Simplifying Trade in UK

8/14/2019 Simplifying Trade in UK

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Simplii Trad AcrssUK BrdrsA Plan o Action

December 2009


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HM Ru & Custms (HMRC)

100 Parliament StreetLondon

SW1A 2BQ

Tel: 0845 010 9000

Website: www.hmrc.gov.uk

Dpartmt r Busiss, Iati ad Skills (BIS)1 Victoria Street

London

SW1H 0ET

Tel: +44 (0)20 7215 5000

Website: http://www.bis.gov.uk/


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FoRewoRD

International trade policy is a key strand in our mission tobuild UK prosperity. Open markets provide opportunitiesor rms and individuals to prosper, and trade supportsour commitment to tackling global poverty and tomeeting the Millennium Development Goals.

Recent events in the global economy have emphasisedthe need or the UK to scrutinise rigorously our border

processes and trading environment. According to the World Trade Organisation, thecurrent economic downturn will drive exports down by roughly 10% in volume terms in2009 the biggest such contraction since the Second World War. In order or the UK toremain a preerred trading partner, it is vital or us to act to make trading with the UK assmooth a process as possible.

The UK has responded strongly and positively to help businesses through theNew Industry, New Jobs strategy and through the work o UK Trade & Investment,

the Enterprise Finance Guarantee, the Real Help Now service and the HMRC BusinessPayment Support Service. This Action Plan reinorces the Governments commitment tohelping UK businesses that rely on international trade to remain strong.

The Action Plan ulls the commitment in the 2008 Pre-Budget Report which jointlytasked the Department or Business, Innovation and Skills and HM Revenue & Customswith undertaking a review to assess how the costs to business o complying withinternational trade regulation at the UK borders could be reduced.

Working with key partners in Government, border regulators and, crucially, business wewill ensure the delivery o a air and eective regulatory environment or those engaged in

international trade, based on streamlined, ecient regulation and procedures or exportsand imports cutting out avoidable costs and delays or business.

In proposing this Action Plan, we commit to:

promotetheUKsinternationalreputationandstrongeconomicfundamentals;

givemoreUKbusinessesthecondencetoexploittheopportunitiesprovidedbyoverseastrade;

ensureUKrmsarewellpositionedtotakeadvantageofglobalisationandfurther

liberalisationoftheworldeconomy;and

driveambitiousreductions,bothdomesticallyandintheEuropeanUnion,inthe

costs o bringing goods across UK borders.

The UK can stand comparison with the very best trade regulatory regimes in the world.This Action Plan is a rst step towards ensuring that continues to be the case.

Lrd Dais AbrschMiistr r Trad, Istmt

ad Small Busiss

Rt H. Stph Timms MPFiacial Scrtar t th

Trasur


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ConTenTS

Acti Pla Summar

Itrducti

Chaptr 1: Impri prcdurs at UK brdrs

Chaptr 2: Custms at th hart itratial trad

Chaptr 3: Cmmittd t prrss:

Trade nance

Transport and inrastructure

Export control

Chaptr 4: Th irmd tradr

Inormation and communication

Trade as a career

Chaptr 5: Plic c-rdiati ad prmti bttr rulati i theurpa Ui

Chaptr 6: Itratial cmpariss h ds th UK rak?

A A: Itratial Trad Facilitati Cmmitt Trms Rrc

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5

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Acti Dlir dat Pa

Th Irmd Tradr

15. International Trade Theme Board to oversee andpromote a new strategy on inormation and adviceor business

Autumn 2009onwards

21

16. Promotion o international trade as a career path by:

Rolling-outanewLevel2NVQqualicationinInternationalTradeandLogisticsOperations(ITLO);

Autumn 2009onwards

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WorkingwithSkillsforLogisticsandtrainingproviderstodevelopaLevel3ITLOqualication;

Early 2010

Exploringoptionsforacentralschemetoaccreditshorttradepracticecourses;and

Autumn 2009

UsingtheBackingYoungBritainandGraduateTalent

Pool schemes to develop a programme to promote

proessionalism in international trade

Autumn 2009

Plic C-rdiati

17. Establishment o a cross-Government InternationalTrade Facilitation Committee to enhance internationaltrade policy co-ordination by:

Autumn 2009 28

ConsideringforthcomingEUanddomesticlegislation

aecting trade and ensuring that all cross-cuttingimpactsareaddressed;

Overseeingandpromotingbestpracticeattheborder;

ReviewingtheUKsstandingagainstleadinginternationalcomparators;and

EnsuringeffectiveimplementationofthisActionPlan

18. Reduce EU regulatory burdens on traders, bydeveloping a UK vision or better international traderegulation at the EU level and driving orward thatagenda in the European Commission and with otherEU Member States

Spring 2010 32

Itratial Cmpariss

19. Continue to improve UK perormance in leadinginternational indicators such as the World BanksDoing Business Report (trading across borderscategory) through:

Ongoing romAutumn 2009

32

TheactionsproposedinthisActionPlan;

Encouragingincreasedbusinessengagement;and

Regularperformanceassessmentbythe

International Trade Facilitation Committee

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InTRoDUCTIon

Britains trading strengths, and its ability to access export markets, will be central to ouruture prosperity. 60% o British productivity growth between 1996 and 2004 came rombusinesses which export. British businesses, and the British economy as a whole, haveundamental strengths that position us well to trade internationally.

TradeandinvestmentarevitaltotheUKUKexportsin2008werevaluedat422billion(30%ofGDP). 1Around60%ofUKimportsfromoutsidetheEUareusedinproduction.2

Internationaltradehasslowedsignicantlybecauseofthecurrenteconomicsituation.Globaltradevolumesareexpectedtodeclineby10-16%3thisyearandforeigndirectinvestment(FDI)owsdeclinedbyabout21%in2008. 4

TheimpactonUKexportshasbeenlessseverethaninothercountries,butvolumesarestill10%lowerinJune2009thanlastyear, 5eventhoughexportersarelessaffectedthannon-exportersbythecurrenteconomic

situation. GrowthprospectsintradefortheUKforthenexttwoyearsareexpectedto

recovermorequicklythanotheraspectsoftheeconomy. 6Mostforecastsprojectaslowrecoveryin2010andsome55%ofUKTrade&Investment(UKTI)clientsexpectthepercentageoftheiroverseassalestoincreaseoverthenextyear.7

The recently published World Bank Doing Business Report 2010, a well respectedinternational comparator, ranks the UK 5th in the world overall in terms o businessenvironment, and 1st in Europe. The UK has also risen several places to 16th in the world(8th within the EU) or ease o trading across borders, and other international studiesplace the UK even higher. We want to improve urther and will continue to make useo international indices to identiy what more we can do to make trading across the UKborder easier.

This Action Plan is a comprehensive analysis o procedures and practices at the UK borderand makes strong recommendations or specic actions to reduce the cost o borderregulation, and place trade acilitation at the heart o the UKs trade and border strategy.

Based on research and consultation with business, the recommendations are designedto ensure that UK borders stand comparison with the very best trade regulatory regimeselsewhere in the world. This is essential to the competitiveness o UK business in the

global marketplace.

1 Source: Oce or National Statistics.

2 Global Europe. EU perormance in the global economy, European Commission, 27 October 2008.

3 Source: WTO, OECD.

4

Source: UNCTAD.5 Source: Oce or National Statistics.6 Source: HM Treasury, Budget Forecast or the UK Economy.

7 Source: UKTI.

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K lmts iclud:

AnItratial Trad Facilitati Cmmitt made up o high level ocials romGovernment departments with an interest in border procedures, including HM Revenue& Customs (HMRC), Department or Business, Innovation and Skills (BIS), Departmentor the Environment, Food and Rural Aairs (Dera), Department or Transport (DT) andUK Border Agency (UKBA), together with UK Trade & Investment (UKTI) and SITPRO,

the UKs trade acilitation body, to represent the interests o business. This committeewill look at trade acilitation across the piece, co-ordinating policy and overseeing newinitiatives to streamline UK border processes and minimise unnecessary regulation.

DevelopmentofaUK isi r rduci burds tradrs i eurp, aimed atostering UK principles o risk-based regulation and administrative burden reductionin the EU institutions. EU legislation accounts or 94% o the regulatory burdens onUK trade. A targeted and co-ordinated eort at EU level could considerably reduce thecosts o such regulation and improve the operation o the Single Market.

EstablishmentofUKBA,withitswidepowersandobjectivesandalargefrontlinepresence, as the ac drii practical c-rdiati at th brdr o the many

regulators currently carrying out on the ground trade enorcement. This will take placeat the strategic level and through the role o lead ocials rom UKBA working directlyat UK ports and airports.

AnewdynamicapproachtocompletionoftheUKsInternationalTradeSingleWindow

(ITSW) in a step-by-step manner and using as ar as possible, existing trade systems.Practical demonstration pilots will be established to explore the easibility o achievingthe ultimate goal o a single electronic interace or all trade documentation with allUK border regulators.

