Cautious welcome from forwarders for “more business-like” UK post-Brexit customs plans

8/17/2017

Forwarding and logistics organisations have broadly welcomed the UK government’s trade-friendly post-Brexit customs proposals published in a position paper yesterday.

But they admit the plans will only be achievable if EU negotiators make an about-turn in their negotiating stance. And that already seems unlikely after EU representatives quickly dismissed the proposals as “fantasy”.

In a position paper released yesterday the UK government said it was aiming for “frictionless trade” in goods between the UK and the EU in any future customs arrangements once Brexit becomes reality in March 2019.

The policy paper, designed to ease fears of border chaos post-Brexit, broadly sketched out a deal between the EU and the UK which would create a “temporary customs union” for an unspecified period post-Brexit while negotiations continued to establish a more permanent arrangement that essentially mirrors the existing system.

During this transition period, the government suggested it would also expect to be able to negotiate its own international trade deals, something which cannot be done as an EU customs union member. Once this time expired, the government said it hoped to establish either a “highly streamlined” border with the EU or a new “partnership” with no customs border at all.

The immediate reaction to the proposals from the EU was dismissive. Guy Verhofstadt, the European Parliament’s Brexit chief, tweeted that the UK’s plans were a “fantasy”, while a European Commission spokesman said the UK’s preferences on a future trading relationship could only be addressed once sufficient progress had been made on the UK’s “orderly withdrawal” from the EU.

“As [the EU’s chief negotiator] Michel Barnier has said on several occasions, ‘frictionless trade’ is not possible outside the single market and customs union,” added the spokesman.

Robert Keen, Director General of the British International Freight Association, cautiously welcomed the more unified and business-like Cabinet approach to post-Brexit trade negotiations with the EU apparent in the paper. “Unfortunately,” he added, “what the paper cannot address is the fact that, so far, the EU has made clear it will not discuss Britain’s future trading relationship – including customs arrangements – until it has reached agreement on several key issues, including the terms of the financial payments Britain will make on exit, the rights of citizens, and the future status of the border in Northern Ireland.

"To accommodate any of the proposals laid out in today's paper, EU negotiators would have to change that stance and it will be interesting to see if that happens, or whether those on the EU side of negotiations determine that the UK is trying to have its cake and eat it.”

The Freight Transport Association took a similar line, calling the paper a “step in the right direction”. But James Hookham, Deputy Chief Executive for FTA, said that while the Government had recognised it could not “drive the British economy off the cliff edge of Brexit”, securing the best possible deal for British business would take skill and understanding of how trading relationships work, in order to obtain the buy-in of the rest of the EU27 countries, as well as the EU’s own bureaucrats.  

“The government’s ambitions for customs arrangements post-Brexit are, at present, just that, and it will take time and care to ensure that all the subtleties of current operations can be incorporated into future plans,” he added. 

“The logistics industry has clearly identified its needs if trade is to continue in a frictionless manner with the EU and the rest of the world, and the government owes it to British trade and industry to work with us to ensure that these arrangements can be introduced as part of the final Brexit deal.”

“No trade deal will succeed unless freight and logistics requirements have been factored into any discussions between the EU and the UK. Without involving the sector in negotiations, the government risks driving the country’s economy off the Brexit cliff onto the beach below.”