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Simplifying Trade Across

UK Borders
A Plan of Action
December 2009
HM Revenue & Customs (HMRC)
100 Parliament Street
London
SW1A 2BQ
Tel: 0845 010 9000
Website: www.hmrc.gov.uk

Department for Business, Innovation and Skills (BIS)


1 Victoria Street
London
SW1H 0ET
Tel: +44 (0)20 7215 5000
Website: http://www.bis.gov.uk/
Foreword
International trade policy is a key strand in our mission to
build UK prosperity. Open markets provide opportunities
for firms and individuals to prosper, and trade supports
our commitment to tackling global poverty and to
meeting the Millennium Development Goals.
Recent events in the global economy have emphasised
the need for the UK to scrutinise rigorously our border
processes and trading environment. According to the World Trade Organisation, the
current economic downturn will drive exports down by roughly 10% in volume terms in
2009 – the biggest such contraction since the Second World War. In order for the UK to
remain a preferred trading partner, it is vital for us to act to make trading with the UK as
smooth a process as possible.
The UK has responded strongly and positively to help businesses through the
‘New Industry, New Jobs’ strategy and through the work of UK Trade & Investment,
the Enterprise Finance Guarantee, the Real Help Now service and the HMRC Business
Payment Support Service. This Action Plan reinforces the Government’s commitment to
helping UK businesses that rely on international trade to remain strong.
The Action Plan fulfils the commitment in the 2008 Pre-Budget Report which jointly
tasked the Department for Business, Innovation and Skills and HM Revenue & Customs
with undertaking a review to assess how the costs to business of complying with
international trade regulation at the UK borders could be reduced.
Working with key partners in Government, border regulators and, crucially, business we
will ensure the delivery of a fair and effective regulatory environment for those engaged in
international trade, based on streamlined, efficient regulation and procedures for exports
and imports – cutting out avoidable costs and delays for business.
In proposing this Action Plan, we commit to:
• promote the UK’s international reputation and strong economic fundamentals;
• g
 ive more UK businesses the confidence to exploit the opportunities provided by
overseas trade;
• e
 nsure UK firms are well positioned to take advantage of globalisation and further
liberalisation of the world economy; and
• d
 rive ambitious reductions, both domestically and in the European Union, in the
costs of 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 first step towards ensuring that continues to be the case.

Lord Davies of Abersoch Rt Hon. Stephen Timms MP


Minister for Trade, Investment Financial Secretary to the
and Small Business Treasury
Contents

Action Plan Summary 1

Introduction 3

Chapter 1: Improving procedures at UK borders 5

Chapter 2: Customs – at the heart of international trade 11

Chapter 3: Committed to progress: 14


Trade finance 14
Transport and infrastructure 15
Export control 18

Chapter 4: The informed trader 20


Information and communication 20
Trade as a career 21

Chapter 5: Policy co-ordination and promoting better regulation in the


european Union 24

Chapter 6: International comparisons – how does the UK rank? 30

Annex A: International Trade Facilitation Committee –


Terms of Reference 33
ACTIon PLAn SUMMARy

Action Delivery date Page


Improving procedures at UK borders
1. UKBA to lead on co-ordination of border security and Autumn 2009 7
controls – driving ideas to increase joined-up working onwards
and contact with traders at strategic and port level
2. Effective delivery of the International Trade Single 8
Window through:
• All trade-related Government information to be March 2011
transferred to BusinessLink website; and
• Progressive electronic enablement of further trade Autumn 2009
transactions onwards
3. Extend Primary Authority Scheme to Port Health Autumn 2009 9
Authorities
4. Modernisation of processes for amending trade Spring 2010 10
documents
Customs
5. Refresh international trade strategy through the September 2009 12
Customs Blueprint
6. Negotiate proportionate Modernised Customs Code Mid 2011 13
implementing provisions
7. Improve the Online Tariff Autumn 2009 13
onwards
8. Explore options for further Intrastat simplifications Autumn 2009 13
onwards
Trade finance, transport and infrastructure and
export control
9. Increasing availability of trade finance support and October 2009 15
introduce a letter of credit guarantee scheme
10. Review of the role of Export Credits Guarantee Autumn 2009 15
Department (ECGD)
11. Develop priority options for tackling identified trade Autumn 2009 17
transport bottlenecks and delivering better end-to-end onwards
journeys
12. Implement improvements to key international trade All schemes to 17
networks infrastructure begin by 2015
13. Simplify port planning and development contribution 17
rules through:
• a New National Policy Statement on Ports; and Autumn 2009
• Revised developer contribution guidelines April 2009
14. Export Control Organisation to continue its Autumn 2009 19
commitment to ongoing improvements to service, onwards
through training and awareness activities, service
transformation plans and continued application of fast
track system for low risk applications
1
Action Delivery date Page
The Informed Trader
15. International Trade Theme Board to oversee and Autumn 2009 21
promote a new strategy on information and advice onwards
for business
16. Promotion of international trade as a career path by:
• Rolling-out a new Level 2 NVQ qualification in Autumn 2009 23
International Trade and Logistics Operations (ITLO); onwards
• Working with Skills for Logistics and training Early 2010
providers to develop a Level 3 ITLO qualification;
• Exploring options for a central scheme to accredit Autumn 2009
short trade practice courses; and
• Using the Backing Young Britain and Graduate Talent Autumn 2009
Pool schemes to develop a programme to promote
professionalism in international trade
Policy Co-ordination
17. Establishment of a cross-Government International Autumn 2009 28
Trade Facilitation Committee to enhance international
trade policy co-ordination by:
• Considering forthcoming EU and domestic legislation
affecting trade and ensuring that all cross-cutting
impacts are addressed;
• Overseeing and promoting best practice at the
border;
• Reviewing the UK’s standing against leading
international comparators; and
• Ensuring effective implementation of this Action Plan
18. Reduce EU regulatory burdens on traders, by Spring 2010 32
developing a UK vision for better international trade
regulation at the EU level and driving forward that
agenda in the European Commission and with other
EU Member States
International Comparisons
19. Continue to improve UK performance in leading Ongoing from 32
international indicators such as the World Bank’s Autumn 2009
“Doing Business” Report (trading across borders
category) through:
• The actions proposed in this Action Plan;
• Encouraging increased business engagement; and
• Regular performance assessment by the
International Trade Facilitation Committee

2
Introduction
Britain’s trading strengths, and its ability to access export markets, will be central to our
future prosperity. 60% of British productivity growth between 1996 and 2004 came from
businesses which export. British businesses, and the British economy as a whole, have
fundamental strengths that position us well to trade internationally.

• T
 rade and investment are vital to the UK – UK exports in 2008 were valued at
£422 billion (30% of GDP).1 Around 60% of UK imports from outside the EU
are used in production.2
• International trade has slowed significantly because of the current economic
situation. Global trade volumes are expected to decline by 10-16%3 this year
and foreign direct investment (FDI) flows declined by about 21% in 2008.4
• T
 he impact on UK exports has been less severe than in other countries,
but volumes are still 10% lower in June 2009 than last year,5 even though
exporters are less affected than non-exporters by the current economic
situation.
• G
 rowth prospects in trade for the UK for the next two years are expected to
recover more quickly than other aspects of the economy.6 Most forecasts
project a slow recovery in 2010 and some 55% of UK Trade & Investment
(UKTI) clients expect the percentage of their overseas sales to increase over
the next year.7

The recently published World Bank “Doing Business” Report 2010, a well respected
international comparator, ranks the UK 5th in the world overall in terms of business
environment, and 1st in Europe. The UK has also risen several places to 16th in the world
(8th within the EU) for ease of trading across borders, and other international studies
place the UK even higher. We want to improve further and will continue to make use
of international indices to identify what more we can do to make trading across the UK
border easier.
This Action Plan is a comprehensive analysis of procedures and practices at the UK border
and makes strong recommendations for specific actions to reduce the cost of border
regulation, and place trade facilitation at the heart of the UK’s trade and border strategy.
Based on research and consultation with business, the recommendations are designed
to ensure that UK borders stand comparison with the very best trade regulatory regimes
elsewhere in the world. This is essential to the competitiveness of UK business in the
global marketplace.

1
Source: Office for National Statistics.
2
“Global Europe. EU performance in the global economy”, European Commission, 27 October 2008.
3
Source: WTO, OECD.
4
Source: UNCTAD.
5
Source: Office for National Statistics.
6
Source: HM Treasury, Budget Forecast for the UK Economy.
7
Source: UKTI.