Th aims this Acti Pla ar t:

a) make a real dierence in reducing border regulatory burdens on business andmakingtradeeasier;

b) achieve long-term, active participation o the business community in assessingregulatory practices at UK borders and in enabling an ongoing process oimprovementandreform;

c) ensure recognition by Government and its agencies o the importance o tradefacilitationandpromoteitskeyroleinthedeliveryofregulatoryobjectives;and

d) secure ongoing improvement in the standing o UK border processes against leadinginternational indices, such as the World Bank Doing Business Report.

A separate report by SITPRO on its recent dialogue with business, Keeping GoodsMoving, is published alongside this report.8

Feedback on matters o border regulation or practice is welcomed. Businesses may leavecomments at the SITPRO website.9

8 Keeping Goods Moving, 2 December 2009, http://www.sitpro.org.uk/regreview-keepinggoodsmoving9 http://www.sitpro.org.uk/regreview-eedback

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CHAPTeR 1: IMPRovIng PRoCeDUReS AT UK BoRDeRS

Itrducti

1.1 Traderegulation,andconsequentlyborderco-ordination,ishighlycomplex.Major issues to be considered include the number o dierent regulators rom whomclearancesmustbesought;theintersectionofnationalandinternationalrules;and

the interaction with private sector systems run by port authorities.

1.2 The establishment o the UK Border Agency (UKBA) as a ull agency earlier this yearhas given an opportunity or the development o innovative new ways o working atthe border. The SecurityinaGlobalHub10 Review examined this issue in depth.

1.3 A more co-ordinated approach to border management could have signicant benetsto Government and business through:

targetingregulatoryresourcestohavethegreatestimpact;

co-ordinatingactivityateachportandcreatingmorejoined-upintelligenceprocesses;

improvingtheexperienceofbusinessinbringinggoodsacrossUKborders;

strikingtherightbalancebetweencontrolandfacilitationoflegitimatetrade;

linkingborderworktothewiderGovernmentagendathroughtheresponsetonewandemergingthreatsandissues;and

improvingengagementwithstakeholdersandmakingtheirinteractionwith

Government easier.

Examples o work being done to improve co-ordination at the border:

Opportunitiesarebeingexploredtoenableroutineinspections(suchasbyUKBA)tobeusedtoavoidtheneedforchecksbyotherregulators(suchasVehicleandOperatorServicesAgency)wherethepurposeofinspectionisnon-technical/non-specialistandthiscanbejustiedinproportionateriskterms;

TheexistingagreementfortheFoodandEnvironmentResearchAgency(FERA)andRuralPaymentsAgencys(RPA)HorticulturalMarketingInspectorate(HMI)tocooperateatthelocalleveltoavoidunnecessarydoubleinspectionofthesamegoodsbybothagencies.HMIcarriedoutanestimated2,200freshproducequarantineinspectionsforFERAin2008.

Theagenciesworktogethertoenabletherequireddualtraining; TheAssociationofPortHealthAuthoritiesactivelyfostersengagementwith

otherregulatorsatthelocallevel,includingregularmeetingswithportusersanddrawingupMemorandaofUnderstandingwithUKBA;and

RegularindependentreviewofregulatoryauthoritiesattheborderinlinewiththerecommendationsoftheHamptonReport.

10 Security in a Global Hub Establishing the UKs new border arrangements, 25 July 2007,

http://www.cabinetoce.gov.uk/border_review.aspx.

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Aalsis

UKBA

1.4 The creation o UKBA has demonstrated how, through eective integration oborder arrangements, Government can reduce and rationalise the number o itsinterventions in the sphere o passenger travel. Some o these lessons could be

useully applied to goods. UKBA has ound that specic agreements, such asService Level Agreements (SLAs) and Memoranda o Understanding (MoUs), can beuseul in setting out clear bilateral obligations. For example, UKBAs SLA with Deraprovides a practical mechanism by which it can act on Deras behal in the detectiono illegal products o animal origin. UKBA will look to establish additional agreementswherever benets can be identied or its work.

1.5 Additionally, UKBA has created the role o lead ocials or ports and airports.These individuals act as the single point o contact or all immigration and customsbusiness at each port. They lead engagement with port operators and other deliverypartners (such as the police) and negotiate SLAs with port operators.

Service Level Agreements (SLAs)

SLAswithportandairportoperatorsareastatementofUKBAsintentiontoworkcloselywithoperatorsonarangeofissuesandprovideaframeworkfordeepeningco-operationandunderstanding.Importantly,theyalsocommitbothpartiestomakingrealimprovementsinperformanceanddeliveryforthebenetofcustomers.Theyalsoprovideaconsistentplatformforworkwithkeystakeholders.PortoperatorshavesaidtheyvaluetheSLAsandthatthenegotiationandsignatureprocesshasimprovedtheirrelationshipswithUKBA.TheynowfeelmoreengagedinwhatUKBAdoesandhowitworksat

theborderand,asaconsequence,havegreatercondenceintheAgencyspartnershipapproach.

Asanexample,Stanstedhasbuiltanactionplanaroundgreateruseofjointworkinggroupstotackleissuesandanoverallpartnershipethosaimedatimprovingtheborderexperience.Thishasledtoincreasedsharingofinformationandbetterforecasting;amuchgreaterunderstandingoftherespectivebusinessobjectivesandrequirements;andquickerandbetterreactionstorisksandopportunitiesastheyarise.

InternationalTradeSingleWindow

1.6 A long-standing proposal to simpliy goods procedures at our ports and airports hasbeen the vision or a single electronic interace or all trader documentation with allUK border regulators (an International Trade Single Window or ITSW). This supportsthe Governments commitment to service transormation which seeks to streamlineprocesses and improve the eciency and eectiveness o its transactions with itscustomers by designing services around the needs o citizens and businesses.

1.7 An ITSW would reduce the regulatory burden on traders by centralising electronicallythesubmissionofdocumentsrequiredforimportandexport.Forsomeyears,a project to implement a Single Window in the UK has been run under the oversighto the BusinessLink International Trade Theme Board (chaired by HMRC andinvolving representatives rom border regulators with SITPRO and UK Trade &Investment (UKTI) representing business).

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Example o International Trade Single Window Transaction (ITSW)

ApilotoftheAutomaticLicenceVerication(ALV)systemforimports(fromthirdcountries)ofplants,owersandfruit/vegetables,deliveredbytheSingleWindowproject,isprovidinganelectroniclinkbetweentheRPA/FERAPEACHsystemandHMRCsmainCHIEFsystem.ThismeansthattheRPA/FERAconsignmentreleasedecisionistransmittedelectronicallyandinnearrealtimedirectlyintoCHIEF,whichreducescustomsclearancetimesforFERAandRPAregulatedproducefrom2hoursto15minutesandreducestheadministrativeburdenonimporters/agents.

Fullrolloutofthissystemisscheduledforearly2010.Benetstotradersareconservativelyestimatedat1.7millionperannum.

Thelong-termintentionistoextendtheintegratedALVsystemtoincludeimports(fromthirdcountries)ofliveanimals,animalproductsandhighriskfoodproductsbenetstotradersofdoingsoareconservativelyestimatedat1.1millionperannum.

1.8 There are currently a number o practical diculties related to the completion o theSingleWindowprojectintheUK.Theseinclude:thecontinuedrequirements(orEUlegal obligations) by some regulators to prove authenticity through paper documents,dierent existing computer systems within Government departments and agenciesand the sheer complexity o developing a ully comprehensive electronic packagetakingaccountofallregulatoryandbusinessrequirements.

1.9 A separate document published alongside this Action Plan, A New ConceptualModel or ITSW, explores dierent means by which the aims o the Single Windowmight be achieved. This would involve:

Clsr itrati cmmrcial ad rulatr sstms, enabling data to beshared in the most eective way between business and Government. This wouldinclude the principle o straight through processing which would seek to reusedataalreadyheldforcommercialpurposes;

A markt dri apprach that would see the private sector developing systemsto meet their own business case, enabled by standardisation o Governmentinterfacesandsomeintegrationofback-ofceprocesses;and

epliti dlpmts i tchl that would address traditional barriers,such as the reliance on paper certication.

Acti1.10 UKBA C-rdiati: UKBA will work to consolidate and strengthen the

co-ordination o border controls and policing at ports by improving the eciencyofrequirementsformultipleclearancesand,wherenecessary,inspections.Thatincludes completing the roll out o a new operating model ater testing at modelports;pursuingaprogrammeofactiveenhancementwithportspolicing;and

seeking new ways to join up Government work at the border. Eective co-ordinationwill be achieved partly through UKBAs regular ora or engaging with otherregulators, but also through the use o tools such as ormal agreements to clariyroles and expectations.

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1.11 To refect this strategic joint working at a port level, UKBA ill dlp th rl lad fcials at prts. This will include a more coherent role as a primary contactforallimmigrationandcustomsworkateachport;astrongpartnershipwithportpolice;andbeingakeygureinbringingaboutcooperationbetweenGovernment

agencies. Such a single point will enhance levels o service and best practicethrough:

aimingtoreducetheUKBAfootprintatportsbyconsolidatingimmigrationandcustomsbuildings,wheretheinfrastructureallows;

streamliningprocessesbyimplementinganewoperatingmodeltoremoveduplication;

creatingMOUswithlocalpoliceforcestoshareresourcesandcoordinateactivity;

facilitatingworkwithotherborderagenciestoseehowtheycanworktogetherinsecondaryexaminationareaswherespaceallows;

inportswherespaceisatapremium,workingcloselywithportoperatorstoconsider how to incorporate longer-term Government needs into the design,

developmentandmanagementofports; sharinginformationandintelligencetomaximisethevalueofallborderregulators

systemsandminimisethenumberofdatarequestsmadeontraders;and

developingaLocalIntelligenceModelwithpartnerstodeliveramorecohesiveapproach to identiying costs, risks and threats which impact on the operation oindividual ports.

