Customs Union Brexit – A Chance for the Netherlands?
In the recent days, the United Kingdom has witnessed intensified parliamentary discussions on certain aspects of Brexit. The debates go about the future of trade and border arrangements between the UK and the EU upon the finalisation of Brexit. This specific problem refers to the intention of Great Britain to leave the European Union Customs Union as well as the single market, which allows some non-EU countries (for instance, Norway) to benefit from the customs union’s advantages. In that case, no more frictionless movement of goods between the UK and the EU can be expected. What economic and logistic consequences could it bring for the British business and their neighbours on the continent? To better understand the repercussions, we talk today with Vadim Blaustein, the owner and CEO of BlauStein Lawyers group of companies with headquarters in the Netherlands.
Mr. Blaustein, what can you say about the current state of the customs situation in the EU?
Vadim Blaustein: At this moment, 28 of the EU member states participate in the Customs Union - an agreement decades old, an instrument towards the liberalisation of trade in Europe, which subsequently became the cornerstone of the EU itself. Throughout its years of existence, it was gradually developing towards harmonisation of legislation, unification of tariffs and customs procedures in the participating states and designing of single trade policies in relations with third countries. In 1992, it led to the adoption of the Community Customs Code. The improvement process still continues, in particular, with Decision No 70/2008/EC of the European Parliament and of the Council of 15 January 2008 on a paperless environment for customs and trade, which set the goal to set up a harmonised, integrated system for exchange of information contained in customs declarations, accompanying documents and other information. It announced the transition to an electronic customs systems, aimed at increasing the speed, transparency and effectiveness of customs procedures. Recently, it was further supported by the coming into force of the main provisions of the modernised, adapted to the changes in the international trade, Union Customs Code (effectively abolishing the previous Community Customs Code). It happened in May 2016, but some provisions, including the complete implementation of the mentioned electronic customs systems, due to the complexity of their nature, can be prolonged until 2020. Still, we are approaching the moment of the appearance of a unified European customs database and declaration system.
How exactly does this arrangement affect companies incorporated in Member States?
Vadim Blaustein: In general, the benefits of participation in the European Customs Union for countries and their businesses are clear – the absence of paperwork, border control, customs duties and fees related to the movement of goods within the European Union. It is not only customs duties which are abolished within the Customs Union. The European Union went to a great length to get rid of any other possible payments which might be a less obvious substitution of duties or protection measures. For trade outside the EU a set of rules exists ensuring that all the Member States make use of single customs duties rates as well as agreements on trade with third countries. This makes transfer of goods a simple, well-organised and straightforward process, thus ensuring efficiency in trade or supplying.
Naturally, these rules and benefits apply to each and every Member State equally. If some goods trading or manufacturing companies currently incorporated in the UK consider changing their principal place of business, is there any reason for them to find some EU Member States to be more attractive destinations than others?
Vadim Blaustein: Even with the common rules Europe remains widely dissimilar in a geographical, logistical and even economic sense, thus we cannot discard the local context. As a nation whose success throughout history has been highly dependent on trade, the Netherlands spearheaded the unification tendencies in post-war Europe; Benelux (union of Belgium, the Netherlands and Luxembourg) predated the creation of the European Union. At the same time, this country historically has a well-developed infrastructure for trade, especially maritime. The port of Rotterdam, largest in Europe, provides great logistic choices and highly intensive connections to ports in Asia and the Americas. The Netherlands also have a developed railway network, connecting it to the economically developed neighbours. Another side of the coin is that the Netherlands position themselves as a country welcoming foreign specialists and business. As part of this strategy, the Dutch government encouraged the use of the English language by state agencies, and it allows an easier flow of workforce from other, especially English-speaking countries. In these circumstances, establishing a company in the Netherlands can benefit on many different levels.
Mr. Blaustein, how do you see the perspectives for business in the Netherlands in relation to Brexit? What will it mean for you and your current or potential clients?
Vadim Blaustein: We have our offices in the UK and Ireland, and therefore monitor the situation around Brexit closely. As it develops, some uncertainty remains. The matter is complicated by the promise given by the British government to keep the border with Ireland unaffected. Ireland, however, as a Member State, should not be able to have free movement of goods with a state outside the Union. All these aspects make it difficult to estimate the final agreement on the future move of goods between Europe and the UK. We can be sure that the changes are imminent, and in these circumstances certain loss of business by the United Kingdom is a very likely perspective. However, for the Netherlands the problems of their neighbour with the withdrawal from the EU can turn into an opportunity. With all the strengths of the Netherlands I have described, it looks like a prominent replacement for the business which will be leaving the UK in order to keep access to the benefits of the Customs Union.
At BlauStein we believe that in the changing world around us we still can rely on the commitment of the Dutch government and people to the ideas of common Europe, customs unions, and freedom of movement of goods. We have chosen the Netherlands as the location for the headquarters for a number of reasons, and their rich tradition in commerce is one of them. From here, utilising our many years’ experience in legal, bookkeeping, tax, and other corporate services, we can tailor a solution for a client according to the actual context and needs.
Thank you very much for participating in this interview. Your time and willingness to share your insights are greatly appreciated.