3
Key elements include:
 n International Trade Facilitation Committee made up of high level officials from
• A
Government departments with an interest in border procedures, including HM Revenue
& Customs (HMRC), Department for Business, Innovation and Skills (BIS), Department
for the Environment, Food and Rural Affairs (Defra), Department for Transport (DfT) and
UK Border Agency (UKBA), together with UK Trade & Investment (UKTI) and SITPRO,
the UK’s trade facilitation body, to represent the interests of business. This committee
will look at trade facilitation across the piece, co-ordinating policy and overseeing new
initiatives to streamline UK border processes and minimise unnecessary regulation.
 evelopment of a UK vision for reducing burdens on traders in Europe, aimed at
• D
fostering UK principles of risk-based regulation and administrative burden reduction
in the EU institutions. EU legislation accounts for 94% of the regulatory burdens on
UK trade. A targeted and co-ordinated effort at EU level could considerably reduce the
costs of such regulation – and improve the operation of the Single Market.
• E
 stablishment of UKBA, with its wide powers and objectives and a large frontline
presence, as the agency driving practical co-ordination at the border of the many
regulators currently carrying out on the ground trade enforcement. This will take place
at the strategic level and through the role of lead officials from UKBA working directly
at UK ports and airports.
• A
 new dynamic approach to completion of the UK’s International Trade Single Window
(ITSW) – in a step-by-step manner and using as far as possible, existing trade systems.
Practical demonstration pilots will be established to explore the feasibility of achieving
the ultimate goal of a single electronic interface for all trade documentation with all
UK border regulators.
The aims of this Action Plan are to:
a) make a real difference in reducing border regulatory burdens on business and
making trade easier;
b) achieve long-term, active participation of the business community in assessing
regulatory practices at UK borders and in enabling an ongoing process of
improvement and reform;
c) ensure recognition by Government and its agencies of the importance of trade
facilitation and promote its key role in the delivery of regulatory objectives; and
d) secure ongoing improvement in the standing of UK border processes against leading
international indices, such as the World Bank “Doing Business” Report.
A separate report by SITPRO on its recent dialogue with business, “Keeping Goods
Moving”, is published alongside this report.8
Feedback on matters of border regulation or practice is welcomed. Businesses may leave
comments at the SITPRO website.9

8
“Keeping Goods Moving”, 2 December 2009, http://www.sitpro.org.uk/regreview-keepinggoodsmoving
9
http://www.sitpro.org.uk/regreview-feedback

4
Chapter 1: Improving procedures at UK borders
Introduction
1.1 T
 rade regulation, and consequently border co-ordination, is highly complex.
Major issues to be considered include the number of different regulators from whom
clearances must be sought; the intersection of national and international rules; and
the interaction with private sector systems run by port authorities.
1.2 The establishment of the UK Border Agency (UKBA) as a full agency earlier this year
has given an opportunity for the development of innovative new ways of working at
the border. The Security in a Global Hub10 Review examined this issue in depth.
1.3 A more co-ordinated approach to border management could have significant benefits
to Government and business through:
• targeting regulatory resources to have the greatest impact;
• c o-ordinating activity at each port and creating more joined-up intelligence
processes;
• improving the experience of business in bringing goods across UK borders;
• striking the right balance between control and facilitation of legitimate trade;
• linking border work to the wider Government agenda through the response to
new and emerging threats and issues; and
• improving engagement with stakeholders and making their interaction with
Government easier.

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


• O
 pportunities are being explored to enable routine inspections (such as by
UKBA) to be used to avoid the need for checks by other regulators (such as
Vehicle and Operator Services Agency ) where the purpose of inspection is
non-technical/non-specialist and this can be justified in proportionate
risk terms;
• T
 he existing agreement for the Food and Environment Research Agency
(FERA) and Rural Payments Agency’s (RPA) Horticultural Marketing
Inspectorate (HMI) to cooperate at the local level to avoid unnecessary
double inspection of the same goods by both agencies. HMI carried out an
estimated 2,200 fresh produce quarantine inspections for FERA in 2008.
The agencies work together to enable the required dual training;
• T
 he Association of Port Health Authorities actively fosters engagement with
other regulators at the local level, including regular meetings with port users
and drawing up Memoranda of Understanding with UKBA; and
• R
 egular independent review of regulatory authorities at the border in line
with the recommendations of the Hampton Report.

10
“Security in a Global Hub – Establishing the UK’s new border arrangements”, 25 July 2007,
http://www.cabinetoffice.gov.uk/border_review.aspx.

5
Analysis
UKBA
1.4 The creation of UKBA has demonstrated how, through effective integration of
border arrangements, Government can reduce and rationalise the number of its
interventions in the sphere of passenger travel. Some of these lessons could be
usefully applied to goods. UKBA has found that specific agreements, such as
Service Level Agreements (SLAs) and Memoranda of Understanding (MoUs), can be
useful in setting out clear bilateral obligations. For example, UKBA’s SLA with Defra
provides a practical mechanism by which it can act on Defra’s behalf in the detection
of illegal products of animal origin. UKBA will look to establish additional agreements
wherever benefits can be identified for its work.
1.5 Additionally, UKBA has created the role of lead officials for ports and airports.
These individuals act as the single point of contact for all immigration and customs
business at each port. They lead engagement with port operators and other delivery
partners (such as the police) and negotiate SLAs with port operators.

Service Level Agreements (SLAs)


SLAs with port and airport operators are a statement of UKBA’s intention to
work closely with operators on a range of issues and provide a framework
for deepening co-operation and understanding. Importantly, they also commit
both parties to making real improvements in performance and delivery for
the benefit of customers. They also provide a consistent platform for work
with key stakeholders. Port operators have said they value the SLAs and that
the negotiation and signature process has improved their relationships with
UKBA. They now feel more engaged in what UKBA does and how it works at
the border and, as a consequence, have greater confidence in the Agency’s
partnership approach.
As an example, Stansted has built an action plan around greater use of joint
working groups to tackle issues and an overall partnership ethos aimed
at improving the border experience. This has led to increased sharing of
information and better forecasting; a much greater understanding of the
respective business objectives and requirements; and quicker and better
reactions to risks and opportunities as they arise.

International Trade Single Window


1.6 A long-standing proposal to simplify goods procedures at our ports and airports has
been the vision for a single electronic interface for all trader documentation with all
UK border regulators (an International Trade Single Window or ITSW). This supports
the Government’s commitment to service transformation which seeks to streamline
processes and improve the efficiency and effectiveness of its transactions with its
customers by designing services around the needs of citizens and businesses.
1.7 An ITSW would reduce the regulatory burden on traders by centralising electronically
the submission of documents required for import and export. For some years,
a project to implement a Single Window in the UK has been run under the oversight
of the BusinessLink International Trade Theme Board (chaired by HMRC and
involving representatives from border regulators with SITPRO and UK Trade &
Investment (UKTI) representing business).

6
Example of International Trade Single Window Transaction (ITSW)
• A
 pilot of the Automatic Licence Verification (ALV) system for imports (from
third countries) of plants, flowers and fruit/vegetables, delivered by the
Single Window project, is providing an electronic link between the RPA/FERA
PEACH system and HMRC’s main CHIEF system. This means that the RPA/
FERA consignment release decision is transmitted electronically and in near
real time directly into CHIEF, which reduces customs clearance times for
FERA and RPA regulated produce from 2 hours to 15 minutes and reduces
the administrative burden on importers/agents.
 ull roll out of this system is scheduled for early 2010. Benefits to traders are
• F
conservatively estimated at £1.7million per annum.
• T
 he long-term intention is to extend the integrated ALV system to include
imports (from third countries) of live animals, animal products and high risk
food products – benefits to traders of doing so are conservatively estimated
at £1.1million per annum.

1.8 There are currently a number of practical difficulties related to the completion of the
Single Window project in the UK. These include: the continued requirements (or EU
legal obligations) by some regulators to prove authenticity through paper documents,
different existing computer systems within Government departments and agencies
and the sheer complexity of developing a fully comprehensive electronic package
taking account of all regulatory and business requirements.
1.9 A separate document published alongside this Action Plan, ‘A New Conceptual
Model for ITSW’, explores different means by which the aims of the Single Window
might be achieved. This would involve:
• C
 loser integration of commercial and regulatory systems, enabling data to be
shared in the most effective way between business and Government. This would
include the principle of ‘straight through processing’ which would seek to reuse
data already held for commercial purposes;
• A
 market driven approach that would see the private sector developing systems
to meet their own business case, enabled by standardisation of Government
interfaces and some integration of back-office processes; and
• Exploiting developments in technology that would address traditional barriers,
such as the reliance on paper certification.
Action
1.10 UKBA Co-ordination: UKBA will work to consolidate and strengthen the
co-ordination of border controls and policing at ports by improving the efficiency
of requirements for multiple clearances and, where necessary, inspections. That
includes completing the roll out of a new operating model after testing at model
ports; pursuing a programme of ‘active enhancement’ with ports policing; and
seeking new ways to join up Government work at the border. Effective co-ordination
will be achieved partly through UKBA’s regular fora for engaging with other
regulators, but also through the use of tools such as formal agreements to clarify
roles and expectations.