1.12 ITSw: A comprehensive, web-based inormation system or traders will movetowards completion. This project will also take a progressive approach toelectronically enabling urther trade transactions and clearances with borderregulators on the basis o identied priorities or business.

1.13 Work on this project will need to be co-ordinated with other Government initiatives inthe eld o electronic and digital interace with business. In particular, the BusinessIdentity Management Strategy, due to be published by the end o this year, aimstoagreeminimumdatarequirementsforGovernmentandalsoconsidershoweachbusinessmightbegivenauniqueidentier.TheITSWwillalsosupportthe

Governments Digital Britain Report which includes a commitment to the digitalswitchover o public services rom 2012.11

Business Case or Single Window

Afully-functioningSingleWindowcouldbringanumberofbenetsforbothbusinessandGovernment.Theseincludereducedadministrationcosts,improvedclearancespeedsandimprovedcomplianceandrisk-management.

Itisdifculttoquantifythesebenets,andmanyofthegainswilldependonamoveawayfrompaper-basedcerticationbyregulatoryauthorities.However,usingplausibleassumptions,aninitialanalysisbyBusinessLinkofthemorereadilyquantiablebenetssuggeststhatthepotentialgainscouldbeintheregionof100m200mannually.Againstthis,therewouldneedtobefurtherGovernmentinvestmentinadaptingexistingcomputersystems.Furtherscopingworkwillbecarriedouttounderstandmorefullythescaleofboth

thesecostsandtheanticipatedbenetstotraders.

11 Digital Britain: Final Report, June 2009,

http://www.culture.gov.uk/images/publications/exsumchpt9_digitalbritain-nalreport-jun09.pd.

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1.14 Primar Authrit Schm t b tdd t addrss th prcidicsistt applicati rulatis b Prt Halth Authritis: The LocalBetter Regulation Oces Primary Authority scheme12 which was launched on6 April 2009 is a positive step towards a more business-riendly and lessbureaucratic arbitration procedure. It provides business with the opportunity toobtain expert opinion on local authority enorcement matters rom a preerred

local authority or a small ee and oers a mechanism or issues to be reconciledby recourse to expert opinion. It is hoped that the Primary Authority scheme willsubstantially reduce inconsistent interpretations o regulations by diering PortHealth Authorities. The Government will support high level pilots o this schemesapplication to Port Health Authorities at Tilbury and Liverpool.

Costs and Benefts o the Primary Authority Scheme

TheGovernmentsBetterRegulationExecutive(BRE)hasproducedatightlydrawncost/benetanalysisofthewiderPrimaryAuthorityschemeoverthenext5yearsto2014.13BREsguresarebasedonparticipationby200Local

Authoritiesandagureof30,000businessestradingacrossLocalAuthorityboundariesintheUK.Around80LocalAuthoritiescarryoutPortHealthregulatoryenforcementpracticesintheUK,some40%ofthenumberofestimatedparticipatingLocalAuthorities.

Theseguresestimatenetbenetstobusinessofbetween18.9and58.4millionbasedonarangeof700to1100partnerships.BenetstoLocalAuthoritiesareestimatedatbetween10.3and20.8million.

AlargenumberofpartnershipsareexpectedtobebetweenbusinessesimportingthoseproductscaughtbyPortHealthsregulatoryremit(meat,sh,petfoodandnuts)andlocalPortHealthAuthorities.ThiswillmeanthatasignicantportionofthebenetsassociatedwiththewiderPrimaryAuthorityprogrammewillbeaccruedbybusinessesdirectlyinvolvedininternationaltrade.

1.15 Crrcti Dcumtar errrs: The meat and sh trades consider demurrageoverheads and loss o earnings potential caused by documentary issues to be oneo the highest costs to their trade. Such documentary issues include inconsistenciesbetween animal health certicates and other border clearance documentation andmistakes made by vets in the country o export.

1.16 Dera will explore, with relevant border agencies, means both o reducingdocumentary errors and introducing regulatory fexibilities in dealing with such errorswhere they occur by honest mistake. This could include, or instance, acceptingaxed letters o correction to third country certicates in certain circumstances.SuchexibilitieswillneedtobeinlinewithEUlegislativerequirementsandconsistent with essential regulatory objectives.

12 The role o the Local Better Regulation Oce (LBRO) (http://www.lbro.org.uk/) is to improve local authority

enorcement o environmental health, trading standards and licensing obligations, reducing burdens on businesses

that comply with the law while targeting those who fout it.

13 Impact Assessment o Statutory Instruments Implementing the Primary Authority Scheme, March 2009,

http://www.berr.gov.uk/les/le50501.pd

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Costs o Delay Due to Port Health Ofcers Being Unable to AcceptCertifcation Letters o Correction Electronically

Theestimatedannualcostsofdelaytomeatcontainersawaitingoriginalcerticationcorrectionletterscomprise:

Quayrent,refrigerationanddemurrage 68,000

Diversionofcontainersthroughnon-UKEUports (estimated176containersx1,500) 264,000

Totalestimatedcost 332,000

Theseguressuggestanestimated saving o 332,000tothemeatimportindustryalonecouldbeachievedfromtheallowanceofCerticationCorrectionLettersbyelectronicmeans.Thisisaconservativeestimatewhichdoesnotaccountforlossofpotentialrevenueoropportunitycausedbydelay. 14

14 Source: International Meat Traders Association (IMTA).

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CHAPTeR 2: CUSToMS AT THe HeART oF InTeRnATIonAL TRADe

Itrducti

2.1 Customs procedures aect every UK business engaged in international tradewith non-EU countries. For many years, the key objectives or HMRC, the leadGovernment department, have been to collect the revenue due rom import taxes

and duties (in 2007/08 it collected 2.5 billion in customs duty and 19.3 billion inimportVAT)whileachievingthebestbalancepossiblebetweenthefacilitationof

legitimate trade and exercising the controls necessary to protect society and oureconomy rom a variety o threats. The responsibility or maintaining this balanceis now shared between HMRC and UKBA, but the ocus and commitment remainunchanged.

2.2 As part o its policy to improve trade acilitation at borders, HMRC:

consultsregularlywithbusinessesviatheJointCustomsConsultativeCommittee (JCCC) on the introduction o new customs legislation, proceduresandoperationalmatters;

providesvaluedadviceonforthcomingproceduralandlegislativechangesinawide variety o regional meetings and business events through its InternationalTradeDevelopmentLiaisonOfcernetwork;and

worksinclosecollaborationwiththeinternationaltradecommunitytostreamline

electronic processing capability o the customs business.

Customs Electronic Data Management CHIEF

Sinceimplementationin1994,CHIEF(CustomsHandlingofImportandExportFreight)hasbeenwidelyacclaimedasasuccessfulGovernmentITdevelopment.Todaythesystemprovidesanefcientandrobustservicetobusinesses,handlingover99%ofallcustomsdeclarationselectronically.Thisamountstoriskassessingintheregionof30milliondeclarationsperannum,withmostgoodsbeingclearedwithinsecondsasaresult.

2.3 TheseeffortsarerecognisedintheHMRCquarterlycustomersatisfactionsurvey,which includes a dedicated section or international trade customers. For theyear ending 31 March 2009, the overall satisaction rating o international tradebusinesses dealing with HMRC was 82%, with improvements against all o thekey measures. In the World Economic Forums Global Enabling Trade 2009 report,

UK customs services were ranked 1st in the world (out o 121 countries).

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Customs A Fast Moving Environment

Onaverage,29millionUKcustomsdeclarationsareprocessedperannum,(22millionimportsand7millionexports);and

Importdeclarationsarereceivedfromaround160,000traders.

Selectionforexaminationordocumentarycheckistheexceptionratherthan

theruleintheUK.

91.8%ofimportprocessesareclearedwithoutcustomsinterventionattheborder;

6%areselectedforpre-clearancedocumentarychecks;

2.2%areselectedforphysicalexamination;and

Just1%ofexportedgoodsareselectedfordocumentarycheckspriortoclearance.

Clearancetimes:95%ofconsignmentsselectedforadocumentarycheckare

clearedwithintwohoursofthegoodsarrivingandavalidcustomsdeclarationbeingsubmitted.Inspectionstakeonaverage:

30minutesforfastparcel/couriertrafc;

onehourforfreighttrafc;and

twohoursforcontainertrafc.

Aalsis

2.4 The long term international trade strategy or Customs in the UK was set out inthe 2001 Customs Blueprint. The eective administration o trade policy, revenue

collection, the collection and use o data in support o risk management andadmissibility remain the building blocks or ensuring that the economy and societyare protected and the interests o the UKs international trade are well maintained.The electronic customs business approach, the development o the trustedbusiness scheme (Authorised Economic Operators or AEOs) and mutual recognitionagreements or this scheme with Europes key trading partners are key components.

