Overview
For additional guidance, please refer to Steptoe's COVID-19 Resource Center.
How is COVID-19 affecting UK international trade negotiations?
EU-UK Trade Talks (Brexit)
Michel Barnier, the European Union's chief Brexit negotiator, has tested positive for COVID-19 and David Frost, the United Kingdom's chief negotiator, is reportedly self-isolating as he has developed mild symptoms of the virus. Other members of the negotiating teams were similarly affected. Given the circumstances, the parties cancelled the negotiations that had been set to resume in London on March 18, in light of the COVID-19 crisis. Despite this setback, on March 18, the European Union published a draft legal agreement for the future EU-UK partnership which translates into a legal text its negotiating objectives. The United Kingdom was intending to share a draft of its own free trade agreement along with a number of standalone agreements. According to some reports the United Kingdom has indeed sent these in confidence to the European Union. The two sides are currently considering alternative ways of conducting negotiations, such as through video conference.
On March 30, the first meeting of the Joint Committee responsible for the implementation and application of the Withdrawal Agreement took place. While the Joint Committee does not directly address the future relationship between the United Kingdom and European Union beyond those elements set out in the Withdrawal Agreement (the Agreement), its meetings are important to overall progress of EU-UK negotiations, given linkages the EU has made between implementation of that Agreement and progress in the broader "future relationship" negotiations. The meeting was co-chaired by the Chancellor of the Duchy of Lancaster, Rt Hon Michael Gove MP, and the vice president of the European Commission, Maroš Šefčovič, and reportedly took place by teleconference. The Joint Committee's agenda included discussion regarding the Protocol on Ireland/Northern Ireland, as well as citizens' rights. The United Kingdom and European Union reiterated their commitment to protecting the Belfast/Good Friday Agreement and to upholding their obligations under the Northern Ireland Protocol as well as their commitments on citizens' rights. The United Kingdom and European Union also agreed to start work on the six specialized committees.
US-UK Trade Talks
A March 2020 press release by the UK Department for International Trade (DIT) signalled that the United States and United Kingdom expected to start negotiations in March. However, a spokesperson for the Office of the United States Trade Representative (USTR) said that "Both the United States and the United Kingdom are committed to starting trade negotiations as soon as possible…At the present time, both our governments are rightfully focused on stemming the spread of the coronavirus, protecting the health and safety of our citizens, and finding innovative solutions to combat this outbreak." The spokesperson added that the United States and United Kingdom "will begin active trade negotiations at an appropriate time in the near future," noting that "both sides remain in regular contact on when to proceed with the negotiations as the developing situation with the coronavirus becomes clearer."
How is the UK's Department for International Trade responding to COVID-19 at the G-20?
On March 30, the G-20 convened a meeting of trade and investment ministers, including Elizabeth Truss, the UK Secretary of State for International Trade. The Ministerial Statement issued by the G-20 stated: "Consistent with national requirements, we will take immediate necessary measures to facilitate trade in those essential goods. We will support the availability and accessibility of essential medical supplies and pharmaceuticals at affordable prices, on an equitable basis, where they are most needed, and as quickly as possible, including by encouraging additional production through incentives and targeted investment, according to national circumstances. We will guard against profiteering and unjustified price increases… We agree that emergency measures designed to tackle COVID-19, if deemed necessary, must be targeted, proportionate, transparent, and temporary, and that they do not create unnecessary barriers to trade or disruption to global supply chains, and are consistent with WTO rules."
Despite the stated plans for "immediate necessary measures," the G20 did not collectively take specific action on export controls, bans on medical supplies, or the temporary suspension of tariffs on essential goods.
How is COVID-19 affecting UK trade remedies proceedings?
Transition reviews begun by the Trade Remedies Investigations Directorate are currently still in progress. However, a notice issued on March 19 in the investigation TS0002: Rainbow Trout from Turkey granted an extension to register in that investigation until March 26, 2020 in light of COVID-19.
During the transition period under the Withdrawal Agreement, the United Kingdom also remains part of the EU trade remedies regime. The European Commission issued a notice on changes to the EU regime in light of COVID-19, including:
- On spot verifications:
- Suspend all nonessential travel to affected areas and postpone all face-to-face meetings with visitors from these areas.
- In case information provided by exporting producers located in areas affected by COVID-19 is not subject to verification on spot due to safety measures, the Commission will consider information properly submitted by the parties and endeavour to cross-check such information. If the Commission is not satisfied with the accuracy or completeness of information, it will have to base its findings on verified or other proven facts on the record of investigation.
- Time-limits:
- Parties affected by COVID-19 must explain in detail how this has affected their capacity to provide the information requested and an extension of seven days may be granted or, in exceptional cases, beyond seven days where economic operators are located in in regions particularly affected by the COVID-19 outbreak and are subject to additional substantial safety measures (in these cases parties must state how extra time would allow them to meaningfully reply to the questionnaire or other request).
- Conduct and decision making:
- If areas affected by COVID-19 are no longer deemed unsafe then verification visits will again be carried out provided this is still feasible in view of investigation deadlines.
- If definitive measures have been imposed on facts available, once an area becomes safe, in which an exporter is located, the Commission may initiate a review pursuant to Article 11(3) and Article 19(1) of the Basic Regulations.
