Is a post-Brexit temporary customs union on the cards?
Trade coming to a standstill is a very real concern once the U.K. leaves the EU, but the British government is putting forward its latest solution – creating a makeshift customs union that retains all the other benefits of being part of the economic bloc.
But exactly how Brussels will respond is not yet known and how long a provisional and alternative union would last has not been made clear.
Yesterday's (Aug 15) position paper – the first in a series to be published in the weeks ahead – details how Britain is looking to secure a time-limited deal to allow the transit of goods across borders to continue via a temporary customs union that would come into effect after it leaves the EU in March 2019.
Ministers say a new customs regime will avoid disruption and create “the freest and most frictionless possible trade in goods between the U.K. and the EU.” At the same time, a substitute union could also allow Britain to negotiate with non-EU countries.
Secretary of State for Exiting the European Union, David Davis, told the BBC’s Today program that following extensive discussions with businesses and industry most impacted by the trade negotiations, the government will avoid a “cliff-edge” where Britain leaves the EU without a replacement trade deal in place.
The new arrangement of a time-limited temporary union could be a stopgap to bypass such a scenario.
"We've got a new customs system coming in… It will be in a few months before we leave but it would be much more sensible, we think, if there was a shortish period in which we maintain the current arrangements,” Davis said.
“The simple truth is that it’s taken us 12 months to publish policies that are very complex, take the customs one alone. We started out talking to a whole range of companies to see what their concerns were and to see what the practical possibilities were and a huge amount of research went into how we would do this.
“Here we have a massive amount of work done and of course, sometimes you will find it difficult to read what we intend, that’s deliberate. I’m afraid in negotiations you do have constructive ambiguity from time to time.”
He added how laying out positions will take time but “will make people aware of what we intend, where the tensions will be and how difficult the negotiations will be.”
What are the concerns?
Ever since last year’s referendum calling for Brexit, there have been major concerns about how a lack of customs union and trade deal could lead to unmanageable customs checks, overcrowding of lorries at cross-border ports, ultimately putting a significant strain on supply chains.
Speaking in June during The London Produce Show’s “Accessing the U.K. Now and After Brexit Workshop,” a top flight panel of business leaders and public sector officials gave their valuable insights.
Presenters included Barbara Buczek, director of corporate development at the Port of Dover, who warned there is no space at the port to accommodate a rise in lorry volumes or system in place on how to handle delays.
She also calls for the speedy installation and operation of a long-term IT system that could handle significant increases in traffic.
Also speaking at the Brexit seminar was agricultural counselor from the Embassy of the Kingdom of the Netherlands, Tim Heddema, who likened the U.K. leaving the EU as the Netherlands losing a “sibling” or “best friend”.
“Still, both the European Commission or the EU as a whole, and the U.K. Government will probably want to make a big success out of getting additional market access around the world to make up for Brexit,” he said.
“With the right product scope there is a lot to gain for strong exporting industries.”
Reaction to the position paper
The Confederation of British Industry (CBI) emphasizes how important it is to boost economic confidence and stave off the uncertainty for U.K. commerce.
“It’s encouraging to see that these papers propose a time-limited interim period and a customs system that is as barrier-free as possible,” says Josh Hardie, CBI deputy director-general.
“We at the CBI have always been clear that new ideas on crucial issues like this should be brought to the table quickly. But the clock is ticking and what matters now is giving companies the confidence to continue investing as quickly as possible.
“Business want to see as frictionless a customs system as possible, with a strong emphasis on digital systems that make it easier to trade. But to secure frictionless trade, negotiations on regulation, tariff and non-tariff barriers will have to take place.”
He added how efforts should also concrete on delivering “a single-step transition” so that businesses don’t have to adapt twice.
Westminster Food and Nutrition Forum
Meanwhile, the acting head of policy services at the National Farmers’ Union (NFU), Dr Helen Ferrier, will share her thoughts on post-Brexit agriculture at a Westminster Food and Nutrition Forum on Sept. 21.
Talks are scheduled around what measures need to be in place to boost domestic food production and Dr. Ferrier will outline priorities for policy-makers in safeguarding sustainable high standards, negotiating new trade deals and repositioning the U.K. food and drink “brand.”
The University of Oxford’s Professor Charles Godfray and representatives of the Food and Drink Federation, Agriculture and Horticulture Development Board (AHDB), Knowledge Transfer Network (KTN), Monsanto and legal experts are also among the speakers, along with parliamentarians.
The seminar will consider the way ahead for U.K. food security policy, in the context of Brexit negotiations, wider international agreements and domestic policy and follows the announcement of an Agriculture Bill aimed at supporting U.K. farmers after Britain leaves the EU.