Acti

2.5 Th Custms Bluprit has b rrshd i 2009 ith iput rmitratial busiss stakhldrs. The nal version o the new Blueprint waspublished on the HMRC website in September 2009.

The rereshed Blueprint recognises the value o the commercial supply chain insupporting these developments and, as these supply chains improve in eciencyand security, HMRC is seeking to work in partnership with businesses to enableCustoms to:

gatherinformationrelatingtotheinternationalmovementofgoodsasfarupstreamaspossible;

collectdataonlyoncebutuseitmanytimes;and

assesstheriskearlyinthesupplychaintoallowatimely,betterplacedandmost

appropriate response.

Suggestions or improvements to the way in which Customs specialist advice isdelivered will be considered as part o the Customer Understanding work beingtaken orward under the revised Customs Blueprint.

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2.6 eU Mdrisd Custms Cd (MCC) implmti prisis: Consultationwith business identied a perception that the MCC is a step backwards in tradeacilitation terms and that existing simplications are being lost. But the MCCprovisionsarenotallfocusedonachievingsimplication;harmonisationisakey

driver too. Customs is working towards a common approach so that businesses canrely on consistency and certainty in the application o procedures throughout the

EU. At the same time, harmonisation may hold cost implications or businesses.Th aim is t kp t a abslut miimum a icras i burds r lss acilitati, ad t ctiu t plr as t scur simplifcatis.We welcome the support o the UK trade associations and their European tradecounterparts in lobbying or these aims.

2.7 Over time, harmonisation should make it easier to implement developments suchasself-assessment(periodicdeclarationsakintoVATreturns),systems-based

controls and centralised clearance (allowing businesses to deal with all their customsadministration in one Member State).

2.8 oli tari: Since this went live, it has received considerable trade support andpositive eedback, but it is recognised that additional development is needed.A review conducted in partnership with BusinessLink has led to some improvementsto the systems perormance. Further changes will be made as and whenopportunities arise.

2.9 Itrastat: Since Intrastat was rst introduced, there have been a number o changesto make lie easier or businesses. The UK continues to work with the EU governingbody, EUROSTAT, to achieve urther simplications, or example by pushing orcloser links between Intrastat and EC Sales list collection. Thresholds are reviewedannuallytorestrictthenumberofbusinessesrequiredtoprovidetheinformationat the minimum level to comply with legislation. In the longer term, the EuropeanCommission is examining the possibility o Single Flow which would allow or thecollection o inormation on either dispatches or arrivals only. There are, however,a number o issues to resolve beore Single Flow becomes a viable option.

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CHAPTeR 3: CoMMITTeD To PRogReSS

Trad fac

Itrducti ad aalsis

3.1 World trade depends heavily on trade credit, which is an important source o

short-term nancing and a signicant tool to nance business growth. Some 80 to90 percent o all global trade transactions are estimated to rely on some orm onancing, such as loans or guarantees. One result o the current nancial crisis isthat access to aordable trade nance has been constrained and the cost o tradenance has increased substantially compared to the period pre-crisis. In parallel,there has been a reduction in trust between rms.

3.2 In response, the G20 London summit in April 2009 agreed to ensure at least $250billion in trade nance over the next two years to help reboot global trade throughexport credit and investment agencies and through the Multilateral DevelopmentBanks (MDBs). The September 2009 G20 Pittsburgh summit welcomed the swit

implementation o the $250 billion trade nance initiative.15

In the EU, export creditinsurance schemes have been introduced in Denmark, Finland, Germany, theNetherlands and Luxembourg (which will run until December 2010).

Acti

3.3 A rki capital schm was implemented and includes a trade credit insurancetop-up scheme. Designed to increase the amount o lending on oer, the workingcapital scheme provides guarantees covering 50 per cent o the risk on existing andnew working capital portolios presented to the Government by banks.

3.4 The trade credit insurance top-up scheme, which runs until 31 December 2009,

allows suppliers to purchase Government-backed insurance either to restore coverto the original level or to double the amount they are able to obtain rom the privatesector up to the value o 1million (whichever is the lower). In 2008, 14,000 UKcompanies bought trade credit insurance against supplies to over 250,000 UKbusinesses as a guarantee that their bills would be paid.

Working capital scheme responding to industry eedback

Toadapttotheneedsofbusinesses,theschemewas

extendedinJune2009toallowBritishbusinessestoapplyfortheschemeif

theysufferedfromreducedcoverafter1October2008; furtherchangedinAugust2009,inparticular:(i)thepriceofthetop-upcover

wasreducedfrom2%to1%,(ii)the20,000lowerlimitontop-upcoverwasremoved;and(iii)theupperlimitontop-upcoverwasincreasedfrom1millionto2million.

3.5 Th eprt Crdits guarat Dpartmt (eCgD) has powers under theExport and Investment Guarantees Act 1991 to make arrangements with a view toacilitating exports. Use o the word acilitating proved problematic because ECGDcannot be said to acilitate exports i those exports have already been supplied.

15 G-20 Summit, 24-25 September 2009, Pittsburgh, Pennsylvania, http://www.pittsburghsummit.gov/.

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3.6 Th Idustr ad eprts (Fiacial Supprt) Act 2009 came into orce in May2009 and amends section 1(1) o the Export and Investment Guarantees Act 1991to widen support provided by the ECGD to include exports that have already takenplace. The amendment gives certainty to exporters that, i supplies had been madeat a time when, or example, ECGD was still undertaking its due diligence, theywould still be eligible or support, subject to the business being acceptable in terms

o its risk prole and due compliance with ECGDs business principles. This was inresponsetorequestsfrombusinessandhasbeenbroadlywelcomed.

3.7 Lttr crdit uarat schm (LCgS):16 Trade nance is relevant to the WorldBank report because the time taken to obtain letters o credit is one o the actorsholding back the UKs standing in the trading across borders strand.

3.8 An ECGD consultation on a proposed letter o credit guarantee scheme closed on3 July 2009 and the Government17 concluded that the scheme should beintroduced. The scheme was launched on 20 October 2009.18 The LCGS will takethe orm o a master guarantee issued to participating UK banks, under which thosebanks may cede to the guarantee, within limits, potential exposure which they wouldincur by virtue o conrming letters o credit issued by overseas banks in avour oUK exporters.

3.9 Ri th rl eCgD: As part o longer term trade nance strategy, Ministersare considering a range o options to make ECGD a aster and more fexible supportero UK rms. These actions will ensure that a robust trade nance system is in placeintheUKtorespondtoanyfurtherglobaleconomicshocks.Equallyimportantly,they

will enable UK traders to thrive as the world economy picks up.

Trasprt ad irastructur

Itrducti3.10 Ecient, reliable and resilient transport networks are important to acilitating trade

and supporting economic activity. Congestion and delays in and around ports andairports as well as on key inland routes impose signicant costs on UK consumersand businesses and are a deterrent to both trade and inward investment.

3.11 The comparatively high private transport costs in the UK were an inhibiting actor tothe UKs ranking in the World Bank Reports trading across borders indicator.To improve international transport networks, the Department or Transport (DT) has:

carriedoutsubstantiveanalysistoinformpolicydecisionsaboutinternationaltrade

cargojourneys;and madesubstantialfundingcommitmentstofacilitatethesejourneys.

16 Export Credits Guarantee Department Consultation on the Introduction o a Product Guaranteeing Reimbursement

o UK Conrming Banks under Letter o Credit Arrangements, 8 May 2009,

http://www.ecgd.gov.uk/consultation_-_letter_o_credit_guarantee_scheme.pd.

17 Government Response to the Public Consultation on the Introduction o a Product Guaranteeing Reimbursement oUK Conrming Banks under Letter o Credit Arrangements, 7 August 2009,

http://www.ecgd.gov.uk/government_response_-_07-08-09.pd

18 http://www.ecgd.gov.uk/index/news.htm?id=9073

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Recent Trade Transport Project Funding Announcements

InNovember2008,300mwascommittedtospeedingupthedeliveryofkeyschemesthatimprovetransportlinkstosomeoftheUKsmostimportantairportsandports.

ImprovementstotheA180/A160junctiontoenhanceaccessto

ImminghamPort. Trafcmanagementmeasurestoimprovesafetyandreducedelaysalong

theA12betweentheM25andIpswich,improvingaccesstoFelixstoweandHarwichports.

TheSouthEastManchesterreliefroad,toimproveaccesstoManchesterAirport.

EnhancementstotheNorthLondonLinetoenableincreasedmovementsofrailfreightonthisimportantlinktotheThamesGateway,LondonandHavenPorts.

Theseschemesofferhighvalueformoneywithstronginternationalandnationalproductivitybenets.TherecommendationsoftheEddingtonstudy,whichhighlightedtheimportancetotheeconomyoftheUKsinternationalgateways,supportedbytheanalysisofend-to-endjourneys,havegreatlyinuencedtheprioritiesforthisinvestment.

