regulation

Turkish Ministry of Trade (“Ministry“) amended the Customs Regulation. The amendments specify the cases where proof of origin is not required and introduce additional period for the subsequent submission of documents evidencing the origin of the goods.
The deadline for submitting the certificate of origin or supplier declaration to the customs is extended to 31 December 2021 for the goods whose declaration was registered before 5 November 2021 and financial obligations such as origin-based trade policy measure, additional customs duty or additional financial obligation were undeclared, underpaid or were not paid without a certificate of origin or supplier declaration.

United Kingdom: The UK’s Roll-Out of Free Zones: official designation of 1st Free Zone

The UK government have announced the introduction of new Freeports that may act as hubs for global trade and investment in the UK. These so-called “Free Zones” are special economic customs zones located within a Freeport in the UK. Exclusive customs, VAT and excise rules apply within the Free Zone, making it easier or more cost efficient for operators to import, store and process imported goods in these zones.

The aim of the new measure is to create new jobs and reduce administrative burdens, thus accelerating the UK economy by an estimated 3bn pounds.

In total, the following 8 location as Free Zones shall be created in the UK.

• East Midlands Airport
• Felixstowe and Harwich
• Humber
• Liverpool City Region
• Plymouth and South Devon
• Solent
• Teesside
• Thames 

United Kingdom: Get clearance to leave a UK port for commercial vessels

If you’re the ship's master (or their agent) of a commercial vessel, you will need to get clearance to leave a UK port.

From 1 January 2022 new reporting procedures will apply.

If you’re the ship’s master of a commercial vessel you must get clearance from customs to depart from a UK port (known as outward clearance). This includes vessels departing the Isle of Man.
If you’re leaving the UK and destined for another UK port, you do not need to get clearance. You will not need clearance for:

• Great Britain (England, Scotland and Wales)
• Northern Ireland
• Isle of Man

United Kingdom: Report goods arriving at a UK port on a commercial vessel

If you’re the ship's master (or their agent) of a commercial vessel, you will need to report any goods that are arriving on your vessel at a UK port. 

From 1 January 2022 new reporting procedures will apply.

If you’re the ships’ master of a commercial vessel you must report any goods arriving at a UK port. This applies to:

• Great Britain (England, Scotland and Wales)
• Northern Ireland
• Isle of Man

This includes vessels:

• arriving and working at offshore installations
• that were previously part of a regular shipping service

You’re also responsible for telling us in advance if you have on board:

• passengers who are going to disembark
• crew members who will be paid off

We may need to ask questions and examine their baggage and any articles they may be carrying. If we are told in advance, Border Force can be available to give them clearance.

When to report

You will need to report goods:

• within 3 hours of the vessel reaching its berth (if the designated place is closed, within 1 hour of its opening)
• 24 hours after the vessel’s arrival within port limits if it is still at anchor or has not yet reached its berth (an agent may apply for an extension if circumstances warrant for example, adverse weather conditions)
• when requested by an officer visiting your vessels

Claim a waiver for duty on goods that you bring to Northern Ireland from Great Britain or countries outside the UK and EU

Find out how to claim a waiver if you are bringing goods into Northern Ireland from Great Britain or countries outside the UK and EU which might otherwise be charged ‘at risk’ tariffs.

You will need to make declarations and may need to pay any tariffs due when bringing goods into Northern Ireland from Great Britain (England, Wales and Scotland) or from countries outside of the UK and EU.

If you are bringing goods into Northern Ireland from Great Britain, you may be eligible to claim a waiver on Customs Duty, which means that you would not have to pay the duty owed.

When you can claim

You can claim a waiver for duty on goods which might otherwise be charged ‘at risk’ tariffs if you have not exceeded the allowances at the point your import declaration is submitted. You can claim for goods you bring into:

• Northern Ireland from Great Britain
• Northern Ireland from countries outside of the UK and the EU — in this case, you claim a waiver for the difference between the UK and the EU tariff (the Customs Declaration Service will calculate this for you).

Leaflets for hauliers about new rules for moving goods between the EU and Great Britain

Leaflets for hauliers that move goods between the European Union and Great Britain, explaining the new rules they need to follow from 1 January 2022.These leaflets have been developed for haulier managers and drivers who move goods between the European Union (EU) and Great Britain (England, Scotland and Wales), to explain the new rules they must follow and how to prepare for these changes. For more information, please click here

Apply to access Customs Handling of Import and Export Freight (C1800)

If you need to use the Customs Handling of Import and Export Freight (CHIEF) system to make an import or export declarations, you'll need to tell HMRC your full contact details so they can be linked to your CHIEF badge. You’ll use the Customs Handling of Import and Export Freight (CHIEF) system to make a declaration. You’ll need to both:

• apply for access to CHIEF
• buy commercial software that can submit declarations through CHIEF

You’ll need to include information such as:

• your contact details
• your EORI number
• which Community System Provider you’ll be using
• the badge allocated by the Community System Provider
• the port or location where your goods will travel through
• the Entry Processing Unit (EPU) number

Turkish Ministry of Trade introduces new amendments to Customs Regulation

Turkish Ministry of Trade (“Ministry“) amended the Customs Regulation. The amendments specify the cases where proof of origin is not required and introduce additional period for the subsequent submission of documents evidencing the origin of the goods.
The deadline for submitting the certificate of origin or supplier declaration to the customs is extended to 31 December 2021 for the goods whose declaration was registered before 5 November 2021 and financial obligations such as origin-based trade policy measure, additional customs duty or additional financial obligation were undeclared, underpaid or were not paid without a certificate of origin or supplier declaration.