Shifting Policies and Complex Trade Agreements: the Forces Shaping Global Trade, Part 2 of 2

Welcome back to Womble Perspectives. Today’s episode is the second in a series focusing on the complex world of international trade. From shifting tariff policies to trade agreements, we’re exploring the forces shaping global trade. Whether you’re a seasoned economist, business leader, or simply curious about how trade impacts your daily life, this series will bring you the insights you need to stay informed. 

In case you missed part 1, you can find it here.

About our guests

• Alan Enslen
• Rob Jenkins
• Peter Snaith

About Womble's International Trade and National Security practice

About Barbourne Brook

Transcript

PODCAST INTRO (00:00)

Welcome to Womble Perspectives, where we explore a wide range of topics, from the latest legal updates to industry trends to the business of law. Our team of lawyers, professionals and occasional outside guests will take you through the most pressing issues facing businesses today and provide practical and actionable advice to help you navigate the ever changing legal landscape.

With a focus on innovation, collaboration and client service. We are committed to delivering exceptional value to our clients and to the communities we serve. And now our latest episode.

EPISODE INTRO (00:39)
Welcome back to Womble Perspectives and the second of two episodes focusing on the complex world of international trade. Imports, exports, tariffs and Brexit – Peter, Rob, and Alan pick up their conversation right where we left off in last week’s episode. If you missed it, check out the link in our show notes.

And now, on to the episode.

Peter Snaith (01:03)

Another question for you, Rob, in terms of certainly around Brexit. Remember, businesses were saying, actually, they managed to move goods into or out of the UK and Europe, and they didn't seem to feel much pain, didn't seem to feel that they paid anything more. But then we know that those sort of, there are are liabilities which are sort of mounting up in the background. Is it possible that with the customs regime we've got between the UK and the US now that actually businesses are moving things in and not being hit by a cost, but could that cost be could be mounting up?

Rob Jenkins (01:34)

I think that there may be differences and we can come back to Alan on that. But one of the Brexit points was there was a soft sort of a launch to Brexit. You know, there was a we had a trade agreement between the UK and the European Union. And whenever there's a trade agreement, like a trade agreement between ourselves and the US, are conditions attached. The policing of those conditions over Brexit were very, very relaxed.

And there were reduced customs deprivation sets, which I mean, the less information had to pass between the two and from the authorities for a short period of time. And so sometimes the pain wasn't felt right away with Brexit, but when the authorities got the data together and started to look at this, it became rather apparent that the trade agreements conditions weren't met and there were additional customs duties levied.

We did also see it the other way around that sometimes people would rather bake in the cost and not have a nasty surprise down the road. And when we had time to settle the dust and look at things, they had met the conditions and there were reclaims. But that was very Brexit centric. So I'm not sure how it works in the US. I do know from previous conversations with Alan, one of the hygiene friction points is, yeah, we spoke about the need for businesses to have their documentation ready and aligned to support any queries and we Alan as to as to whether rules are met because if that information isn't there, I don't know what happens from a US perspective to do consignments get held up or did they get passed through but they're still subject to checks. Do we know what happened?

Alan Enslen (03:15)

It could be either. mean, and frankly, we're seeing a bit different, operations from different ports. you know, and it also just depends on it's a bespoke type situation because it really depends on what the issue is. We're seeing in a lot of cases when an announcement is made with a very short duration, implementation period. Sometimes it's often, especially early days, meaning you know, back from February, especially in April, it's, customs can't move that fast sometimes to do it. So there's not, you know, a customer in the importing merchandise may say, well, last time you did it this way, this time you're doing it that way. We're seeing a bit of that just because, you know, again, customs to their defense, they're trying to keep up and with the changes and the speed and it's a difficult task.

Peter Snaith (04:08)

On that point of cost though, and I don't know whether you know the answer this, but is it the case that if you've managed to get goods into the US from the UK, and if there was a liability, that would have hit you already, or might there be something which is going to catch you out in time to come?

Alan Enslen (04:24)

I mean, customs can come back and they often come back with a notice or a request for information or something like that if they think they missed something or if they usually that's more in the context of they think you entered it under incorrect HTS classification or that your goods were actually subject to anti-dumping or countervailing duties or something like that. You might get a letter, an invitation from customs to provide them some more information or something like that. it's not a done deal once it's in. And that's why, to Rob's point, that's why the documentation aspect is so important to always be able to show what you did and frankly why you did it.