7
1.11 To reflect this strategic joint working at a port level, UKBA will develop the role of
lead officials at ports. This will include a more coherent role as a primary contact
for all immigration and customs work at each port; a strong partnership with port
police; and being a key figure in bringing about cooperation between Government
agencies. Such a single point will enhance levels of service and best practice
through:
• a iming to reduce the UKBA footprint at ports by consolidating immigration and
customs buildings, where the infrastructure allows;
• s treamlining processes by implementing a new operating model to remove
duplication;
• creating MOUs with local police forces to share resources and coordinate activity;
• f acilitating work with other border agencies to see how they can work together in
secondary examination areas where space allows;
• in ports where space is at a premium, working closely with port operators to
consider how to incorporate longer-term Government needs into the design,
development and management of ports;
• s haring information and intelligence to maximise the value of all border regulators’
systems and minimise the number of data requests made on traders; and
• d
 eveloping a Local Intelligence Model with partners to deliver a more cohesive
approach to identifying costs, risks and threats which impact on the operation of
individual ports.
1.12 ITSW: A comprehensive, web-based information system for traders will move
towards completion. This project will also take a progressive approach to
electronically enabling further trade transactions and clearances with border
regulators on the basis of identified priorities for business.
1.13 Work on this project will need to be co-ordinated with other Government initiatives in
the field of electronic and digital interface with business. In particular, the “Business
Identity Management Strategy”, due to be published by the end of this year, aims
to agree minimum data requirements for Government and also considers how
each business might be given a unique identifier. The ITSW will also support the
Government’s Digital Britain Report which includes a commitment to the digital
switchover of public services from 2012.11

Business Case for Single Window


A fully-functioning Single Window could bring a number of benefits for both
business and Government. These include reduced administration costs,
improved clearance speeds and improved compliance and risk-management.
It is difficult to quantify these benefits, and many of the gains will depend on a
move away from paper-based certification by regulatory authorities. However,
using plausible assumptions, an initial analysis by BusinessLink of the more
readily quantifiable benefits suggests that the potential gains could be in the
region of £100m – £200m annually. Against this, there would need to be
further Government investment in adapting existing computer systems. Further
scoping work will be carried out to understand more fully the scale of both
these costs and the anticipated benefits to traders.
11
“Digital Britain: Final Report”, June 2009,
http://www.culture.gov.uk/images/publications/exsumchpt9_digitalbritain-finalreport-jun09.pdf.

8
1.14 Primary Authority Scheme to be extended to address the perceived
inconsistent application of regulations by Port Health Authorities: The Local
Better Regulation Office’s Primary Authority scheme12 – which was launched on
6 April 2009 – is a positive step towards a more business-friendly and less
bureaucratic arbitration procedure. It provides business with the opportunity to
obtain expert opinion on local authority enforcement matters from a preferred
local authority for a small fee and offers a mechanism for issues to be reconciled
by recourse to expert opinion. It is hoped that the Primary Authority scheme will
substantially reduce inconsistent interpretations of regulations by differing Port
Health Authorities. The Government will support high level pilots of this scheme’s
application to Port Health Authorities at Tilbury and Liverpool.

Costs and Benefits of the Primary Authority Scheme


The Government’s Better Regulation Executive (BRE) has produced a tightly
drawn cost/benefit analysis of the wider Primary Authority scheme over the
next 5 years to 2014.13 BRE’s figures are based on participation by 200 Local
Authorities and a figure of 30,000 businesses trading across Local Authority
boundaries in the UK. Around 80 Local Authorities carry out Port Health
regulatory enforcement practices in the UK, some 40% of the number of
estimated participating Local Authorities.
These figures estimate net benefits to business of between £18.9 and
£58.4 million based on a range of 700 to 1100 partnerships. Benefits to
Local Authorities are estimated at between £10.3 and £20.8million.
A large number of partnerships are expected to be between businesses
importing those products caught by Port Health’s regulatory remit (meat, fish,
pet food and nuts) and local Port Health Authorities. This will mean that a
significant portion of the benefits associated with the wider Primary Authority
programme will be accrued by businesses directly involved in international trade.

1.15 Correction of Documentary Errors: The meat and fish trades consider demurrage
overheads and loss of earnings potential caused by documentary issues to be one
of the highest costs to their trade. Such documentary issues include inconsistencies
between animal health certificates and other border clearance documentation and
mistakes made by vets in the country of export.
1.16 Defra will explore, with relevant border agencies, means both of reducing
documentary errors and introducing regulatory flexibilities in dealing with such errors
where they occur by honest mistake. This could include, for instance, accepting
faxed letters of correction to third country certificates in certain circumstances.
Such flexibilities will need to be in line with EU legislative requirements and
consistent with essential regulatory objectives.

12
The role of the Local Better Regulation Office (LBRO) (http://www.lbro.org.uk/) is to improve local authority
enforcement of environmental health, trading standards and licensing obligations, reducing burdens on businesses
that comply with the law while targeting those who flout it.
13
Impact Assessment of Statutory Instruments Implementing the Primary Authority Scheme, March 2009,
http://www.berr.gov.uk/files/file50501.pdf

9
Costs of Delay Due to Port Health Officers Being Unable to Accept
Certification Letters of Correction Electronically
The estimated annual costs of delay to meat containers awaiting original
certification correction letters comprise:
£
• Quay rent, refrigeration and demurrage 68,000
• Diversion of containers through non-UK EU ports
(estimated 176 containers x £1,500) 264,000
• Total estimated cost 332,000
These figures suggest an estimated saving of £332,000 to the meat import
industry alone could be achieved from the allowance of Certification Correction
Letters by electronic means. This is a conservative estimate which does not
account for loss of potential revenue or opportunity caused by delay.14

14
Source: International Meat Traders Association (IMTA).

10
Chapter 2: Customs – at the heart of international trade
Introduction
2.1 Customs procedures affect every UK business engaged in international trade
with non-EU countries. For many years, the key objectives for HMRC, the lead
Government department, have been to collect the revenue due from import taxes
and duties (in 2007/08 it collected £2.5 billion in customs duty and £19.3 billion in
import VAT) while achieving the best balance possible between the facilitation of
legitimate trade and exercising the controls necessary to protect society and our
economy from a variety of threats. The responsibility for maintaining this balance
is now shared between HMRC and UKBA, but the focus and commitment remain
unchanged.
2.2 As part of its policy to improve trade facilitation at borders, HMRC:
• c onsults regularly with businesses via the Joint Customs Consultative
Committee (JCCC) on the introduction of new customs legislation, procedures
and operational matters;
• p
 rovides valued advice on forthcoming procedural and legislative changes in a
wide variety of regional meetings and business events through its International
Trade Development Liaison Officer network; and
• w
 orks in close collaboration with the international trade community to streamline
electronic processing capability of the customs business.

Customs Electronic Data Management – CHIEF


Since implementation in 1994, CHIEF (Customs Handling of Import and
Export Freight) has been widely acclaimed as a successful Government IT
development. Today the system provides an efficient and robust service to
businesses, handling over 99% of all customs declarations electronically.
This amounts to risk assessing in the region of 30 million declarations per
annum, with most goods being cleared within seconds as a result.

2.3 T
 hese efforts are recognised in the HMRC quarterly customer satisfaction survey,
which includes a dedicated section for international trade customers. For the
year ending 31 March 2009, the overall satisfaction rating of international trade
businesses dealing with HMRC was 82%, with improvements against all of the
key measures. In the World Economic Forum’s Global Enabling Trade 2009 report,
UK customs services were ranked 1st in the world (out of 121 countries).

11
Customs – A Fast Moving Environment
• O
 n average, 29 million UK customs declarations are processed per annum,
(22 million imports and 7 million exports); and
• Import declarations are received from around 160,000 traders.
Selection for examination or documentary check is the exception rather than
the rule in the UK.
 1.8% of import processes are cleared without customs intervention at the
• 9
border;
• 6% are selected for pre-clearance documentary checks;
• 2.2% are selected for physical examination; and
• J ust 1% of exported goods are selected for documentary checks prior to
clearance.
Clearance times: 95% of consignments selected for a documentary check are
cleared within two hours of the goods arriving and a valid customs declaration
being submitted. Inspections take on average:
• 30 minutes for fast parcel/ courier traffic;
• one hour for freight traffic; and
• two hours for container traffic.