Inaddition,aprogrammeofmanagedmotorwayschemeswasannouncedtorelievecongestiononkeyarteriesofthenationalroadnetworkwhicharecrucialfortheonwarddistributionofgoodstoandfromtheUKsportsofentry.

Deliveryoftheseschemesissubjecttoagreeingregionalfundingcontributionsandtothecompletionofstatutoryplanningprocesses.

Aalsis

TheEnd-to-EndJourney

3.12 In order to identiy where pinch points exist and to prioritise uture interventions,DT working with key industry stakeholders has developed a suite o documentswhich analyse end-to-end journeys through the UKs key international gateways.This analysis has included stages o the journey and processes that have notpreviously eatured explicitly in transport analysis, such as border controls orsecurity, presenting new opportunities or a more holistic approach to analysing and

identiying policy options.3.13 On the international reight side, reports ocusing on container reight and roll-on

roll-o (ro-ro) reight were published in December 2008 and an end-to-end analysiso air-reight was published in May 2009. These documents provide a platorm oridentiying key blockages in the transport system, prioritising policy options andreinorcing the commitment to serious long-term transport planning or internationalnetworks.

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End to End Journey Key Findings

Deliveryandregulatoryresponsibilityishighlyfragmentedacrosstheend-to-endjourney,withmultiplepublicandprivatesectororganisationsinvolved.Thisleadstopotentialcoordinationfailures.

Duetothecomplexityofmanyend-to-endjourneys,thereislittle

transparencyofjourneyperformanceataholisticlevel.Dataisoftenincompleteorcollectedonaninconsistentbasis,complicatingthetaskofidentifyingpinchpointsandprioritiesforimprovement.

Inlandtransporttoandfrominternationalgatewayscanbeasignicantcauseofcostanddelay.

PortInfrastructurePlanning

3.14 DT recently approved the construction o a new container terminal at LondonGateway and Harbour Revision Orders or large scale expansion to Felixstowe/Harwich and Teesport, as well as smaller acilities at Liverpool. Southampton, too,

is expanding container capacity within existing rights and powers. A urtherapplication is pending or a deep sea terminal at Bristol Port, while an application isexpected shortly or a substantial increase in ro-ro capacity at Dover.Should the consented schemes go ahead, the UK will be well placed to handleprojected container port demand to the year 2030.

Acti

3.15 Dliri Bttr ed-t-ed Jurs: The DTs International NetworksImprovement Programme, building on the suite o end-to-end analyses willdevelop options or tackling a number o the priority issues raised in the

published documents. The ocus will be on improving the perormance o existinginrastructure by developing measures to improve coordination between deliverypartners and increase transparency across the end-to-end journey. oiimprmts t isti trasprt trks ill als b prrssd.

3.16 natial Plic Statmt (nPS): The Ports NPS has recently been publishedor public consultation and parliamentary scrutiny in accordance with the PlanningAct 2008. The NPS will provide a ramework or decision making by the newInrastructure Planning Commission (IPC) by clearly setting out Government policyon ports. The NPS will set the strategic agenda and criteria or deciding nationallysignicant port developments in the coming years. The new planning regime or

nationally signicant inrastructure will result in aster and airer planning decisions.

3.17 guidac r dlprs: In April 2009, the DT released guidance19 or developersrequiredtoprovidenancialcontributionstothecostofnationallysignicant

inrastructure developments.20 The guidelines seek to provide clarity on the principlesDT applies when negotiating developer contributions to transport inrastructure orthese projects (i.e. transport links to ports and airports). The aim o the guidance is toensure less conusion in uture and a air and ecient way o dividing costs betweendevelopers and Government.

19 Funding transport inrastructure or strategically signicant developments Developer contribution guidelines,April 2009, http://www.dt.gov.uk/pgr/regional/undingtransportinrastructure/.

20 Obligations under section 106 o the Town and Country Planning Act 1990 (as amended) and Section 278 Highways

Act 1980 Agreements.

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3.18 The guidelines were written to address dissatisaction on the part o industrystakeholders. Previous arrangements were seen by investors as protracted, ad hocand dicult to predict.

eprt ctrl

Itrducti

3.19 Export control is politically sensitive, and closely scrutinised by both Parliamentand the wider stakeholder community. The Export Control Organisation (ECO) aimsto manage responsibly transers o strategically controlled goods and technology(thatcould,forinstance,beusedinthemanufactureofmilitaryequipment)withoutunnecessarily impeding legitimate trade. In 2008, the value o contracts signed orthe export o deence goods and services was in excess o 4.2 billion.21

Aalsis

3.20 During Spring/Summer 2009, the ECO commissioned an independent surveyconducted by RSM,22 an independent research company, with the ultimate aim o

helping the organisation to improve its contribution towards:

increasingUKcompetitiveness;and

raisingawarenessof,andcompliancewith,strategicexportcontrols.

3.21 The specic research objectives o the RSM survey were to:

measurecurrentcompliancewithexportregulations;

measureawarenessandperceptionsofdual-useexportcontrols;and

helpdevelopcommunicationsandimplementationstrategiestoincreaseawareness o ECO and compliance with the relevant rules.

RSM Survey o ECO

Thesurveyinvolvedover500controlledtelephoneinterviewswithcompaniesidentiedasbeinginvolvedinmanufacturingand/orexportinggoodswithinstandardindustrialclassication(SIC)codeslikelytoincludedualusegoodsandtechnology.

ThissurveyshowedpositivendingsforrespondentsimpressionsoftheOrganisation,levelsofunderstandingofexportcontrolrulesandcompliance.Forexample:

Ofthosewhoexpressedanopinion,87%ofrespondentshadafavourableorveryfavourableoverallimpressionofECO.

88%ofrespondentsfeltthatbusinessintheUKtookcompliancewithexportcontrolsseriouslyorveryseriously.

87%ofcurrentlicenceholdersthoughtthecostofcompliancewithexportcontrolswaswhattheywouldexpectorlower.

21Source:VoluntaryprovisionofdatafromUKdefencecompaniestoUKTIDefence&SecurityOrganisation(DSO).Given the voluntary nature o the survey, it is expected that this will not represent the ull value o deence goods

agreed or sale in that year.22 http://www.rsm1.com/

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Acti

3.22 The ECO is committed to ongoing improvements to its service. More specically,ECO will ollow up the results o the surveys in the ollowing ways:

Communication

3.23 eCo traii ad aarss actiitis: These will include: continuingawarenessraisingeventsandachargeabletailoredtrainingserviceto

business seeking to target these more eectively and to co-ordinate with otherborderregulators;

innovativedeliveryofguidancematerialsthroughtheuseofvariousmedia,suchaswebcasts;and

launchoftheExportControlSkillsAcademyinAutumn2009tobringtogetherthe various strands o internal, external and cross-Government training underone brand and to urther promote and advertise training and awarenessopportunities.

3.24 Custmr Sric ecllc plans to apply or accreditation will help ECO inits aim o becoming the best organisation o its type in the world and a model oservice delivery in Government. In particular, sric trasrmati plas will bedeveloped to demonstrate how eectively the service is being delivered throughvarious channels (e.g. ace to ace, websites and contact centre) including theapplications process via SPIRE, the ECOs online licence application system, andcreate a strategy or ongoing improvements to service delivery.

Riskmanagement

3.25 op licsi this will continue to be used where appropriate to reduce the need

or exporters and traders to apply or individual licences. The ECO will ensure thatguidance on how to assess the business case or an open individual export licence(OIEL) is ully publicised to sta. Similarly, a ast track sstm ill ctiu t busd r prcssi l risk applicatis not appropriate or open licensing.

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CHAPTeR 4: THe InFoRMeD TRADeR

Irmati ad cmmuicati

Itrducti ad aalsis

4.1 Business must have access to impartial inormation and advice about the rules and

proceduresthatapplytoimportsandexportsofgoodstoorfromtheUK.Equally,in developing and implementing regulatory regimes, Government must have regulardialogue with those who will be aected. A considerable amount o resource isalready expended on these matters:

Manyborderregulatorsalreadyhaveinplacededicatedstakeholderengagement

ora (e.g. the Joint Customs Consultative Committee communicates the businessviewtoHMRConregulatoryissues);

SupportisavailablethroughUKTIforbothexperiencedtradersandthoseseekingto enter the international trade scene or the rst time including:

over300specialisttradeadvisersintheEnglishregions;

access to UKTI services through the Devolved Administrations o Scotland,WalesandNorthernIreland;

1,300 export and investment advisers in 96 overseas markets in UK Embassies,HighCommissions,ConsulatesandTradeOfces;and

UKTIsEnquiryServiceandtheUKTIwebsite;

HMRCsInternationalTradeDevelopmentLiaisonOfcer(ITDLO)network

provides advice to businesses on orthcoming Customs changes and there areHMRCBusinessAdviceOpenDays;and

Co-ordinationofcross-Governmentweb-basedinformationandadvicetobusiness

has been led by the International Trade Theme Board as part o the BusinessLinksingle website programme

The International Trade Theme Board

Winnerofthe2008e-Govawardforitsfocusonthedeliveryofcoherentwebbasedinformationandadvicetotraderswhichhasincluded:

around180informationguidestransferredtoBusinessLinkwebsite,approximately40-50newguidestomovethisyearandanongoingcommitmenttotransferrelevanttrade-relatedGovernmentinformationto

thissitebyendofMarch2011; transactionaltoolssuchastheonlinecustomstariffandelectronic

applicationforAuthorisedEconomicOperatorstatuswhicharealreadyavailable.Deliverablesfor2010includethefullrolloutoftheAutomaticLicenceVericationSystem(ALV)forimportsofplants/owers/freshproduceandthefacilityforCommonAgriculturalPolicy(CAP)licencestobeappliedforonline,viatheBusinessLinkwebsite;

plansunderwayfortheadditionofnon-GovernmenttradecomplianceinformationtotheBusinessLinkprogramme(e.g.localauthorityPortHealthinformation).