Rob Jenkins (05:06)

I think from a UK perspective on that one, Peter, I just know the level of checking when goods move across a border are fairly, you know, they're fairly light from our perspective. So probably 5 % of consignments tops get checked physically and with documents. So most of our control this side is exercise audit-based control. So it is having all that evidence and information available. But we do see it as well.

Your consignment is stopped at port and you don't have all the certification and documentation lined up it isn't going to move anytime soon which causes a lot of problems for the down supply chain. I mean you can imagine just a just-in-time system going on with a factory waiting for pass A which is stuck in customs and the whole thing grinding to a halt which would cost an awful lot of money.

Peter Snaith (05:58)

Yeah, that's important Rob, we're not just talking about US here, but actually that liability and the audit period that comes at three years, I think you said, so there is a government which is trying to find funds from somewhere or other actually, if there's a customs liability out there which can be unpicked at a later date, then businesses need to be wary that just because they haven't been checked on the way through, that doesn't mean they haven't got a liability which might bite them later on.

Rob Jenkins (06:23)

Yeah, I mean, we're seeing a lot of activity there, Peter, because perhaps I'm a bit cynical here, but, know, before Brexit, these customs duties flow back to the European Union. Since Brexit, our duties belong to the UK government, who are obviously looking for more revenue for very clear reasons. And this is, because of that, we're seeing an increase in the number of audits carried out on UK businesses to make sure that they do benefit or qualify for release. I imagine Alan, given all the turmoil and everything in the US, this is something where the dust won't be settling anytime soon from your end either.

Alan Enslen (07:04)

Right. they're going to be, you know, depending on where things go, there can be some creative claims back against the government. And, know, you know, in terms of, you know, protests are going to probably get very creative, I suspect. 

Peter Snaith (07:17)

Okay, so just turning a bit to trade deals. I mean, there's the UK-US trade deal needs to bed in, no doubt change shape a little bit here and there. But the EU-US deal, how does that impact things for the UK as a whole, Alan, in terms of the interplay between the two arrangements and what might that mean for businesses in the UK?

Alan Enslen (07:40)

Well, I mean, I see it personally as a good situation because I think right now we have some, we, we expected stability between the U.S. and UK on the agreement side, but we weren't quite sure that's what we were going to get on the EU side. And it's still baseball season. So I don't want to jinx it by saying that it's stable because it could go unstable, you know, with, and off the rails. But I think generally that sets up a good situation for supply chains that run EU-UK and makes it that pathway to the US, you know, and back and forth that much more stable. So it looks like, you know, the real proof is going to be when the 232 start to roll out and how those impact because those can swallow these agreements in ways because when you start looking at what's included in these various 232, you know, deals or these programs,

You've already got steel, aluminum, copper, automobiles, light trucks. You're about to have pharmaceuticals, which is going to be huge. You're about to have semiconductors, which is going to be huge. And so those, those will have a either stabilizing or destabilizing effect. think on what, you know, the, the, the base, these agreements between the countries, which tends to focus much more on that IEPA reciprocal tariff rate. So it's going to be interesting just from a trade policy standpoint as to how those programs all interact and what that really does to the overall relationship, trade relationships between the say EU, US, UK.

Rob Jenkins (09:17)

I think it's going to be very confusing. It's going to be a very confusing matrix that people have to look up. But just a very simple example that I can cite at the moment is we have a client who we work with who has a UK production site and the Republic of Ireland production site and they both make exactly the same thing. So with the two different trade agreements at the moment, that tariff rate going into the US from the UK would be 10%, but from Republic of Ireland it would be 15%.

So there are some clear-cut sort of wins there or potential bear traps if people don't appreciate that. That's an oversimplification because there's a lot of other things to consider but there are some very obvious cases where there's an interesting landscape now we have different trade agreements from the US between the EU and the UK.

Peter Snaith (10:13)

Presumably if there's enough certainty for a period of time, then there's an opportunity there in terms of reconfiguring supply chains to play in the most favorable customs area in terms of where you're manufacturing goods.

Rob Jenkins (10:28)

There is, I mean, there's a playoff, isn't there, as to what is the cost and disruption of moving that supply chain around compared to the benefits of getting that. But there are quite a lot of potential use cases where that's true. It comes back to that origin point we were talking about earlier. How much work would you have to do to reconfigure a supply chain? So it goes perhaps EU, UK to the US and there's enough done in the UK rather than UK, EU and the US. There's a lot to be considered, but I think it comes back to, with the extra costs, these things are now more interesting than they were when the tariffs were much lower. So we're issuing a threshold to consider those things much quicker now.

