What challenges does the corona crisis pose to world trade?
At present, many companies are struggling with the acute problems of the pandemic: loss of sales, liquidity problems, short-time work or even insolvency confront many companies with unprecedented problems. It will take a long time until the economic consequences of this pandemic are overcome. It is essential to counter the emerging tendencies of de-globalisation and to avoid further protectionist measures. Internationally integrated value chains must also be protected and again strengthened. Without international division of labour and cooperation, it will not be possible to overcome the crisis as quickly and sustainably as possible.
Which measures should the German government take to create customs relief for companies?
First things first, we should praise German customs authorities. The operative business, in particular the clearance of imports and exports, has been maintained almost unaffected by the crisis. Although our call for customs simplifications in the wake of the Covid-19 pandemic has been partially answered by the federal government with initial simplifications having been adopted, many necessary policies have not been fully implemented. Specifically, these include fundamental offsetting of the import turnover tax (VAT) as input tax, as well as the greatest possible facilitation of customs clearance for reliable companies, for example by extending deadlines or the electronic transmission of documents. There is also no general deferral of customs payments to date, due to restrictions within the Union Customs Code.
Can the Corona crisis lead to lasting simplifications in customs clearance?
The pandemic has exposed weaknesses in the current system and revealed opportunities for future improvements from which both the economy and the customs administration must benefit. Besides the immediate possibility of offsetting the VAT, an additional simplification is the further digitalisation of customs processes, for example through the complete digital replacement of previously paper-based freight and customs documents. Also, the practical implementation of Article 185 UCC (self-monitoring) in the form of a periodic self-assessment for reliable importers would offer the possibility for simplification on both sides.
What will the focus of the work of the Working Group on Customs and Trade Defence Instruments be in the coming years?
First, measures to deal with the Corona crisis are at the top of the agenda. A second priority is the future relationship with the United Kingdom: on one hand, the negotiation of a free trade agreement between the EU and the UK, and on the other, the operational introduction of customs processes in the bilateral trade in goods. In particular, the tight timeframe until the UK leaves the common market at the end of 2020 – unless the transition phase is extended – delineates a major challenge in the negotiations.
EU trade policy and the German European Council presidency are also important priorities. In this context, the focus is particularly on level playing field considerations. In addition, we have set ourselves the goal of establishing structured cooperation with the Directorate General of Customs, where current and future issues are discussed in a regular joint dialogue. Other focal points are the implementation of the EU-Mercosur free trade agreement, the trade conflict with the United States, and the utilisation rates of existing free trade agreements.
In recent years, an increasing number of countries have made increasingly more use of trade defence instruments. Is this a topic with which the working group is occupied?
Other than customs issues, trade defence instruments have always been part of the working group’s scope. Due to the worldwide increase in protectionism, the topic has gained special importance and urgency in recent years. Above all, the U.S. trade policy under President Donald Trump, which employs tariffs as a political instrument and leads to trade conflicts, is a focal point of the working group’s work. However, European trade instruments, such as the European anti-dumping mechanism and the proposal to reform the WTO Agreement on Subsidies and Countervailing Measures are also high on our agenda.
It is important that the multilateral trading system is not further restricted by an escalating protectionism spiral. Open markets based on fair and rule-based trade and international cooperation are central to sustainable global growth!
Since 2019, Bernd Stadtler has served as chairman of the BDI Working Group on Customs and Trade Defence Instruments. He works as Head of Customs Global responsible for customs and trade policy at HUGO BOSS AG.