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4.2 Deployment o inormation and advice on international trade practices andprocedures, nevertheless, would benet rom being more tightly co-ordinated andfocused.Itisalsotimelytoreviewthequalityandappropriatenessofthisinformation

and advice.

SITPRO The UKs Trade Facilitation Agency

SITPROistheUKstradefacilitationbody,anon-departmentalpublicbodyfundedbytheDepartmentforBusiness,InnovationandSkills.Foralmost40years,SITPROhasbeenatthevanguardofeffortstomakeinternationaltradeeasierthroughtheapplicationofstandardsandacollaborativeapproachtoaddressingtradingissues.

SITPROworkscloselywithboththebusinesscommunityandGovernmentbodiestoreducethecostsoftradinginternationally.Itsactivitiesrangefromgrassrootsproblem-solvingandassistanceservicesforUKbusinessestohigh-levelinputintonationalandinternationalpolicyeffortsonbehalfoftraders.SITPROactsasexpertinterlocutorbetweenbusinessandGovernmentontrade

facilitationissues,promotingworkablesolutionstotradingissuesthatwillmeettheneedsofthebusinesscommunity.

Acti

4.3 orsi th dlpmt a chrt strat trad irmati adadic r busiss. The International Trade Theme Board has been commissionedto establish:

wherebusinessesgoforadvice(web,telephonehelpline,face-to-face);

howeffectivethesechannelsareandhowtheymightbeimproved;and

enhancethepromotionoftheassistanceandinformationavailabletobusiness

rom Government particularly the BusinessLink website through improvedmarketing and monitoring o usage o the site.

The Board will be supported in these tasks by SITPRO to ensure that business isully engaged and that emerging conclusions rom Government are tested againstthe perceptions o business.

Trad as a carr

Itrducti ad aalsis

4.4 It is important that businesses have well-inormed sta and are able to employskilled proessionals with a broad understanding o international trade practices andprocedures.Employeesenteringtheinternationaltradeindustriesarebestequippedwhen they have a thorough grounding in the procedures and practices usedthroughout the supply chain.

4.5 Wide-rangingvocationalqualicationsare,therefore,importanttomaintaina

proessional workorce. Signicant progress has already been made during thepreparation o this Action Plan:

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a) National Occupational Standards (NOS) or International Trade and LogisticsOperations(ITLO)havebeendevelopedbySkillsforLogistics.Alevel2QCF(QualicationsandCreditFramework)qualication,basedontheseNOS,will

soon be oered or examination by the EDI and ABC awarding bodies who haveworked closely with Skills or Logistics in its development. The development othe course has been assisted by respected international trade training providers.

ThenewLevel2ITLOqualicationwillbeofferedastrainingtoGovernmentocials joining Departments working on international trade matters at regulatoryand policy levels to ensure that they have a clear understanding o businesspractices relevant to their work.

b)TheGovernmentisworkingwithSkillsforLogistics,qualication-awardingbodiesandtrainingproviderstodevelopaLevel3ITLOqualicationtobridgethegapbetweentheexistingLevel2courseandmorespecialisedhigherqualications.

This project is in the process o canvassing views rom sector employers andexpertswiththeaimofcreatingunitsandqualicationsforlaunchin2010.Theintentionistodevelopacoherentqualicationopentoalllearnersand

employers which supports wider skills policy objectives.

c) Skills or Logistics are promoting the use o trade scenarios (such as the Made inChina resource (see table below)) as a learning method in Secondary Schools togive 14-16 year olds a taste o the international trade sector. Government is ullysupportive o such initiatives.

Delivering Your Futures Made in China, a curriculum resource or 14 to16 year olds

MadeinChinaisacurriculumresourcewhichsupportsthedeliveryofMathsandEnterpriseteachinginschools.ItfocusesonthejourneyofanMP3playerfromitsmanufactureinChinatothepointofsaleintheUK.TheextensivepilotingofthisresourcehasnowendedandthefeedbackthathasbeenreceivedfromNorthernIreland,Scotland,theNorthWestandtheEastMidlandshasbeenrationalised.Commentsfromtheteachersandpupilshavehelpedtorenethematerialsandasaresultcertainimportantnewfeatureshavebeenaddedtothematerials.ThisresourcewillbecompletedbytheendofOctoberandlaunchedinNovember.ItwillthenbeavailableforschoolstousethroughouttheUnitedKingdom.

4.6 Much international trade training is currently oered through short courses.

These allow employees to build their knowledge o specic processes andproceduresrequiredfortheirjobsandallowbusinessestoupdatetheirknowledge

as and when procedures change. However, it is not always easy or traders toidentifytrainingofthetypeandqualitythattheyrequire.

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The Benefts o Trade Learning and Skills

Statistics:EvidencesuggeststhatpeoplewhogainanNVQ2(nowQCF2)betweentheagesof26and34onaverageenjoya22%increaseinearningscomparedtothosewhodonot.Moreover,peoplewhoattainanNVQ2astheirhighestqualicationare14%morelikelytobeemployedthanpeoplewhosehighestqualicationisbelowLevel2,andpeoplewhoattainanNVQ3(nowQCF3)astheirhighestqualicationare17%morelikelytobeemployedthanpeoplewhosehighestqualicationisbelowLevel3.

Case study:SmallpilotschemeshavetakenplaceinFelixstowe,bringinginternationaltrade,oneofthemajoremployersinthelocalarea,intoGCSEprogrammesforsomestudents.AtDebenHighSchool,eightstudentsundertookthecoursewithassistancefromITSTrainingServices.Oftheseeight,sixhavereceivedoffersofemploymentwithintheinternationaltradeareaandoneisnowemployedbythetrainingprovider.EachofthesixemployedstudentsisnowembarkingonaLevel2qualicationwiththesupportoftheiremployers.

Acti

4.7 Prmti itratial trad as a ui carr path: The Governmentwill work alongside SITPRO to ensure that the range o training tools andqualicationsavailablerecognisestheimportanceoftradeasaprofessionessential

to the UK economy.

4.8 The Government will explore options or a ctral schm t accrdit shrtcurss i k itratial trad practics rom competent trainingorganisations. SITPRO will be looking into this issue and maintaining an open

dialogue with Government as regards their ndings.

4.9 The Government will develop a programme to promote proessionalism ininternational trade, both in the business community and within Government.Through its new Backi yu Britai and Graduate Talent Pool programmes,it will oer opportunities or internships with trade regulators and will encouragetrade service providers such as reight orwarders and ports to oer similaropportunities.

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CHAPTeR 5: PoLICy Co-oRDInATIon AnD PRoMoTIng BeTTeR RegULATIonIn THe eURoPeAn UnIon

Itrducti

5.1 A clear understanding o the current reality is an essential rst step towards creatingabettertradingenvironment.Thisrequiressoundanalysisofarangeofdata

relating to the UKs position. With this in mind, analysis was undertaken to establishthe total estimated administrative burden on business rom signicant traderegulations in the UK (almost 1 billion annually) and to identiy the departmentswith policy responsibility or each regulation.23 This is summarised in the tablesand charts below. Customs gures dominate the table because o the high volumeo Customs declarations (22 million imports and 7 million exports annually) andpostal declarations (55 million consignments entering and 41 million leaving the UKannually) rather than the unit cost.

Admin Burden of International Trade Related Regulations

HMRC - 77%

DFT - 15%

DH - 5%

DEFRA - 2%Others - 1%

23 Admin Burdens are the administrative costs to business o complying with Government regulation, estimated using

the Standard Cost Model. They refect only part o the total cost o complying with regulation. e.g. they exclude coststo business o time delays at the border while inspections take place. Further details can be ound at http://www.berr.

gov.uk/les/le35995.pd and http://www.hmrc.gov.uk/better-regulation/kpmg.htm. The estimates here relate to the

most signicant regulations which appear to be related to international trade. In the case o HMRC or example, they

cover collection o excise tax at the border and Intrastat as well as customs regulations.

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Dpartmt Prcta Burd Ttal AdmiistratiBurd

milli

HMRC 77% 769

Department or Transport 15% 145

Department o Health 5% 52

Department or 2% 17Environment, Food andRural Aairs

othrs 1% 7

Health and Saety Executive


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orii Rulati Ttal Admi Burd

milli

%

EU Directly Applicable 927 93

EU Domestic Discretion 11 1

Domestic 55 6

Ttal 993 100

Aalsis

5.3 All agencies operating at the border should:

includetradefacilitationwithintheircoreregulatoryobjectivesandbeabletodemonstratehowthisobjectiveisbeingfullled;

consultfullywithbusinessandprepareimpactassessmentsinrelationtoproposed trade regulations, reducing negative impacts on the fow o trade andreducingcostsforGovernment;and

besubjecttoregularreviewinlinewiththeHamptonprinciplestoensuretraderegulation is being enorced proportionately.

