The raft of new legislation in response to the global COVID-19 pandemic is making cross-border trade difficult and confusing. It is not easy to navigate the maze of trade restrictions and the new trade facilitation measures, or to understand what they mean in the short and longer term for customs and trade management.
Here is an assessment of the areas to be aware of that can help businesses prioritise the actions they can take.
These may include outright bans, quotas or license restrictions. All exporters first need to find out if they are affected and in what jurisdictions. If they are unable to export their products, they may need to find domestic customers. If this is not possible or their products are not suitable for a domestic market, they should proactively engage with the authorities to seek derogations from the restrictions.
Such deferrals or exemptions tend to be product specific, and typically have to be applied for. Importers need to determine whether they are eligible, and make sure they benefit from all relevant measures and reliefs that are available to them.
Shippers need to stay up to date with the status of border crossings (land, sea and air) because closures or understaffing can result in products getting stuck , potentially leading to a loss of products and / or a loss of customers. Exporters should explore alternatives wherever possible. Authorized Economic Operators may be given preferential clearance treatment.
Customs authorities around the world are likely going to miss their revenue targets. They will also be looking to increase audits to review historic compliance during lockdowns. Whether or not cross-border trade picks up sooner or later, the customs audit landscape is likely to become more challenging. Importers would be well advised to use any underutilised resources today to better prepare for such audits. Strengthening processes and procedures, creating customs valuation support documentation, and getting ready for voluntary disclosures of transfer pricing (or other pricing) adjustments are but a few examples of such preparation.
These are top-of-mind examples of the impact of COVID-19 on international supply chains. They make a good starting point for anyone looking to navigate through fast changing, difficult and varied regulations.
As noted in last month’s blog, PwC is providing live updates on the emergency indirect tax breaks introduced in response to COVID-19. We have now added a special section on customs and excise measures. The latest updates will be added continually to GlobalVATOnline.
Customs and international trade leader, PwC Singapore