Trusted trader accreditation ‘advisable’ but not the ‘answer’ to Brexit

Businesses hoping to circumvent Brexit custom woes by becoming a ‘trusted trader’ under a widely recognised international scheme are unlikely to gain accreditation in time, the WSTA has warned, arguing that it is ‘not the answer to Brexit’.

The WSTA told the drinks business that while it was“advisable” for drinks companies to register interest in becoming an authorised economic operator (AEO) – an important quality standard which shows a business’ role in the international supply chain is secure, and that its customs controls and procedures are efficient and meet EU standards – ahead of 29 March, it should not be seen as the “answer” to Brexit.

“We believe it is advisable to at least register interest, as alcohol beverage businesses must already demonstrate good supply chain security and high audit standards for the purpose of existing HMRC authorisations.“

“It is becoming more important, but HMRC are not yet able to introduce streamlined procedures, so it is unlikely that a business applying now will be approved by March 2019,” the WSTA explained, adding that he effort of attaining AEO may not yet be justifiable for some business, unless the supply chain facilitations and guarantee waivers outweigh the application costs.

It comes after calls from accountants and advisors to boost the number of AEO’s ahead of a no-deal March 29th deadline. They argue it could protect companies from deadlock once the UK has left the EU, by providing a ‘fast-track’ customs process in a post-Brexit EU that could “dramatically” reduce costs and delays.

No time to waste

Speaking to the drinks business recently, John Perry of logistics and supply chain consultant Scala said AEO’s could form part of the contingency planning undertaken by booze and other fmcg companies in the run up to Brexit, along with stockpiling and other measures – but warned that there was little time to waste.

“The thought is that people who have [the accreditation] could be fast-tracked through. It’s not expensive to apply, but it is time-consuming to go through the process of being audited and verified. If they don’t do it now, they are running out of time.”

Writing on a recent online post, Allan Bird, a Customs & Excise manager with Scottish accountants and business advisor Campbell Dallas and former AEO specialist with HMRC argued that AEO status could “help provide frictionless trade with the EU, and will be the benchmark for compliance with customs systems, controls and financial solvency.”

He argued that it could “dramatically” reduce costs and delays in a post-Brexit EU, but that there was low awareness and applications were still ‘negligible’, and the widespread lack of AEO accreditation across Scotland’s brewing and distilling sector could result in a dramatic reduction in exports to the EU.

Frictionless trade

“Exporting without AEO status will become increasingly onerous, costly and unattractive, with the risk that many of Scotland’s thriving drinks businesses will find the export market less attractive,” he wrote.

“Companies need to start the process now, as there will soon be a bottleneck of applications and long delays for a process that currently can take a year to complete”.

The WSTA added that the future relationship paper on Brexit had outlined the concept of a “trusted trader” as a potential future standard, but as yet there was little more information about this.

“We are waiting for further clarification from Government as to what this means and will be keeping our members informed.”

Currently the UK has only 672 accredited AEO’s – well short of Germany’s 6,316 and France’s 1,661, but more than many member states – but only around a dozen companies in the drinks industry have gained the accreditation.