Consultation in Action The Benefts to Trade o Government Liaison

NewEUmarketingstandardscameintoforceon1July2009.TheHorticulturalMarketingInspectorate(HMI)hastakenatradefacilitativeapproachthathasconrmedthatGeneralMarketingStandard(GMS)products(suchascabbageandleeks)willnothavetobeenteredontothePEACHsystem.

Thefreshproduceindustryestimatescostsavingsof250,000perannumarisingfromreducedtimeenteringapplicationsontoPEACH.Additionally,whentheimpactacrossthewidersectorisconsidered,Defraestimatesthatbenetstoindustryintheregionof1.5millionperannumwillbeachieved.

Meaningfulcollaborationwiththeindustrywasachieved,includingworkshop/road-showsusinglocalHMIinspectorstoleaddiscussionsinordertounderstandtradeconcernsandwishlistsandtoreportbackinplenary.Thispaiddividendsinfeedback,education,andformulatingpolicy;criticallyassuringindustrybuy-in.

BetterRegulationtheUKAgenda

5.4 In the autumn, the Government published a forward regulatory programme throughits Better Regulation Executive (BRE). Additionally, the Government will set up a newexternal Regulatory Policy Committee whose role will be to advise on whether it isdoing all it can to assess accurately the costs and benefts o regulation. Building onthe work o the Hampton Report, this body will also advise on whether regulators takeappropriate steps to ensure their work is risk based.

5.5 These steps build on the Governments announcement in 2005 that it would cut theadministrative burdens o regulation by 25 per cent by May 2010 a target whichit remains on course to meet having already delivered 1.9 billion o savings to

business. Additionally, the Government will adopt new simplication targets or 2010and 2015 which will address all regulatory costs on business.

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BetterRegulationtheEuropeanPicture

5.6 There are considerable benets to the UK in being part o the European Union a Customs Union providing an active market or UK goods and a stronger hand ininternational trade negotiations. It is, thereore, essential to ensure that there issucient co-ordination and evaluation o the impact o EU proposals both betweenthe dierent trade-acing Directorates General o the European Commission andbetween dierent Government departments in the UK and their EU counterparts.Two key strands o work are already under way to address this:

TheBREandtheCabinetOfceareworkingtoinuencethenextEuropean

Commission, on the importance o better regulation and the need to deliver on theEUscommitmenttoanadministrativeburdenreductionof25%by2012;and

TheCustomsBlueprintplacesattheheartofitsapproachpositivelyinuencingorganisations and initiatives to maximise the opportunities or the EU to deliversimple, easy-to-use, relevant and adaptable processes and procedures.

A closer look the clothing and ootwear sector

Annual sales o the UK clothing and ootwear sector were 48 billion in 2008.

The sector represents:

4%ofUKtrade;

5%ofnon-EUtrade;

8%ofnon-EUimports;and

30%ofimportandexportdeclarationsrequiringcerticates.

There is a large UK trade defcit:

73%importsarefromnon-EUcountriesmainlydevelopingcountries;and

76%exportsaresoldwithintheEU.

Main concerns are regulations aecting extra-EU imports and intraEUexports. Issues relate to:

Classication;

Valuation;

RulesofOrigin;and

Intrastat.

Intermsofclassication,thereare466differentclothingtarifflines,85%ofwhichhavethesameduty.

Examples o regulatory costs reported by individual companies in the sector: 1.25million=annualcostofcompliancewithtraderegulationforonemajor

retailer;

600,000=annualcostofcustomsdeclarationsforonecompany;

100,000=amountonecompanysavedeachyearbydoingitsowncustomsdeclarationsratherthanemployingafreightforwarder;

100,000=majorretailersannualcouriercostsforsendingorigincerticates;

15,00030,000=extracosteachyearincurredbyonecompanyllingindetailsfororigincerticatesattarifflineratherthanheaderlevel;

600,000=annualcosttooneretailerforbankfeesfordutyguarantees; 15,000=annualcostofIntrastatreturnsforspecialistretailer;and

1.20=costperinvoiceofIntrastatreturnsforonecompany.

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Acti

5.7 It is essential to embed the better regulation initiatives, at both the national andEuropean level, in the specic eld o trade rules and enorcement. This includesbuilding on the existing analysis o burdens on trade, identiying areas or reorm orsimplication and ensuring that uture proposed legislative measures do not imposedisproportionate costs on traders. Two specic measures are set out below toachieve this.

5.8 Itratial Trad Facilitati Cmmitt: A cross-Government Committeewill be created, to be chaired by BIS with high level representatives rom theGovernment departments and agencies involved in international trade.The Committee will drive best practice and root out unnecessary burdens. It willhave a wide remit to enhance international trade policy co-ordination by:

ConsideringforthcomingEUanddomesticlegislationaffectingtradeandensuringthatallcross-cuttingimpactsareaddressed;

Overseeingandpromotingbestpracticeattheborder;

ReviewingtheUKsstandingagainstleadinginternationalcomparators;and

EnsuringeffectiveimplementationofthisActionPlan.

To ensure that the Committee remains alive and responsive to business concerns,the Committees Secretariat will be provided by SITPRO. Detailed terms o reerenceor the Committee are set out in Annex A to this Action Plan.

5.9 orarchi isi r rduci burds tradrs i th eU: The changes setout in the rest o the Action Plan will have limited benet unless we can infuencethe European Commission to put better regulation and administrative burdenreductions at the heart o the EU international trade agenda. We want to send a clear

message that changes need to be made now to an increasingly complex set o traderules. A undamental simplication o those rules will reduce compliance costs orbusinesses, errors and the opportunities or manipulation by the non-compliant bringing benets and resource savings to authorities as well as to traders.

5.10 BIS, working with other Government and trade stakeholders, will develop avision or trade acilitation at the EU level and a strategy or delivering it. The visionwill encompass:

Clear,agreedUKobjectivesforinternationaltraderegulationthatallGovernment

departments and agencies can draw upon to inorm their own lobbying,

inuencingandnegotiatingstrategieswiththeEUinstitutions; Astrongemphasisonbetterregulationandonminimisingadministrativeburdens

andcostsonbusiness;

Acommitmenttoworkingforafundamentalsimplicationoftraderules;and

AnenhancedpartnershipwithUKandEUtradebodies,matchedbya

commitment rom those bodies to work with the UK Government to achievecommon objectives.

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5.11 The vision will include long term goals and its success will be measured asmuch against uture legislative proposals as against those already in train. Thesupporting strategy will set out specic steps that Departments will take in theirdiscussions with the various Commission Directorates General to drive orward thesimplication agenda. The input rom this Action Plan and the resulting rameworkor all Government Departments engaged in international trade, along with trade

representatives, to pool ideas and eorts will be an important step orward.

Benefts o Trade Facilitation

Variousestimationssuggestthatthecostoftradeproceduresmayrangefrom2%to15%ofthevalueoftradedgoods.TheEuropeanCommissionhasestimatedthathalvingthecostofbureaucratictradeproceduresmaymeansavingaroundn300billionayearworldwidefortraders.A1%savinginthevalueofgoodstradedacrossUKborderswouldbeworthalmost6billionannually.

Tariffequivalentscostsarisingfromimportdelaysexceedthecostsoftradetariffsineveryregionoftheworld. 24

Eachdayintransitforvegetablesandfruitisequivalenttoloweringtheirpricesby0.9%.25

24USAID,CalculatingTariffEquivalentsforTimeinTrade,preparedbyNathanAssociatesInc,March2007.

25 As ootnote 24.

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CHAPTeR 6: InTeRnATIonAL CoMPARISonS How DoeS THe UK RAnK?

Itrducti

6.1 Although a number o surveys make cross-country comparisons o the cost andease o trading, the results o these various surveys refect dierences in scope,methodology and sample size. Some o the leading indicators are summarised in the

table below.

ItratialIdicatr

UK Rak(yar)

Scp ad Mthdl

World Bank DoingBusiness Report(Trading AcrossBorders category)

16th (2010) Survey: time and cost o document preparation,letters o credit, customs clearance and technicalcontrol, port and terminal handling, inland transporthandling.

World Bank LogisticsPerormance Index

9th (2007) Survey: based on seven actors eectivenessandefciencyofCustoms;qualityofITand

transport inrastructure, ease and aordability oshipping;competenceoflocallogisticsindustry;abilitytotrackandtraceshipments;domesticlogisticscosts;timelinessofshipments.

Global ExpressAssociation (GEA)

1st (2008) Survey: based on 15 GEA customs barriers surveyquestionscapturingdifferentaspectsofthe

services oered by customs and related agencies.The services include clearance o shipments viaelectronicdatainterchange;andseparationofphysical release o goods rom the scal control.

