Will Britain be ready to implement a new customs regime after Brexit takes place in March 2019? This is one of the most troubling questions for business leaders and one which has not been fully answered by the new government customs white paper.
The government is sticking to its position that Britain will leave the single market and the customs union. The UK also wants a new customs arrangement with the EU that, in the words of the white paper, “facilitates the freest and most frictionless trade in goods possible”.
We cannot at this stage of the Brexit negotiation know what the new customs arrangement will be. But even under the most benign scenario, a decision to leave the customs union will mean significant changes to the way the UK border operates. And after the white paper at least two important questions remain unanswered.
The first regards what exactly would happen if no deal is agreed. True, the white paper for the first time makes some attempt to address this issue. It says, for example, that companies would have to register their exports in advance of transferring goods to reduce the danger of huge traffic queues at Channel ports.
But the document fails to address the huge pressure that this would put on government infrastructure and personnel. Under a “no deal” scenario, Britain would rapidly need to employ thousands of new customs officers and make changes to the operations of more than 30 public bodies. There was no mention of any planning for this.
Joe Owen of the Institute for Government, who has co-authored a detailed report on Brexit and customs, says:
“In 2012, the UK made comparatively minor changes to its customs systems and, from the point at which the government implemented the new systems, it gave companies 18 months to introduce them. We are 18 months away from a potential “no deal” scenario — and the most detail we have is a couple of pages in a Treasury white paper.”
The second question regards what would happen in the event of an orderly Brexit. If the UK left the EU in March 2019 with a two-year standstill transition and then a move to a new free trade agreement with the EU, would two years be sufficient to introduce the necessary customs arrangements?
This is a hard question to answer because we have no clarity on the terms of a customs deal. The government has set out a few possibilities for a post-2021 customs arrangement, including a blue-sky option that would involve electronically tracking and tracing goods ahead of export.
But Mr Owen says that, even under the best scenario, it is not clear that two years would be enough:
“Again, the best way to understand timelines for customs is to look at past changes. The EU’s Union Customs Code was designed in 2013, introduced across the EU in 2016 and businesses have until 2020 to become compliant. While that seven-year planning horizon could be reduced in the case of Brexit, could you really cut it back to just two years? That is a heroic timeline.”
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