- Interested parties are requested to inform the Commission of any changes which may improve the verification process.
How have UK customs been affected by COVID-19?
On March 31, Her Majesty's Revenue and Customs (the HMRC) produced guidance on claiming relief on import duty and VAT on protective equipment, relevant medical devices, or equipment brought into the United Kingdom from non-EU countries during the COVID-19 outbreak.
The relief can be claimed immediately by state organizations, including state bodies, public bodies and other bodies governed by public law and other authorized non-state bodies. Imported goods which are eligible for relief are protective equipment, other relevant medical devices or equipment for the COVID-19 outbreak which are for distribution free of charge to those affected by, at risk from, or involved in combating COVID-19 or to be made available free of charge to those affected by, at risk from, or involved in combating the COVID-19 outbreak, while remaining the property of the organizations importing them. A list of the commodity codes on which eligible parties may claim relief are in the guidance.
The HMRC guidance goes on to state that goods imported into the United Kingdom for donation or onward sale to the National Health Service (NHS) are also eligible for relief and can be imported free of import duty and import VAT. Relief can also be claimed by disaster-relief agencies which are importing goods for free circulation to meet their needs during the COVID-19 outbreak. If the goods are loaned, hired out, or transferred to an eligible organisation, relief will remain in place as long as the conditions continue to be met. The relief applies until July 31, 2020. VAT on domestic supplies is not affected by this relief. Eligible parties must still charge and account for VAT on the onward sale at the normal rate.
HMRC has also released guidance on customs authorizations during the COVID-19 crisis, moving goods through customs during the COVID-19 crisis and customs civil penalty guidance (withheld at the time of writing).
As the United Kingdom remains part of the EU customs territory during the Withdrawal Agreement transition period, it is also relevant to note that the EU Commission has also released guidance in light of COVID-19 on EU customs procedures which includes the following:
- E-Commerce. Empowerment for customs representation: customs authorities could, during the period of the crisis, waive the requirement to prove that the person represented (i.e. the consignee) has provided the empowerment (using a power under the Union Customs Code (the UCC)).
- Customs Decisions. During the crisis, economic operators might require some urgent customs authorizations to ensure the functioning of the supply chain. The UCC obliges the customs authorities to accept applications for a decision that meet all the requirements. Therefore, customs authorities are not legally entitled to refuse applications for customs decisions that meet the legal requirements. However, in the present situation, economic operators are strongly encouraged to only apply for essential customs decisions
- Entry of Goods. Medical, surgical and laboratory equipment are not exempted from the obligation to lodge an entry summary declaration (ENS), even in emergency cases. However, the UCC provides for the possibility to use commercial, port or transport documents for this purpose, on condition that these other documents contain the necessary particulars of the ENS and are available before a specific time-limit prior to the arrival of the goods in the EU.
What support is the Department for International Trade offering to UK businesses trading internationally?
The DIT has published guidance (see also this) for UK businesses trading internationally, including guidance on the assistance provided by UK Export Finance. The Department for Transport has published specific guidance for the freight industry.
What is the UK International Trade Select Committee doing about COVID-19?
On March 27, the UK International Trade Select Committee launched an inquiry into the COVID-19 pandemic and international trade. The inquiry is currently accepting evidence which should be submitted by 5:00 p.m. BST on April 24, 2020. The terms of reference include:
- What impact will the global COVID-19 pandemic have on UK businesses trading internationally, in the short-, medium-, and long-term?
- How effectively has the government responded, both in the United Kingdom and in overseas posts, to the short-term negative impact of the pandemic on UK businesses trading internationally? What further steps could be taken to mitigate this impact?
- What medium- and long-term negative impacts could arise from the pandemic for UK businesses trading internationally? What steps could the government take to mitigate these impacts?
How is COVID-19 affecting UK Export Restrictions and Controls?
The United Kingdom continues to be subject to EU regulations during the Withdrawal Agreement transition period until at least December 31, 2020. As a result, EU-wide export control restrictions imposed in response to COVID-19 apply to UK exports. On March 14, the European Commission adopted Regulation (EU) 2020/402, which prohibits the export of certain medical and personal protective equipment (PPE) to countries outside the European Union without an export authorization (though note the exceptions in the guidance). This is a temporary restriction, initially in place until April 25, 2020 at present, to allow for the medical needs of EU Member States to be met. UK-based exporters intending to transfer such items will need to apply for an export licence from the UK Department for Health and Social Care (DHSC) (PPEexports@trade.gov.uk), which has jurisdiction over PPE exports (rather than the Export Control Joint Unit (ECJU) in the Department for International Trade, which is responsible for licensing of UK dual use and military exports). Please also see the EU FAQ and UK guidance.
In addition, on March 20, the ECJU published a Notice to exporters 2020/08: coronavirus (COVID-19) - export licence handling to update exporters on COVID-19 developments. The ECJU confirmed that processing applications for export licences for military and dual-use goods remains a business-critical operation. Therefore, the ECJU will continue to review export license applications, conduct end-use checks and technical assessments. However, the ECJU will cease to conduct site audits, which will be replaced by remote audits. To prioritize the processing of license applications, the ECJU may also suspend its control list advice and end-use advice services.