Analysis
2.4 The long term international trade strategy for Customs in the UK was set out in
the 2001 Customs Blueprint. The effective administration of trade policy, revenue
collection, the collection and use of data in support of risk management and
admissibility remain the building blocks for ensuring that the economy and society
are protected and the interests of the UK’s international trade are well maintained.
The electronic customs business approach, the development of the trusted
business scheme (Authorised Economic Operators or AEOs) and mutual recognition
agreements for this scheme with Europe’s key trading partners are key components.
Action
2.5 The Customs Blueprint has been refreshed in 2009 with input from
international business stakeholders. The final version of the new Blueprint was
published on the HMRC website in September 2009.
The refreshed Blueprint recognises the value of the commercial supply chain in
supporting these developments and, as these supply chains improve in efficiency
and security, HMRC is seeking to work in partnership with businesses to enable
Customs to:
 ather information relating to the international movement of goods as far
• g
upstream as possible;
• collect data only once but use it many times; and
• a ssess the risk early in the supply chain to allow a timely, better placed and most
appropriate response.
Suggestions for improvements to the way in which Customs specialist advice is
delivered will be considered as part of the ‘Customer Understanding’ work being
taken forward under the revised Customs Blueprint.
12
2.6 EU Modernised Customs Code (MCC) implementing provisions: Consultation
with business identified a perception that the MCC is a step backwards in trade
facilitation terms and that existing simplifications are being lost. But the MCC
provisions are not all focused on achieving simplification; harmonisation is a key
driver too. Customs is working towards a common approach so that businesses can
rely on consistency and certainty in the application of procedures throughout the
EU. At the same time, harmonisation may hold cost implications for businesses.
The aim is to keep to an absolute minimum any increase in burdens or loss
of facilitation, and to continue to explore ways to secure new simplifications.
We welcome the support of the UK trade associations and their European trade
counterparts in lobbying for these aims.
2.7 Over time, harmonisation should make it easier to implement developments such
as self-assessment (periodic declarations akin to VAT returns), systems-based
controls and centralised clearance (allowing businesses to deal with all their customs
administration in one Member State).
2.8 Online tariff: Since this went live, it has received considerable trade support and
positive feedback, but it is recognised that additional development is needed.
A review conducted in partnership with BusinessLink has led to some improvements
to the system’s performance. Further changes will be made as and when
opportunities arise.
2.9 Intrastat: Since Intrastat was first introduced, there have been a number of changes
to make life easier for businesses. The UK continues to work with the EU governing
body, EUROSTAT, to achieve further simplifications, for example by pushing for
closer links between Intrastat and EC Sales list collection. Thresholds are reviewed
annually to restrict the number of businesses required to provide the information
at the minimum level to comply with legislation. In the longer term, the European
Commission is examining the possibility of Single Flow which would allow for the
collection of information on either dispatches or arrivals only. There are, however,
a number of issues to resolve before Single Flow becomes a viable option.

13
Chapter 3: Committed to progress
Trade finance
Introduction and analysis
3.1 World trade depends heavily on trade credit, which is an important source of
short-term financing and a significant tool to finance business growth. Some 80 to
90 percent of all global trade transactions are estimated to rely on some form of
financing, such as loans or guarantees. One result of the current financial crisis is
that access to affordable trade finance has been constrained and the cost of trade
finance has increased substantially compared to the period pre-crisis. In parallel,
there has been a reduction in trust between firms.
3.2 In response, the G20 London summit in April 2009 agreed to ensure at least $250
billion in trade finance over the next two years to help reboot global trade through
export credit and investment agencies and through the Multilateral Development
Banks (MDBs). The September 2009 G20 Pittsburgh summit welcomed the swift
implementation of the $250 billion trade finance initiative.15 In the EU, export credit
insurance schemes have been introduced in Denmark, Finland, Germany, the
Netherlands and Luxembourg (which will run until December 2010).
Action
3.3 A working capital scheme was implemented and includes a trade credit insurance
top-up scheme. Designed to increase the amount of lending on offer, the working
capital scheme provides guarantees covering 50 per cent of the risk on existing and
new working capital portfolios 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 cover
to the original level or to double the amount they are able to obtain from the private
sector up to the value of £1million (whichever is the lower). In 2008, 14,000 UK
companies bought trade credit insurance against supplies to over 250,000 UK
businesses as a guarantee that their bills would be paid.

Working capital scheme – responding to industry feedback


To adapt to the needs of businesses, the scheme was
• e
 xtended in June 2009 to allow British businesses to apply for the scheme if
they suffered from reduced cover after 1 October 2008;
• f urther changed in August 2009, in particular: (i) the price of the top-up cover
was reduced from 2% to 1%, (ii) the £20,000 lower limit on top-up cover
was removed; and (iii) the upper limit on top-up cover was increased from
£1 million to £2 million.

3.5 The Export Credits Guarantee Department (ECGD) has powers under the
Export and Investment Guarantees Act 1991 to make arrangements with a view to
facilitating exports. Use of the word “facilitating” proved problematic because ECGD
cannot be said to facilitate exports if those exports have already been supplied.

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

14
3.6 T
 he Industry and Exports (Financial Support) Act 2009 came into force in May
2009 and amends section 1(1) of the Export and Investment Guarantees Act 1991
to widen support provided by the ECGD to include exports that have already taken
place. The amendment gives certainty to exporters that, if supplies had been made
at a time when, for example, ECGD was still undertaking its due diligence, they
would still be eligible for support, subject to the business being acceptable in terms
of its risk profile and due compliance with ECGD’s business principles. This was in
response to requests from business and has been broadly welcomed.
3.7 Letter of credit guarantee scheme (LCGS):16 Trade finance is relevant to the World
Bank report because the time taken to obtain letters of credit is one of the factors
holding back the UK’s standing in the trading across borders strand.
3.8 An ECGD consultation on a proposed letter of credit guarantee scheme closed on
3 July 2009 and the Government17 concluded that the scheme should be
introduced. The scheme was launched on 20 October 2009.18 The LCGS will take
the form of a master guarantee issued to participating UK banks, under which those
banks may cede to the guarantee, within limits, potential exposure which they would
incur by virtue of confirming letters of credit issued by overseas banks in favour of
UK exporters.
3.9 Review of the role of ECGD: As part of longer term trade finance strategy, Ministers
are considering a range of options to make ECGD a faster and more flexible supporter
of UK firms. These actions will ensure that a robust trade finance system is in place
in the UK to respond to any further global economic shocks. Equally importantly, they
will enable UK traders to thrive as the world economy picks up.
Transport and infrastructure
Introduction
3.10 Efficient, reliable and resilient transport networks are important to facilitating trade
and supporting economic activity. Congestion and delays in and around ports and
airports as well as on key inland routes impose significant costs on UK consumers
and 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 factor to
the UK’s ranking in the World Bank Report’s trading across borders indicator.
To improve international transport networks, the Department for Transport (DfT) has:
• c arried out substantive analysis to inform policy decisions about international trade
cargo journeys; and
• made substantial funding commitments to facilitate these journeys.

16
Export Credits Guarantee Department – Consultation on the Introduction of a Product Guaranteeing Reimbursement
of UK Confirming Banks under Letter of Credit Arrangements, 8 May 2009,
http://www.ecgd.gov.uk/consultation_-_letter_of_credit_guarantee_scheme.pdf.
17
Government Response to the Public Consultation on the Introduction of a Product Guaranteeing Reimbursement of
UK Confirming Banks under Letter of Credit Arrangements, 7 August 2009,
http://www.ecgd.gov.uk/government_response_-_07-08-09.pdf
18
http://www.ecgd.gov.uk/index/news.htm?id=9073

15
Recent Trade Transport Project Funding Announcements
In November 2008, £300m was committed to speeding up the delivery of key
schemes that improve transport links to some of the UK’s most important
airports and ports.
• Improvements to the A180/A160 junction to enhance access to
Immingham Port.
• T
 raffic management measures to improve safety and reduce delays along
the A12 between the M25 and Ipswich, improving access to Felixstowe and
Harwich ports.
• T
 he South East Manchester relief road, to improve access to
Manchester Airport.
• E
 nhancements to the North London Line to enable increased movements
of rail freight on this important link to the Thames Gateway, London and
Haven Ports.
These schemes offer high value for money with strong international and
national productivity benefits. The recommendations of the Eddington study,
which highlighted the importance to the economy of the UK’s international
gateways, supported by the analysis of end-to-end journeys, have greatly
influenced the priorities for this investment.
In addition, a programme of managed motorway schemes was announced to
relieve congestion on key arteries of the national road network which are crucial
for the onward distribution of goods to and from the UK’s ports of entry.
Delivery of these schemes is subject to agreeing regional funding contributions
and to the completion of statutory planning processes.

