Momchil,

I know that this is likely to happen, and I will tell you why. If you consult the Union Customs Code, you will see that several measures were introduced to “protect” Import Duty and VAT Revenue for the EU. Duty Drawback was removed, more stringent measures were introduced concerning import duty reliefs, and stiff financial guarantees were required for both duty deferment accounts and applications for Inward processing and Customs Warehousing, unless, that is, the applicants were already AEO approved, which most applicants are not. In any case, AEO status is difficult to achieve. Furthermore, the Lithuanian Free Economic Zone was only allowed to exist as long as it did not approve Customs Duty and VAT Relief facilities within the Free Zone.

This was one of the main elements of Brexit. The moment the UK left the EU, it lowered all its Customs Tariffs and generally removed the need for Financial Guarantees on Import Duty Relief applications, as well as implementing Postponed VAT Accounting. The only stupidities that HMRC insisted on were AEO status for all Freeport operators and specific areas for Customs-controlled manufacturing. These measures fly in the face of global Free Zone management, requires none of these restrictions.

In short, the EU is desperate to protect Customs Import Duties and VAT as much as possible, and has no intention of allowing more duty relief than is absolutely necessary, if at all. It certainly has no intention of relaxing the rules concerning Customs-suspended storage, and will tighten these rules as much a possible.  The so-called “Customs Reform” certainly dates back just over a year, when the EU proposed a reduction in Temporary Storage time to 3 or 6 days, depending upon the operator’s authorisation. This time limit is useless, as much temporary storage revolves around Transit Sheds, where goods may be temporarily stored until they are either removed to a Customs Warehouse, brought into Free Circulation, or re-exported on an outbound vessel or aircraft. The “risk factor” as mentioned in the article on this original proposal does not have any credibility, as risk factors are already taken into account by the agents when depositing goods into Temporary Storage. The main issue is that the EU wants revenue on these goods, and will do anything to gain it, regardless of the ethics of such activities.

However, the European Freight Forwarding Organisation CLECAT pointed out that Customs Warehousing in its current form was not an alternative for temporary storage. It said: “The commission seems to underestimate that the requirement for an authorisation and the management of a customs warehouse are much more complex than for temporary storage”. From this, it would appear that the EU Commission has no knowledge of Temporary Storage and Customs Warehousing, including Freeports, whatsoever. They need educating as soon as possible. Even a period of 20 days Temporary Storage is too little. Maybe between 30 and 40 days might be more realistic.  

Long live the UK’s isolation from the EU!

Mark Rowbotham