Needed – a customs system fit for purpose

Tom Evans joined a recent LCCI visit to Dover and Calais to discover what was in store for the ports post-Brexit

During the summer of 2015, a French ferry workers strike resulted in a tailback of 7,000 lorries that stretched all the way from Dover to Maidstone. Now, with 1.2 million vehicles passing through the port every year, the potential for a repeat of that episode, if the UK is unable to maintain a frictionless customs border post-Brexit, remains a frightening prospect for many.

The Port of Dover handles £119 billion of trade annually and the goods that are transported often depend upon ‘just-in-time’, a strategy that is based upon efficiency and getting deliveries to businesses at the exact moment they are required. Although the notion of a fast approaching, Brexit-related ‘cliff edge’ remains difficult to envisage for some industries, the magnitude of a sudden disruption to the 16,000 lorry movements a day through Dover leaves little to the imagination. Yet, if we revert to World Trade Organisation rules and regulatory and tariff barriers between the UK and the EU go up, short-lived bouts of disruption, including long tailbacks of lorries subject to check and controls, risk becoming chronic very quickly.

Disruption

During a recent visit to Dover and Calais, LCCI witnessed first-hand the work underway to expand capacity at both ports. These improvements were commissioned in the hope they would support growth, not ease post-Brexit disruption. However, customs checks on EUUK trade haven’t been carried out since 1992 and if regulatory barriers were to be put in place overnight there would be clear and immediate implications for businesses. This is the heart of the matter; disruption to the free flow of goods will potentially cripple businesses and their ability to deliver on time for their clients.

In negotiations between London and Brussels, the government has proposed two options for a post-Brexit customs deal. Ideally, any new customs partnership or a transition deal that is ‘business as usual’ would remove the need to adapt to a customs border. However, a new trading agreement will be exceptionally hard to deliver in 18 months and, if we decide to push ahead with “no deal is better than a bad deal” we must look to ways to ensure trade remains as frictionless as possible.

Infrastructure

This means more customs officials and an upgraded electronic customs system that is on time and fit for purpose. Recently, HMRC chief Jon Thompson told MPs that leaving the EU without a customs union deal could require an extra 5,000 customs staff and £800 million in costs. The upgraded customs system – due to be introduced just before we officially leave the EU – will process 255 million customs declarations a year, an increase of 55 million on this year. Some 15 months after Brexit, we are still not much the wiser as to whether this system, and our wider infrastructure, will be able to handle the 130,000 firms who do not currently deal with HMRC. In the short term, confidence in these contingency plans must be improved.

Frictionless

The European Commission has said that if Britain leaves the customs union and the single market, the concept of a frictionless border “is not possible”. If a degree of greater friction is inevitable or likely, we must also explore ways of managing friction, including options such as pre-clearance customs and immigration controls that are offsite and away from chokepoints.

Herculean

Britain’s reputation as a trading nation will depend upon early planning and considerable investment. What I have outlined is completely possible, but it will require nothing short of a Herculean effort.

To end on a positive note, getting our future customs model right will not only help maintain the free flow of goods with the EU, but it will also assist us in tapping into new markets. As Britain expands its trading beyond Europe, we must have the people and infrastructure in place before we walk into the negotiating room and place our faith in new and exciting opportunities.

 

 

 

Tom Evans is Policy Manager at LCCI

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