Analysis
The End-to-End Journey
3.12 In order to identify where pinch points exist and to prioritise future interventions,
DfT – working with key industry stakeholders – has developed a suite of documents
which analyse end-to-end journeys through the UK’s key international gateways.
This analysis has included stages of the journey and processes that have not
previously featured explicitly in transport analysis, such as border controls or
security, presenting new opportunities for a more holistic approach to analysing and
identifying policy options.
3.13 On the international freight side, reports focusing on container freight and roll-on
roll-off (ro-ro) freight were published in December 2008 and an end-to-end analysis
of air-freight was published in May 2009. These documents provide a platform for
identifying key blockages in the transport system, prioritising policy options and
reinforcing the commitment to serious long-term transport planning for international
networks.

16
End to End Journey – Key Findings
• D
 elivery and regulatory responsibility is highly fragmented across the
end-to-end journey, with multiple public and private sector organisations
involved. This leads to potential coordination failures.
• D
 ue to the complexity of many end-to-end journeys, there is little
transparency of journey performance at a holistic level. Data is often
incomplete or collected on an inconsistent basis, complicating the task of
identifying pinch points and priorities for improvement.
• Inland transport to and from international gateways can be a significant
cause of cost and delay.

Port Infrastructure Planning


3.14 DfT recently approved the construction of a new container terminal at London
Gateway and Harbour Revision Orders for large scale expansion to Felixstowe/
Harwich and Teesport, as well as smaller facilities at Liverpool. Southampton, too,
is expanding container capacity within existing rights and powers. A further
application is pending for a deep sea terminal at Bristol Port, while an application is
expected shortly for a substantial increase in ro-ro capacity at Dover.
Should the consented schemes go ahead, the UK will be well placed to handle
projected container port demand to the year 2030.
Action
3.15 Delivering Better End-to-End Journeys: The DfT’s International Networks
Improvement Programme, building on the suite of end-to-end analyses will
develop options for tackling a number of the priority issues raised in the
published documents. The focus will be on improving the performance of existing
infrastructure by developing measures to improve coordination between delivery
partners and increase transparency across the end-to-end journey. Ongoing
improvements to existing transport networks will also be progressed.
3.16 National Policy Statement (NPS): The Ports NPS has recently been published
for public consultation and parliamentary scrutiny in accordance with the Planning
Act 2008. The NPS will provide a framework for decision making by the new
Infrastructure Planning Commission (IPC) by clearly setting out Government policy
on ports. The NPS will set the strategic agenda and criteria for deciding nationally
significant port developments in the coming years. The new planning regime for
nationally significant infrastructure will result in faster and fairer planning decisions.
3.17 Guidance for developers: In April 2009, the DfT released guidance19 for developers
required to provide financial contributions to the cost of nationally significant
infrastructure developments.20 The guidelines seek to provide clarity on the principles
DfT applies when negotiating developer contributions to transport infrastructure for
these projects (i.e. transport links to ports and airports). The aim of the guidance is to
ensure less confusion in future and a fair and efficient way of dividing costs between
developers and Government.

19
“Funding transport infrastructure for strategically significant developments – Developer contribution guidelines”,
April 2009, http://www.dft.gov.uk/pgr/regional/fundingtransportinfrastructure/.
20
Obligations under section 106 of the Town and Country Planning Act 1990 (as amended) and Section 278 Highways
Act 1980 Agreements.

17
3.18 The guidelines were written to address dissatisfaction on the part of industry
stakeholders. Previous arrangements were seen by investors as protracted, ad hoc
and difficult to predict.
Export control
Introduction
3.19 Export control is politically sensitive, and closely scrutinised by both Parliament
and the wider stakeholder community. The Export Control Organisation (ECO) aims
to manage responsibly transfers of strategically controlled goods and technology
(that could, for instance, be used in the manufacture of military equipment) without
unnecessarily impeding legitimate trade. In 2008, the value of contracts signed for
the export of defence goods and services was in excess of £4.2 billion.21
Analysis
3.20 During Spring/Summer 2009, the ECO commissioned an independent survey
conducted by RSM,22 an independent research company, with the ultimate aim of
helping the organisation to improve its contribution towards:
• increasing UK competitiveness; and
• raising awareness of, and compliance with, strategic export controls.
3.21 The specific research objectives of the RSM survey were to:
• measure current compliance with export regulations;
• measure awareness and perceptions of dual-use export controls; and
• h
 elp develop communications and implementation strategies to increase
awareness of ECO and compliance with the relevant rules.

RSM Survey of ECO


The survey involved over 500 controlled telephone interviews with companies
identified as being involved in manufacturing and/or exporting goods within
standard industrial classification (SIC) codes likely to include dual use goods and
technology.
This survey showed positive findings for respondents’ impressions of the
Organisation, levels of understanding of export control rules and compliance.
For example:
• O
 f those who expressed an opinion, 87% of respondents had a favourable or
very favourable overall impression of ECO.
• 8
 8% of respondents felt that business in the UK took compliance with
export controls seriously or very seriously.
• 8
 7% of current licence holders thought the cost of compliance with export
controls was what they would expect or lower.

Source: Voluntary provision of data from UK defence companies to UKTI Defence & Security Organisation (DSO).
21

Given the voluntary nature of the survey, it is expected that this will not represent the full value of defence goods
agreed for sale in that year.
22
http://www.rsm1.com/

18
Action
3.22 The ECO is committed to ongoing improvements to its service. More specifically,
ECO will follow up the results of the surveys in the following ways:
Communication
3.23 ECO training and awareness activities: These will include:
• c ontinuing awareness raising events and a chargeable tailored training service to
business – seeking to target these more effectively and to co-ordinate with other
border regulators;
• innovative delivery of guidance materials through the use of various media, such
as webcasts; and
• launch of the Export Control Skills Academy in Autumn 2009 to bring together
the various strands of internal, external and cross-Government training under
one “brand” and to further promote and advertise training and awareness
opportunities.
3.24 Customer Service Excellence – plans to apply for accreditation will help ECO in
its aim of becoming the best organisation of its type in the world and a model of
service delivery in Government. In particular, service transformation plans will be
developed to demonstrate how effectively the service is being delivered through
various channels (e.g. face to face, websites and contact centre) including the
applications process via SPIRE, the ECO’s online licence application system, and
create a strategy for ongoing improvements to service delivery.
Risk management
3.25 Open licensing – this will continue to be used where appropriate to reduce the need
for exporters and traders to apply for individual licences. The ECO will ensure that
guidance on how to assess the business case for an open individual export licence
(OIEL) is fully publicised to staff. Similarly, a fast track system will continue to be
used for processing low risk applications not appropriate for open licensing.

19
Chapter 4: The informed trader
Information and communication
Introduction and analysis
4.1 Business must have access to impartial information and advice about the rules and
procedures that apply to imports and exports of goods to or from the UK. Equally,
in developing and implementing regulatory regimes, Government must have regular
dialogue with those who will be affected. A considerable amount of resource is
already expended on these matters:
• M
 any border regulators already have in place dedicated stakeholder engagement
fora (e.g. the Joint Customs Consultative Committee communicates the business
view to HMRC on regulatory issues);
• S
 upport is available through UKTI for both experienced traders and those seeking
to enter the international trade scene for the first time including:
– over 300 specialist trade advisers in the English regions;
– access to UKTI services through the Devolved Administrations of Scotland,
Wales and Northern Ireland;
– 1,300 export and investment advisers in 96 overseas markets in UK Embassies,
High Commissions, Consulates and Trade Offices; and
• UKTI’s Enquiry Service and the UKTI website;
• H
 MRC’s International Trade Development Liaison Officer (ITDLO) network
provides advice to businesses on forthcoming Customs changes and there are
HMRC Business Advice Open Days; and
• C
 o-ordination of cross-Government web-based information and advice to business
has been led by the International Trade Theme Board as part of the BusinessLink
single website programme

The International Trade Theme Board


Winner of the 2008 e-Gov award for its focus on the delivery of coherent web
based information and advice to traders which has included:
• a round 180 information guides transferred to BusinessLink website,
approximately 40-50 new guides to move this year and an ongoing
commitment to transfer relevant trade-related Government information to
this site by end of March 2011;
• t ransactional tools such as the online customs tariff and electronic
application for Authorised Economic Operator status which are already
available. Deliverables for 2010 include the full roll out of the Automatic
Licence Verification System (ALV) for imports of plants/flowers/fresh produce
and the facility for Common Agricultural Policy (CAP) licences to be applied
for online, via the BusinessLink website;
• p
 lans underway for the addition of non-Government trade compliance
information to the BusinessLink programme (e.g. local authority Port
Health information).

