- The UK Government’s present approach to negotiations will lead to trade friction between Great Britain and the EU and Northern Ireland.
- On the 1st January, friction will – at the very least – result from customs requirements and import checks on British goods entering the Single Market and Customs Union, with further friction developing from required exit declarations on goods coming from the Single Market and Customs Union into Great Britain.
- The global Covid-19 pandemic has pushed some businesses to the brink of going out of business, a further shock of systemic change without adequate time to prepare could see a loss of businesses and jobs across the United Kingdom. In our view, phased introduction of import procedures does not resolve the issue.
- Friction will result in costs borne by British businesses that have, in many circumstances, developed in large part due to unfettered access to the Single Market.
- Border processes for goods moving between customs zones are detailed and complex. This is difficult for container based imports/exports, but is made much more complicated for Roll-on Roll-off, which is time and sequencing critical. The CGE Trade Group has looked at the Turkey/EU border, which illustrates some of the difficult issues involved – despite Turkey and the EU sharing a Customs Union.
- The Government’s publication of procedures at the UK border from 1st January raises three significant questions:
1. Why is the UK border going to be in the position of not being able to fulfil proper checks on goods entering the UK market on day one, or even month one?
The principles have been clear for four years, given both this Government’s and the previous Government’s position on exiting the Single Market and Customs Union, yet preparation is last minute and continues to lack convincing detail. A lack of preparedness should be put down to Covid-19, the issues were known well in advance of the global pandemic
2. Does the Government intend to compensate British businesses which will be at an unfair competitive disadvantage compared with EU goods that will cross the UK border with relatively less friction than UK goods entering the EU market?
The Government’s ‘soft touch’ approach may solve one issue, but it potentially undermines UK business competitiveness at a point where this is least affordable
3. When will the UK Government provide the same level of information for businesses trading with Northern Ireland?
The Border Model for EU/GB was released in July; we are now less than four months away from exiting transition and no information has so far been forthcoming with regards to NI/GB trade
- The CGE Trade Policy Group is deeply concerned that the UK Government’s approach has been to spend its way out of trouble on fundamental questions of future trade friction – border process regimes take significant time, resources (technical, logistical and financial) to get right. Simply throwing money at the issues, be it £200 million or £700 million, will not solve the problem.
- In relation to the previous point, will the UK Government provide support to those businesses adversely affected in the short-term?
For NI/GB trade, the Government has announced the £200 million Trader Support Scheme (TSS). The TSS is at present still out to tender despite needing to be operational on January 1st, and will cease after two years. Not effectively supporting such businesses risks undermining a strategically vital part of the UK and leaves those businesses that need help without it once the TSS winds up
- It is clear that the Smart Freight system, that will be relied upon by logistics operators to ensure the flow of lorries to the ports, will not be ready until April 2021. A beta test version of the system is scheduled to become available only from mid- December 2020.
This severely limits the ability for logistics operators to adequately train staff in order to be able to use the system on day one, or to have confidence in the solidity of a beta system for the first quarter of 2021
- It is detail, not rhetoric, which is needed if Brexit is to succeed through exporters, importers and retailers keeping and building the businesses which maintain employment and economic progress. As Conservatives, we believe there must be recognition of how much more work needs to be done to ensure a successful outcome.