Closed for business? Not the UK! New Customs Visions for EU-UK Trade unveiled today

Tue 15 Aug 2017
Posted by: William Barns-Graham
Trade News

Open for business sign 

Article by Arne Mielken, Young President, IOE&IT

Following months of speculation regarding the UK’s position on various aspects of global trade – positions that are now subject to serious scrutiny as the government negotiates the departure from the EU - an official paper has been published today to clarify the government’s plans.

In the paper ‘Future customs arrangements: a future partnership paper’, the United Kingdom has set out its vision of how it wishes to construct a new, deep and special partnership with the European Union. The UK says it seeks a new customs arrangement that facilitates “the freest and most frictionless trade possible in goods between the UK and the EU, and allows us to forge new trade relationships with our partners in Europe and around the world”.

The government initiated the official EU withdrawal process on 29 March 2017, which puts the UK on course to complete the withdrawal process by 30 March 2019.

So far so good, but what is in the paper?

The paper in essence proposes to leave the EU customs union but also to keep a ‘close association’ with it for a limited period of transition.

Leaving the EU Customs Union

The paper makes it clear that “as we leave the EU we will also leave the EU Customs Union”. The Customs Union is a foundation of the European Union and an essential element in the functioning of the single market. The single market can only function properly when there is a common application of common rules. These rules are known as the Union Customs Code.

Two approaches

The UK government outlines two approaches to the future customs arrangements:

1) A highly streamlined customs arrangement

Outside the EU Customs Union, the UK will set its domestic customs arrangements to facilitate the flow of trade across its border, leaving as few additional requirements on UK-EU trade as possible.

Under this model, the UK would aim to negotiate trade facilitations with the EU and implement unilateral improvements to our domestic regime to make trade with the EU easier.

Ideas to simplify requirements to move goods across borders include doing away with import and export declarations for goods in transit through EU Member States, through the UK’s membership of the Common Transit Convention (CTC), with a waiver of entry and exit summary declarations. Mutual recognition of Authorised Economic Operators (AEOs) hopes to enable faster clearance of AEO goods at the border and ease pressure on ports and entry points.

2) Innovative and Untested: “a new customs partnership with the EU”

The real big goal, however, would be the completion of the second option, “a new customs partnership with the EU” aligning the UK’s approach to the customs border in a way that removes the need for a UK-EU customs border.

Under this proposal, the UK would be mirroring the EU’s customs approach at its external EU-UK border, to ensure that all goods entering the EU via the UK have paid the correct EU duties. The UK government believes that that would remove the need for the UK and the EU to introduce customs processes between the two parties, so that goods moving between the UK and the EU would be treated as they are now for customs purposes.

At the same time however, the UK could apply its own tariffs and trade policy to UK exports and imports from other countries destined for the UK market, “in line with our aspiration for an independent trade policy”. The paper mentions a robust enforcement mechanism to that ensured goods that had not complied with the EU’s trade policy stayed in the UK.

To reiterate, in both of these options, the UK would be out of the customs union and able to negotiate its own trade deals around the world.

Next steps

Today’s proposals will be discussed with stakeholders over the summer and the UK plans to publish a Customs White Paper in advance of the Customs Bill in the autumn.

Across the channel, in Brussels, in October, the European Council will rule on whether talks on the withdrawal agreement have made sufficient progress on the main key topics of citizen’s rights and the financial settlement (+ UK-IE Border issue) to proceed to the next phase — the transition and the future relationship.

Without this agreement, negotiations on the future border arrangements are unlikely to kick off in Brussels no matter how many papers are being produced.

Staying on top of it

<>Post-Brexit workshops are an excellent starting point for this, while learning the skills of trade – like completing export documentation and understanding how WTO rules work – will only become more important.