20
4.2 Deployment of information and advice on international trade practices and
procedures, nevertheless, would benefit from being more tightly co-ordinated and
focused. It is also timely to review the quality and appropriateness of this information
and advice.

SITPRO – The UK’s Trade Facilitation Agency


SITPRO is the UK’s trade facilitation body, a non-departmental public body
funded by the Department for Business, Innovation and Skills. For almost 40
years, SITPRO has been at the vanguard of efforts to make international trade
easier through the application of standards and a collaborative approach to
addressing trading issues.
SITPRO works closely with both the business community and Government
bodies to reduce the costs of trading internationally. Its activities range from
‘grass roots’ problem-solving and assistance services for UK businesses to
high-level input into national and international policy efforts on behalf of traders.
SITPRO acts as expert interlocutor between business and Government on trade
facilitation issues, promoting workable solutions to trading issues that will meet
the needs of the business community.

Action
4.3 Overseeing the development of a coherent strategy on trade information and
advice for business. The International Trade Theme Board has been commissioned
to establish:
• where businesses go for advice (web, telephone helpline, face-to-face);
• how effective these channels are and how they might be improved; and
• e
 nhance the promotion of the assistance and information available to business
from Government – particularly the BusinessLink website – through improved
marketing and monitoring of usage of the site.
The Board will be supported in these tasks by SITPRO to ensure that business is
fully engaged and that emerging conclusions from Government are tested against
the perceptions of business.
Trade as a career
Introduction and analysis
4.4 It is important that businesses have well-informed staff and are able to employ
skilled professionals with a broad understanding of international trade practices and
procedures. Employees entering the international trade industries are best equipped
when they have a thorough grounding in the procedures and practices used
throughout the supply chain.
4.5 W
 ide-ranging vocational qualifications are, therefore, important to maintain a
professional workforce. Significant progress has already been made during the
preparation of this Action Plan:

21
a) National Occupational Standards (NOS) for International Trade and Logistics
Operations (ITLO) have been developed by Skills for Logistics. A level 2 QCF
(Qualifications and Credit Framework) qualification, based on these NOS, will
soon be offered for examination by the EDI and ABC awarding bodies who have
worked closely with Skills for Logistics in its development. The development of
the course has been assisted by respected international trade training providers.
The new Level 2 ITLO qualification will be offered as training to Government
officials joining Departments working on international trade matters at regulatory
and policy levels to ensure that they have a clear understanding of business
practices relevant to their work.
b) The Government is working with Skills for Logistics, qualification-awarding bodies
and training providers to develop a Level 3 ITLO qualification to bridge the gap
between the existing Level 2 course and more specialised higher qualifications.
This project is in the process of canvassing views from sector employers and
experts with the aim of creating units and qualifications for launch in 2010.
The intention is to develop a coherent qualification open to all learners and
employers which supports wider skills policy objectives.
c) Skills for Logistics are promoting the use of trade scenarios (such as the ‘Made in
China’ resource (see table below)) as a learning method in Secondary Schools to
give 14-16 year olds a taste of the international trade sector. Government is fully
supportive of such initiatives.

Delivering Your Future’s ‘Made in China,’ a curriculum resource for 14 to


16 year olds
‘Made in China’ is a curriculum resource which supports the delivery of
Maths and Enterprise teaching in schools. It focuses on the journey of an
MP3 player from its manufacture in China to the point of sale in the UK. The
extensive piloting of this resource has now ended and the feedback that has
been received from Northern Ireland, Scotland, the North West and the East
Midlands has been rationalised. Comments from the teachers and pupils have
helped to refine the materials and as a result certain important new features
have been added to the materials. This resource will be completed by the end
of October and launched in November. It will then be available for schools to
use throughout the United Kingdom.

4.6 Much international trade training is currently offered through short courses.
These allow employees to build their knowledge of specific processes and
procedures required for their jobs and allow businesses to update their knowledge
as and when procedures change. However, it is not always easy for traders to
identify training of the type and quality that they require.

22
The Benefits of Trade Learning and Skills
Statistics: Evidence suggests that people who gain an NVQ2 (now QCF2)
between the ages of 26 and 34 on average enjoy a 22% increase in earnings
compared to those who do not. Moreover, people who attain an NVQ2 as their
highest qualification are 14% more likely to be employed than people whose
highest qualification is below Level 2, and people who attain an NVQ3 (now
QCF 3) as their highest qualification are 17% more likely to be employed than
people whose highest qualification is below Level 3.
Case study: Small pilot schemes have taken place in Felixstowe, bringing
international trade, one of the major employers in the local area, into GCSE
programmes for some students. At Deben High School, eight students
undertook the course with assistance from ITS Training Services. Of these
eight, six have received offers of employment within the international trade
area and one is now employed by the training provider. Each of the six
employed students is now embarking on a Level 2 qualification with the
support of their employers.

Action
4.7 Promotion of international trade as a genuine career path: The Government
will work alongside SITPRO to ensure that the range of training tools and
qualifications available recognises the importance of trade as a profession essential
to the UK economy.
4.8 The Government will explore options for a central scheme to accredit short
courses in key international trade practices from competent training
organisations. SITPRO will be looking into this issue and maintaining an open
dialogue with Government as regards their findings.
4.9 The Government will develop a programme to promote professionalism in
international trade, both in the business community and within Government.
Through its new ‘Backing Young Britain’ and Graduate Talent Pool programmes,
it will offer opportunities for internships with trade regulators and will encourage
trade service providers such as freight forwarders and ports to offer similar
opportunities.

23
Chapter 5: Policy co-ordination and promoting better regulation
in the European Union
Introduction
5.1 A clear understanding of the current reality is an essential first step towards creating
a better trading environment. This requires sound analysis of a range of data
relating to the UK’s position. With this in mind, analysis was undertaken to establish
the total estimated administrative burden on business from significant trade
regulations in the UK (almost £1 billion annually) and to identify the departments
with policy responsibility for each regulation.23 This is summarised in the tables
and charts below. Customs figures dominate the table because of the high volume
of Customs declarations (22 million imports and 7 million exports annually) and
postal declarations (55 million consignments entering and 41 million leaving the UK
annually) rather than the unit cost.

Admin Burden of International Trade Related Regulations

DEFRA - 2% Others - 1%
DH - 5%

DFT - 15%

HMRC - 77%

23
Admin Burdens are the administrative costs to business of complying with Government regulation, estimated using
the Standard Cost Model. They reflect only part of the total cost of complying with regulation. e.g. they exclude costs
to business of time delays at the border while inspections take place. Further details can be found at http://www.berr.
gov.uk/files/file35995.pdf and http://www.hmrc.gov.uk/better-regulation/kpmg.htm. The estimates here relate to the
most significant regulations which appear to be related to international trade. In the case of HMRC for example, they
cover collection of excise tax at the border and Intrastat as well as customs regulations.

24
Department Percentage of Burden Total Administrative
Burden
£million
HMRC 77% 769
Department for Transport 15% 145
Department of Health 5% 52
Department for 2% 17
Environment, Food and
Rural Affairs
others 1% 7
Health and Safety Executive <1% 3
Department for Business, <1% 3
Innovation & Skills
Forestry Commission <1% 0.2
Department for Culture, <1% 0.2
Media and Sport
Office of National Statistics <1% 0.2
Total 100% 992
5.2 The vast majority of the laws affecting the international trade environment in the
UK are negotiated and passed in the EU (estimated at 94% of all trade regulation
in terms of administrative burdens to business). The tables below show the
approximate proportion of UK trade regulation (in terms of administrative burdens)
arising from either directly applicable EU law (such as Regulations) or EU law with
some domestic discretion in implementation (such as Directives).

Admin Burden of International Trade Related Regulations


Domestic - 6%
EU Domestic Discretion - 1%

EU Directly Applicable - 93%

25
Origin of Regulation Total Admin Burden %
£million
EU Directly Applicable 927 93
EU Domestic Discretion 11 1
Domestic 55 6
Total 993 100
Analysis
5.3 All agencies operating at the border should:
• include trade facilitation within their core regulatory objectives and be able to
demonstrate how this objective is being fulfilled;
• c onsult fully with business and prepare impact assessments in relation to
proposed trade regulations, reducing negative impacts on the flow of trade and
reducing costs for Government; and
• b
 e subject to regular review in line with the Hampton principles to ensure trade
regulation is being enforced proportionately.

