🇬🇧 Ideal EU Customs Relations for Post-Brexit UK 🇪🇺

The UK government has issued a position paper describing potential post-brexit relations with Europe. The aim is to create a scenario in which the UK is free to negotiate independent trade deals, whilst also retaining close relations to the European Union and thus not needing an EU-UK customs border. The envisioned transition period would only happen after March 2019.

The paper outlines two approaches to meet these objectives of as “frictionless as possible” trade. The initial approach would be a streamlined customs arrangement, between the UK and the EU. The aim being to continue some of the already existing arrangements, but also to put in place new negotiated and potentially unilateral facilitations as well as implement technology-based solutions in support of customs compliance procedures. This approach requires development of “new innovative facilitations to deliver as frictionless a customs border as possible”, it says, acknowledging that the technology does not yet exist.

The second approach would include a new customs partnership with the EU that removes the need for a UK-EU customs border. This would be because the UK customs would mirror the EU’s requirements for imports from the rest of the world if their final destination is the EU. Acknowledging the latter as an unprecedented approach, the government states this “could be challenging to implement” and that it will “explore the principles” further with business and the EU.

“In its basic proposal for using technology to facilitate trade processing at a future EU-UK border, what the UK is proposing is fairly sensible and plausible. However, its more radical ideas raise more questions than they answer. The UK is proposing a dual regime in which it collects and manages its own tariffs from the UK side, but also outsources the management of that to the EU on its side and does the same for the EU on its own borders. Even if this is WTO compatible, which is questionable, the system would require systems of product traceability and duty refund mechanisms arguably even more complex than the cross-border trade processing they are designed to replace. The UK’s more ambitious proposals are an attempt to square the circle of wanting an autonomous UK trade policy in which London sets its own tariffs and wanting free circulation of goods across the border with the EU. If they are serious, they represent a failure to fully appreciate the complexities involved. By suggesting London does not have to choose between these things, they chiefly emphasise exactly the choices the UK will ultimately have to make. It is also possible that they are intended simply to demonstrate UK ambition and ultimately focus minds on the more pragmatic technological solutions and transitional period that will make the re-imposition of a hard border manageable.” – Stephen Adams (senior director Global Think Tank council).

Source: Global Trade Review