Peter Snaith (11:13)

So how do you see digital tools and data playing a role in all this? Can tech help businesses stay ahead of tariff changes or improve visibility across their supply chains? Because Rob, at Barbourne Brooke, you've developed your own customs analytics software. So how does CAT 360 work and what data does it rely on?

Rob Jenkins (11:30)

As I said at the beginning, one of the big themes I see at the moment is the use of technology. I I've been in this space for about 35 years and it wasn't very long ago that we were really using very archaic systems and working our way through documents. Now you're seeing big data, you're seeing AI, you're seeing wonderful tools come out to make that a lot less strict, I should say. But one of the things we've done in that space, Peter, you we've had a consultancy firm going for some time now. So we've developed all sorts of planning ideas over the last 30 odd years, and we've been baking those into algorithms, which we put into an analytics tool so we can pour in your customers data, see where the overpayments are, see where the underpayments are, see where the customs risks are, and very quickly report that back to the business. So we're seeing a lot of traction in that space. It's all still fairly new. But given the volatility we've all been talking about, it's becoming increasingly useful for modeling purposes as well. So if I change this supply chain, what does that mean to my customers duty costs?

One of the reasons we know it's been challenging for people in the past because the data wasn't there. We can get the data centrally from the UK government. It's one of the world leaders in that one. Glad to say as well that the US is in a very strong position for data analytics because it's got an ACE system which importers can access their data from. And that's having to go to, tend to have different brokers and ask the same question and merge the data into the similar data set. So the information is available. The algorithms can now be applied. Dashboards can show the sort of the information in a business centric way. And, you know, we're doing that. I'm sure others will be doing it, but we're finding millions.

Peter Snaith (13:24)

So just to be clear on that point, we're not talking about data which is on businesses individual systems, it’s which businesses might be concerned isn't as accurate or reliable. This is data which is already existing in a public record system somewhere that they can, which you can put through your system.

Rob Jenkins (13:40)

It's not public Peter because you you go to the to customs authority and that's for your data because it's quite sensitive but you're absolutely right that data doesn't usually sit within the

businesses ecosystem because they're outsourcing the making of these customs declarations to third parties and that's where the granular data which drives all this decision making will come from. So, but rather than going to those brokers we can get it from the customs authorities and we know then that that's accurate because that's the same data these tax authorities are using to carry out the audits.

So it has that credibility when we're using it for customs duty reclaims or in some cases, voluntary disclosures. So the businesses don't get hit for penalties.

Peter Snaith (14:29)

Is there anything to add from the US side? As Rob was saying, the data is available in a similar way in the US.

Alan Enslen (14:35)

Yes, there's really nothing I would add to that. mean, that was a very good assessment that hits us really the same, at least from my vantage point.

Peter Snaith (14:47)

So before we wrap up, are there any top tips or resources you recommend for businesses trying to keep on top of this? I mean, Alan, every time we speak, you seem to have Bloomberg on in the background, but sort of where would you go to or where would you point people to to get the latest up-to-date data and information about changes?

Alan Enslen (15:04)

Well, this podcast for one. Yeah, but, no, there's, and there's a lot of writing out there. mean, this is something that I think every, every, definitely every law firm in the U S that does trade struggles with is the, you know, we want to write about things. Everybody wants to, and things are moving so fast. It's tough. So companies have to be careful if they're looking at resources that are a bit outdated and, you almost have to do this real time, which is one of the reasons why you know, we recommend that, as I said, no snapshots. It's kind of a continual. You got to just dive in and immerse. But in terms of, you know, I think that, yeah, to me, if you're looking for particular media sources, I'm not recommending anyone or not intending to do that, but yeah, Bloomberg seems to have a, they pretty well factor it into the financial implications of some of these and have some, some good points on that, but there are plenty of other podcasts. I'll have to say that within the, within the U S trade world, that the trade guys podcast out of CSIS in DC is, is fantastic. And it has been for a long time. And, so that that's a good resource. We want to recommend that, you know, when companies are looking at their courses of action, looking at opportunities, looking at risks and assessing those, trying to mitigate those, that they don't just look at, you know, the current tariff regimes and the tariff impacts. 