Consultation in Action – The Benefits to Trade of Government Liaison


• N
 ew EU marketing standards came into force on 1 July 2009. The
Horticultural Marketing Inspectorate (HMI) has taken a trade facilitative
approach that has confirmed that General Marketing Standard (GMS)
products (such as cabbage and leeks) will not have to be entered onto the
PEACH system.
• T
 he fresh produce industry estimates cost savings of £250,000 per annum
arising from reduced time entering applications onto PEACH. Additionally,
when the impact across the wider sector is considered, Defra estimates that
benefits to industry in the region of £1.5 million per annum will be achieved.
• M
 eaningful collaboration with the industry was achieved, including
workshop/road-shows using local HMI inspectors to lead discussions in
order to understand trade concerns and wish lists and to report back in
plenary. This paid dividends in feedback, education, and formulating policy;
critically assuring industry buy-in.

Better Regulation – the UK Agenda


5.4 In the autumn, the Government published a forward regulatory programme through
its Better Regulation Executive (BRE). Additionally, the Government will set up a new
external Regulatory Policy Committee whose role will be to advise on whether it is
doing all it can to assess accurately the costs and benefits of regulation. Building on
the work of the Hampton Report, this body will also advise on whether regulators take
appropriate steps to ensure their work is risk based.
5.5 These steps build on the Government’s announcement in 2005 that it would cut the
administrative burdens of regulation by 25 per cent by May 2010 – a target which
it remains on course to meet having already delivered £1.9 billion of savings to
business. Additionally, the Government will adopt new simplification targets for 2010
and 2015 which will address all regulatory costs on business.

26
Better Regulation – the European Picture
5.6 There are considerable benefits to the UK in being part of the European Union –
a Customs Union providing an active market for UK goods and a stronger hand in
international trade negotiations. It is, therefore, essential to ensure that there is
sufficient co-ordination and evaluation of the impact of EU proposals both between
the different trade-facing Directorates General of the European Commission and
between different Government departments in the UK and their EU counterparts.
Two key strands of work are already under way to address this:
• T
 he BRE and the Cabinet Office are working to influence the next European
Commission, on the importance of better regulation and the need to deliver on the
EU’s commitment to an administrative burden reduction of 25% by 2012; and
• T
 he Customs Blueprint places at the heart of its approach positively influencing
organisations and initiatives to maximise the opportunities for the EU to deliver
simple, easy-to-use, relevant and adaptable processes and procedures.

A closer look – the clothing and footwear sector


Annual sales of the UK clothing and footwear sector were £48 billion in 2008.
The sector represents:
• 4% of UK trade;
• 5% of non-EU trade;
• 8% of non-EU imports; and
• 30% of import and export declarations requiring certificates.
There is a large UK trade deficit:
• 73% imports are from non-EU countries – mainly developing countries; and
• 76% exports are sold within the EU.
Main concerns are regulations affecting extra-EU imports and intra–EU
exports. Issues relate to:
• Classification;
• Valuation;
• Rules of Origin; and
• Intrastat.
In terms of classification, there are 466 different clothing tariff lines, 85% of
which have the same duty.
Examples of regulatory costs reported by individual companies in the sector:
• £1.25 million = annual cost of compliance with trade regulation for one major
retailer;
• £600,000 = annual cost of customs declarations for one company;
• £100,000 = amount one company saved each year by doing its own customs
declarations rather than employing a freight forwarder;
• £100,000 = major retailer’s annual courier costs for sending origin
certificates;
• £15,000 – £30,000 = extra cost each year incurred by one company filling in
details for origin certificates at tariff line rather than header level;
• £600,000 = annual cost to one retailer for bank fees for duty guarantees;
• £15,000 =annual cost of Intrastat returns for specialist retailer; and
• £1.20 = cost per invoice of Intrastat returns for one company.
27
Action
5.7 It is essential to embed the better regulation initiatives, at both the national and
European level, in the specific field of trade rules and enforcement. This includes
building on the existing analysis of burdens on trade, identifying areas for reform or
simplification and ensuring that future proposed legislative measures do not impose
disproportionate costs on traders. Two specific measures are set out below to
achieve this.
5.8 International Trade Facilitation Committee: A cross-Government Committee
will be created, to be chaired by BIS with high level representatives from the
Government departments and agencies involved in international trade.
The Committee will drive best practice and root out unnecessary burdens. It will
have a wide remit to enhance international trade policy co-ordination by:
• C
 onsidering forthcoming EU and domestic legislation affecting trade and ensuring
that all cross-cutting impacts are addressed;
• Overseeing and promoting best practice at the border;
• Reviewing the UK’s standing against leading international comparators; and
• Ensuring effective implementation of this Action Plan.
To ensure that the Committee remains alive and responsive to business concerns,
the Committee’s Secretariat will be provided by SITPRO. Detailed terms of reference
for the Committee are set out in Annex A to this Action Plan.
5.9 Overarching vision for reducing burdens on traders in the EU: The changes set
out in the rest of the Action Plan will have limited benefit unless we can influence
the European Commission to put better regulation and administrative burden
reductions at the heart of the EU international trade agenda. We want to send a clear
message that changes need to be made now to an increasingly complex set of trade
rules. A fundamental simplification of those rules will reduce compliance costs for
businesses, errors and the opportunities for manipulation by the non-compliant –
bringing benefits and resource savings to authorities as well as to traders.
5.10 BIS, working with other Government and trade stakeholders, will develop a
vision for trade facilitation at the EU level and a strategy for delivering it. The vision
will encompass:
• C
 lear, agreed UK objectives for international trade regulation that all Government
departments and agencies can draw upon to inform their own lobbying,
influencing and negotiating strategies with the EU institutions;
• A
 strong emphasis on better regulation and on minimising administrative burdens
and costs on business;
• A commitment to working for a fundamental simplification of trade rules; and
• A
 n enhanced partnership with UK and EU trade bodies, matched by a
commitment from those bodies to work with the UK Government to achieve
common objectives.

28
5.11 The vision will include long term goals and its success will be measured as
much against future legislative proposals as against those already in train. The
supporting strategy will set out specific steps that Departments will take in their
discussions with the various Commission Directorates General to drive forward the
simplification agenda. The input from this Action Plan and the resulting framework
for all Government Departments engaged in international trade, along with trade
representatives, to pool ideas and efforts will be an important step forward.

Benefits of Trade Facilitation


Various estimations suggest that the cost of trade procedures may range
from 2% to 15% of the value of traded goods. The European Commission has
estimated that halving the cost of bureaucratic trade procedures may mean
saving around n300 billion a year worldwide for traders. A 1% saving in the value
of goods traded across UK borders would be worth almost £6 billion annually.
Tariff equivalents – costs arising from import delays – exceed the costs of trade
tariffs in every region of the world.24
Each day in transit for vegetables and fruit is equivalent to lowering their prices
by 0.9%.25

24
USAID, “Calculating Tariff Equivalents for Time in Trade”, prepared by Nathan Associates Inc, March 2007.
25
As footnote 24.

29
Chapter 6: International comparisons – how does the UK rank?
Introduction
6.1 Although a number of surveys make cross-country comparisons of the cost and
ease of trading, the results of these various surveys reflect differences in scope,
methodology and sample size. Some of the leading indicators are summarised in the
table below.

International UK Rank Scope and Methodology


Indicator (Year)
World Bank “Doing 16th (2010) Survey: time and cost of document preparation,
Business” Report letters of credit, customs clearance and technical
(Trading Across control, port and terminal handling, inland transport
Borders category) handling.
World Bank Logistics 9th (2007) Survey: based on seven factors – effectiveness
Performance Index and efficiency of Customs; quality of IT and
transport infrastructure, ease and affordability of
shipping; competence of local logistics industry;
ability to track and trace shipments; domestic
logistics costs; timeliness of shipments.
Global Express 1st (2008) Survey: based on 15 GEA customs barriers survey
Association (GEA) questions capturing different aspects of the
services offered by customs and related agencies.
The services include clearance of shipments via
electronic data interchange; and separation of
physical release of goods from the fiscal control.
World Economic 20th (2009) Survey, plus collation of other surveys, including
Forum: Global the three above: based on nine pillars, including
Enabling Trade Report market access; efficiency of customs; efficiency of
import-export procedures; transparency of border
administration; availability and quality of transport
infrastructure and border administration; availability
and use of ICTs; regulatory environment; and
security.
World Bank “Doing Business” Report
6.2 A
 major impetus for this Action Plan was the fact that the World Bank “Doing
Business” Report 2009 ranked the UK 25th in the world and 11th within Europe for
ease of trading across borders. This compared with an overall ranking of 6th for all
aspects of doing business. This trade ranking, and the slight deterioration in position
since the previous report (2008), surprised many businesses and commentators in the
UK, who recognised ours as one of the most trade-facilitative regimes within the EU.
6.3 The most recent “Doing Business” Report showed an improvement in the UK
ranking, up to 5th overall and 16th for the trading across borders category. In
particular, improvements were shown in the time taken to import or export. Whilst
this is to be welcomed and reflects Government’s ongoing work in this field, the UK
still comes behind a number of other EU countries such as Finland (4th), Denmark
(6th), Sweden (7th), the Netherlands (13th) and Germany (14th).