World EconomicForum: GlobalEnabling Trade Report

20th (2009) Survey, plus collation o other surveys, includingthe three above: based on nine pillars, includingmarketaccess;efciencyofcustoms;efciencyofimport-exportprocedures;transparencyofborderadministration;availabilityandqualityoftransportinfrastructureandborderadministration;availabilityanduseofICTs;regulatoryenvironment;and

security.

WorldBankDoingBusinessReport

6.2 A major impetus or this Action Plan was the act that the World Bank DoingBusiness Report 2009 ranked the UK 25th in the world and 11th within Europe orease o trading across borders. This compared with an overall ranking o 6th or allaspects o doing business. This trade ranking, and the slight deterioration in positionsince the previous report (2008), surprised many businesses and commentators in theUK, who recognised ours as one o the most trade-acilitative regimes within the EU.

6.3 The most recent Doing Business Report showed an improvement in the UKranking, up to 5th overall and 16th or the trading across borders category. Inparticular, improvements were shown in the time taken to import or export. Whilstthis is to be welcomed and refects Governments ongoing work in this eld, the UKstill comes behind a number o other EU countries such as Finland (4th), Denmark(6th), Sweden (7th), the Netherlands (13th) and Germany (14th).

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Aalsis

6.4 The World Bank Doing Business Report trading across borders category makesannual comparisons across 183 dierent countries using a business survey.Like most World Bank Doing Business analyses, it seeks to capture the numbero processes involved and outcomes such as cost and time or business, in thiscase or a standard import/export transaction. Covering so many dierent countrieseach year means that it inevitably has to adopt something o a one size ts allmethodology, which does not always capture the ne-grained reality o trading onthe ground. It also means that the number o businesses included in the sampletends to be relatively small. In the UK, or example, the results are thought to refectthe views o only a handul o traders.

IndependentanalysisofWorldBankreport

6.5 In preparing the Action Plan, Middlesex University was asked by BIS and HMRC toreplicate the World Banks survey or the 2009 edition, but to improve the statistical

robustness o the results by interviewing a larger number and wider range o

companies and experts than the World Bank sample. A copy o the Middlesex Studywas sent to the World Bank as part o a joint eort with the Bank to improve therobustness o the trading across borders category analysis. In relation to the 2009Report, the key fndings were:

ItislikelythattheWorldBankoverstatedthetimeforimport/exporttradeacrossthe UK border: Middlesex estimate that it takes no longer than nine days to importor export and in some cases a lot less compared with the 13 days ound by theWorld Bank.

TheWorldBankscostestimateswerebroadlycorrectforimportandexport.

However, as the report expresses costs in US dollars, the costs attributed to the

UK may partly refect the dollar exchange rate prevailing in 2008.

ThetimetakentoclearcustomsanareawhereothersurveyssuggesttheUK perorms well internationally (see above) has only a small infuence on thetrading across borders results.

ThemaininuenceontheUKrankingisthecostofandtimetakenforinland

transport and port handling, rather than trade regulation per se. Inland transportand port handling account or approximately 70% o the cost and approximately30% o the time delays associated with trading. Customs and technical controlsby contrast account or around 8% o costs and 15% o time delays.

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Acti

6.6 wrld Bak Di Busiss Rprt: The UK Government takes the ndings othe trading across borders indicator seriously. It is an infuential yardstick by whichbusinesses and potential investors judge the UK. We, thereore, propose to takea number o important steps to understand, monitor and continue to improve UKperormance:

OurplantoestablishanInternationalTradeFacilitationCommittee(seeparagraph

5.8 o this Action Plan) will provide a orum or analysis and action in relation tothose elements o trading across borders which Government can infuence.This Committee will, in conjunction with BIS, use this and other surveys,as part o a continuing review o the UK perormance and a ocus or policies toreducecosts;

ManyoftherecommendationsinthisActionPlan,particularlythoserelatingtothe

EU, trade nance and transport, address important elements o the trading acrossborders category. They will provide concrete policies to help reduce the costs o

importingtoorexportingfromtheUK;

Thetradingacrossbordersrankingshouldbeasrepresentativeaspossibleofthe views and experiences o UK business. We, thereore, aim to give morepublicitytothesurvey,whichisconductedintherstquarterofeachyear,andtoencourageasmanycompaniesaspossibletoparticipate;and

TheBREisworkingacrossGovernmenttocontinuetoimprovetheUKsranking

in the World Banks Doing Business Report. The BRE will be working withrelevant departments to develop costed proposals in ve regulatory areasmeasured by the World Bank, including trading across borders.

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Annex A: InTeRnATIonAL TRADe FACILITATIon CoMMITTee

Drat Trms Rrc

Madat ad backrud

1. The joint BIS and HMRC Action Plan (Simpliying Trade Across UK Borders),

which accompanied the Pre-Budget Report 2009, tasked the International TradeFacilitation Committee with taking and enorcing decisions to improve eectiveco-ordinationbetweenagenciesresponsibleforregulatoryrequirementsatUKborders.

2. International trade represents a signicant proportion o GDP and it is crucial thatdomestic trade regulation is as easy to comply with as possible in order orUK-based rms to remain internationally competitive. Trade in goods is a big contributor,with exports totalling 251bn and imports totalling 344bn in 2008. Internationalcomparisons suggest that there is room or improvement in the UK ramework.For example, although the most recent World Bank Doing Business Report showedan improvement in the UK ranking 16th compared with 25th in the previous year UK

still comes behind a number o other EU countries such as Finland (4th), Denmark (6th),Sweden (7th), Netherlands (13th) and Germany (14th).

objctis

3. The objectives o the International Trade Facilitation Committee are to:

a) oversee a proportionate and risk-based approach to trade regulation in the UK,includinghorizonscanningofnewregulationsorregulatorydevelopments;

b) shape and oversee delivery o a strategic UK vision to address border initiativesemanatingfromtheEuropeanUnion;

c) developasystemofcompliancecostassessmentforallareasofborderregulation;

d)createasystemforidentifyingregulatoryareasrequiringimprovement,anddevelopactionplanstoimplementtheimprovementsidentied;

e) develop a strategy or achieving eective cross-Governmental border agencyco-ordination, including the scope or achieving border regulatory synergies, andmonitoritsimplementation;

f) benchmarkandsharegoodregulatorypracticebyborderregulatoryagencies;

g) review UK standing on border regulation against key international comparators(e.g.WorldBankDoingBusinessReport);and

h) develop an agreed programme and timetable to ensure eective implementation o

Simpliying Trade Across UK Borders.

Scp

4. The International Trade Facilitation Committee should address the ollowing areas:

a) regulatory burdens imposed in relation to trade in goods across UK borders bydomesticorEuropeanlegislationorproceduresandotherinternationalrequirements;

b) the scope or increased provision by Government o inormation technology systemsto enable compliance with trade regulatory burdens.

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Actiitis ad tasks

5. The activities and tasks o the International Trade Facilitation Committee may includeundertaking or commissioning the ollowing activities and tasks:

a) collection and appraisal o ideas or reducing trade regulatory burdens, in particularthrough achieving regulatory synergies rather than considering individual regulatory

regimesinisolation; b)identicationandin-depthanalysisofspecictradesectors;

c) consultation with business, both generic and sectoral (to include, i appropriate,surveysoftradersatisfaction);

d)comparisonswithselectedothercountriesapproaches;

e)regularcompliancecostassessmentsofdifferentareasofborderregulation;

) examination o the annual World Bank Doing Business Report and LogisticsPerformanceIndexandanyotherrelevantindices;and

g) selective analysis o promising ideas or reorm (including best practice in the private

sector), identiying those that could be implemented.

outputs ad timi

6. The Committee will issue a report o its activities annually.

grac

7. The Committee will be chaired by a senior representative o the Department orBusiness, Innovation and Skills (BIS, Trade Policy Unit). SITPRO, the UKs tradeacilitation body, will act as Secretariat to the Committee.

8. In addition, the Committee will comprise senior representatives rom HM Revenue &Customs (Customs and International), HM Treasury, the Department or Environment,Food and Rural Aairs (Dera), the UK Border Agency (UKBA), the Department orTransport (DT), UK Trade & Investment (UKTI) and SITPRO. Other relevant borderregulatory agencies will also be represented.

9.TheCommitteewillaimtomeetquarterlyorasfrequentlyasisnecessary,todeliverits

objectives.

Masurs succss

10. The success o the Committee will be measured against:

whetheritmakesarealdifferenceinreducingborderregulatoryburdensonbusinessandmakingtradeeasier;

achievementoflong-term,activeparticipationofthebusinesscommunityinassessing regulatory practices at UK borders and in enabling an ongoing process oimprovementandreform;

ensuringrecognitionbyGovernmentanditsagenciesoftheimportanceoftradefacilitationandpromoteitskeyroleinthedeliveryofregulatoryobjectives;

ongoingimprovementofthestandingofUKborderprocessesagainstleadinginternational indices, such as the World Banks Doing Business Report.

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Ctact HMRC email: [email protected]: 0845 010 9000 Web: www.hmrc.gov.uk

Ctact BIS email: [email protected]

Phone: 020 7215 5000 Web: www.bis.gov.uk

Documents

Simplifying Trade in UK