Again, we've already talked about looking up and down that supply chain, but also pay attention to the, the trade agreements and the relevant agreements that are being renegotiated. Rob was mentioning this a few minutes ago about leaning on certain authorities that are coming out that are designed to smooth this out. One point that I will speak to is that we often get the question, we thought we had stability between US and Mexico and Canada because of the USMCA or USMACA as people like to call it, which is, you know, the renegotiated in the first Trump administration version of NAFTA. But people need to realize that a lot of the posturing, a lot of the issues between the US, Canada and Mexico, one could posit that those are positioning for the negotiations because USMCA is going to be renegotiated in 2026. You know, that’s why we've heard some folks say, look, Canada, Mexico don't seem to be stable points for, for example, nearshoring. If onshore in the US is not possible and you're looking for nearshoring, whether that's UK, EU, or more closer geographically, then Canada, Mexico are obvious choices. But that's the thing is that we expect that to get more stable or maybe more unstable as it's being negotiated. But eventually, hit a better point of stability for nearshoring opportunities in the US. 

But a lot of people look right past that whole issue that the entire trade agreement is being renegotiated next year. So, I think you're gonna have similar impacts to other trade agreements as they come up for renegotiation or are pushed into that lane.

Rob Jenkins (18:21)

My take on the US position is the information available in the UK is very, very high level, too high level to be useful. So, you know, Alan was explaining the difference between reciprocal tariffs and 232 tariffs. Sometimes these things get blended from a UK perspective when you look at the media reports on it. So, and it's critical to know the difference between. 

So I do think don't to get in touch with people you know and I think you you do hold information on your websites from Womble Bond  Dickinson. Alan will, he'll hate me for saying it but you know I think his contact details will be made available as well. I imagine the phone's gonna ring off the wall because of that. Sorry Alan.

Alan Enslen (19:03)

Yes, we have information on our website on Womble Bond Dickinson. And another site that I think is very helpful that we have is our Federal Government Transition Task Force has a page that that addresses issues far beyond trade. It does tend to have a trade flavor to it because that's what's underlying a lot of the chaos but in you know in other specific areas and other you know specific sectors there's there's commentary on that but that's a the so the federal government transition task force web page on Womble Bond Dickinson's site is a good place to go as well. Thanks Rob.

Peter Snaith (19:41)

So Rob, if someone wants to reach out to you guys at Barbourne Brooke or to us for support, what's the best way to start the conversation?

Rob Jenkins (19:50)

I think the easiest way to start a meaningful conversation, Peter, is get hold of your customers' data, send it to us, and we'll jump on a call and at least tell you what's going on, which might be quite illuminating and eye-opening. I would say on that one, just as a finishing thought from my side, in the UK, we've had to pay for customers' data in the past. It hasn't been expensive. It's only a few hundred pounds, but we've had to pay for it.

That data becomes free as of October. And if you've already paid for it, you'll be getting a refund. So you can get the data very easily. We can pour it into our tool and we can have a meaningful conversation as to do we see opportunities or do we see threats? I'm sure our contact details will be out on the podcast.

I'd also recommend getting that data if you are importing into the US from the AIS system. And if it's not easy to get, again, get in touch with us and we'll sort of help you find a way through. But I like data-driven decision making. And I think it's that bit that sort of puts meat on the bone and sort of a bit more context to any discussions going on before we get into the technicalities of customs law.

Peter Snaith (21:03)

Is it fair to say, Rob, for you guys the same as us, get concerned about getting in touch with lawyers because they're going to get hit with an invoice straight away. it sort of, there's no immediate upfront cost just because someone's picked up the phone to you. How does that play out?

Rob Jenkins (21:18)

There's no cost at all. We really want to know what's going on and a short conversation will soon indicate as to whether there's something more to go at. But yeah, absolutely no cost. We're not sort of hitting the clock. Clearly we don't work for free, but if we ever do engage, it's much further down the line when everybody knows what there is to go for.

Peter Snaith (21:41)

great. Okay, so thanks so much to Rob and Alan for joining me today. This is a complex space, but hopefully we've helped break it down a bit and give listeners some practical ideas to take away. And as we've mentioned, for more information about the themes we've covered, please click on the link provided or visit the websites for one with one Dickinson and Barbara Brooke, where we jointly host a series of updates and guides for doing business across borders and navigating the new tariff regimes. So until next time, don't be too pessimistic, stay informed, and don't let concerns about tariffs hold you back.

PODCAST OUTRO (22:13) 

Thank you for listening to Womble Perspectives. If you want to learn more about the topics discussed in this episode, please visit The Show Notes, where you can find links to related resources mentioned today. The Show Notes also have more information about our attorneys who provided today's insights, including ways to reach out to them.

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