30
Analysis
6.4 The World Bank “Doing Business” Report trading across borders category makes
annual comparisons across 183 different countries using a business survey.
Like most World Bank “Doing Business” analyses, it seeks to capture the number
of processes involved and outcomes such as cost and time for business, in this
case for a standard import/export transaction. Covering so many different countries
each year means that it inevitably has to adopt something of a “one size fits all”
methodology, which does not always capture the fine-grained reality of trading on
the ground. It also means that the number of businesses included in the sample
tends to be relatively small. In the UK, for example, the results are thought to reflect
the views of only a handful of traders.
Independent analysis of World Bank report
6.5 In preparing the Action Plan, Middlesex University was asked by BIS and HMRC to
replicate the World Bank’s survey for the 2009 edition, but to improve the statistical
robustness of the results by interviewing a larger number and wider range of
companies and experts than the World Bank sample. A copy of the Middlesex Study
was sent to the World Bank as part of a joint effort with the Bank to improve the
robustness of the trading across borders category analysis. In relation to the 2009
Report, the key findings were:
• It is likely that the World Bank overstated the time for import/export trade across
the UK border: Middlesex estimate that it takes no longer than nine days to import
or export – and in some cases a lot less – compared with the 13 days found by the
World Bank.
• T
 he World Bank’s cost estimates were broadly correct for import and export.
However, as the report expresses costs in US dollars, the costs attributed to the
UK may partly reflect the dollar exchange rate prevailing in 2008.
• T
 he time taken to clear customs – an area where other surveys suggest the
UK performs well internationally (see above) – has only a small influence on the
trading across borders results.
• T
 he main influence on the UK ranking is the cost of and time taken for inland
transport and port handling, rather than trade regulation per se. Inland transport
and port handling account for approximately 70% of the cost and approximately
30% of the time delays associated with trading. Customs and technical controls
by contrast account for around 8% of costs and 15% of time delays.

31
Action
6.6 World Bank “Doing Business” Report: The UK Government takes the findings of
the trading across borders indicator seriously. It is an influential yardstick by which
businesses and potential investors judge the UK. We, therefore, propose to take
a number of important steps to understand, monitor and continue to improve UK
performance:
• O
 ur plan to establish an International Trade Facilitation Committee (see paragraph
5.8 of this Action Plan) will provide a forum for analysis and action in relation to
those elements of trading across borders which Government can influence.
This Committee will, in conjunction with BIS, use this and other surveys,
as part of a continuing review of the UK performance and a focus for policies to
reduce costs;
• M
 any of the recommendations in this Action Plan, particularly those relating to the
EU, trade finance and transport, address important elements of the trading across
borders category. They will provide concrete policies to help reduce the costs of
importing to or exporting from the UK;
• T
 he trading across borders ranking should be as representative as possible of
the views and experiences of UK business. We, therefore, aim to give more
publicity to the survey, which is conducted in the first quarter of each year, and to
encourage as many companies as possible to participate; and
• T
 he BRE is working across Government to continue to improve the UK’s ranking
in the World Bank’s “Doing Business” Report. The BRE will be working with
relevant departments to develop costed proposals in five regulatory areas
measured by the World Bank, including trading across borders.

32
Annex A: INTERNATIONAL TRADE FACILITATION COMMITTEE
Draft Terms of Reference
Mandate and background
1. The joint BIS and HMRC Action Plan (“Simplifying Trade Across UK Borders”),
which accompanied the Pre-Budget Report 2009, tasked the International Trade
Facilitation Committee with taking and enforcing decisions to improve effective
co-ordination between agencies responsible for regulatory requirements at UK borders.
2. International trade represents a significant proportion of GDP and it is crucial that
domestic trade regulation is as easy to comply with as possible in order for
UK-based firms to remain internationally competitive. Trade in goods is a big contributor,
with exports totalling £251bn and imports totalling £344bn in 2008. International
comparisons suggest that there is room for improvement in the UK framework.
For example, although the most recent World Bank “Doing Business” Report showed
an improvement in the UK ranking – 16th compared with 25th in the previous year – UK
still comes behind a number of other EU countries such as Finland (4th), Denmark (6th),
Sweden (7th), Netherlands (13th) and Germany (14th).
Objectives
3. The objectives of the International Trade Facilitation Committee are to:
a) oversee a proportionate and risk-based approach to trade regulation in the UK,
including horizon scanning of new regulations or regulatory developments;
b) shape and oversee delivery of a strategic UK “vision” to address border initiatives
emanating from the European Union;
c) develop a system of compliance cost assessment for all areas of border regulation;
d) create a system for identifying regulatory areas requiring improvement, and develop
action plans to implement the improvements identified;
e) develop a strategy for achieving effective cross-Governmental border agency
co-ordination, including the scope for achieving border regulatory synergies, and
monitor its implementation;
f) benchmark and share good regulatory practice by border regulatory agencies;
g) review UK standing on border regulation against key international comparators
(e.g. World Bank “Doing Business” Report); and
h) develop an agreed programme and timetable to ensure effective implementation of
“Simplifying Trade Across UK Borders”.
Scope
4. The International Trade Facilitation Committee should address the following areas:
a) regulatory burdens imposed in relation to trade in goods across UK borders by
domestic or European legislation or procedures and other international requirements;
b) the scope for increased provision by Government of information technology systems
to enable compliance with trade regulatory burdens.

33
Activities and tasks
5. The activities and tasks of the International Trade Facilitation Committee may include
undertaking or commissioning the following activities and tasks:
a) collection and appraisal of ideas for reducing trade regulatory burdens, in particular
through achieving regulatory synergies rather than considering individual regulatory
regimes in isolation;
b) identification and in-depth analysis of specific trade sectors;
c) consultation with business, both generic and sectoral (to include, if appropriate,
surveys of trader satisfaction);
d) comparisons with selected other countries’ approaches;
e) regular compliance cost assessments of different areas of border regulation;
f) examination of the annual World Bank “Doing Business” Report and Logistics
Performance Index and any other relevant indices; and
g) selective analysis of promising ideas for reform (including best practice in the private
sector), identifying those that could be implemented.
Outputs and timing
6. The Committee will issue a report of its activities annually.
Governance
7. The Committee will be chaired by a senior representative of the Department for
Business, Innovation and Skills (BIS, Trade Policy Unit). SITPRO, the UK’s trade
facilitation body, will act as Secretariat to the Committee.
8. In addition, the Committee will comprise senior representatives from HM Revenue &
Customs (Customs and International), HM Treasury, the Department for Environment,
Food and Rural Affairs (Defra), the UK Border Agency (UKBA), the Department for
Transport (DfT), UK Trade & Investment (UKTI) and SITPRO. Other relevant border
regulatory agencies will also be represented.
9. The Committee will aim to meet quarterly or as frequently as is necessary, to deliver its
objectives.
Measures of success
10. The success of the Committee will be measured against:
• w
 hether it makes a real difference in reducing border regulatory burdens on business
and making trade easier;
• a chievement of long-term, active participation of the business community in
assessing regulatory practices at UK borders and in enabling an ongoing process of
improvement and reform;
• e
 nsuring recognition by Government and its agencies of the importance of trade
facilitation and promote its key role in the delivery of regulatory objectives;
• o
 ngoing improvement of the standing of UK border processes against leading
international indices, such as the World Bank’s “Doing Business” Report.

34
35
Contact HMRC Email: intenquiries@hmrc.gsi.gov.uk
Phone: 0845 010 9000 Web: www.hmrc.gov.uk

Contact BIS Email: enquiries@bis.gsi.gov.uk


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

R
Printed in the UK on recycled paper containing a minimum of 75% post consumer waste.
Department for Business, Innovation and Skills. www.bis.gov.uk
First published November 2009. Crown Copyright. BIS/500/11/09/NP. URN 09/1464