As the clock ticks inexorably towards March 29, 2019, the UK’s future trading relationship with the EU and the wider world will have profound implications for retailers’ supply chains and the price and availability of the goods they provide.
Our latest paper on customs, as part of our A Fair Brexit for Consumers campaign, shows just how dependent consumers and businesses are on efficient customs, haulage, shipping and logistics systems to get goods delivered quickly, provide choice, keep prices low, and raise quality.
Our customs system is currently the sixth most efficient in the world, according to the World Economic Forum. We need to build on the strengths of our customs system, not fall by accident into one with avoidable delays, red tape and disruption, as the UK prepares for Brexit.
It was encouraging that the Government’s position paper on customs acknowledged the need to avoid a cliff-edge after Brexit day.
But what it didn’t talk about were the challenges posed by the sheer scale and volume of goods that cross our borders – four million lorries and 55 million customs declarations per annum.
“The UK and EU must also reach agreement on regulatory standards, security, VAT, haulage, transit and on drivers to ensure goods can continue to move from A to B as efficiently as possible”
With the latter expected to increase fivefold to 255 million if a customs border exists, the port of Dover, or any other, simply isn’t geared up to handle additional procedures, documentation and checks of this scale.
As we’ve illustrated in The Customs Roadmap, the reality is that a deal on customs alone cannot mitigate the new frictions, such as delays at ports, which would affect trade.
The UK and EU must also reach agreement on regulatory standards, security, VAT, haulage, transit and on drivers to ensure goods can continue to move from A to B as efficiently as possible.
The absence of any one of these agreements could create avoidable cost and regulation burdens for business and, hence, consumers.
Delays and costs
Products bogged down in additional customs red tape at ports and docks mean longer waiting times for consumers to receive goods.
What’s more, given that three-quarters of the food we import comes from the EU, much of which is fresh, these delays to perishable goods could threaten to increase food waste and mean extra costs for refrigeration and storage – an estimated £500 per day for a delayed refrigerated lorry soon starts to add up.
Take VAT as another example; the imposition of import VAT on all goods being imported from the EU could represent a major cash flow burden for importers.
“Extra costs, delay and food waste are highly plausible downsides if the UK leaves the EU without a deal, or has only weak customs co-operation with the EU 27 in the years after Brexit”
But this could be avoided under a special agreement for EU-UK goods transactions that would limit delays and red tape for businesses as well as extra costs for HMRC in administering taxation of imported goods.
The stakes are high – a deal short of a transitional customs union and a suite of agreements supplementing customs will mean importers will face new compliance burdens and checks.
Extra costs, delay and food waste are highly plausible downsides if the UK leaves the EU without a deal, or has only weak customs co-operation with the EU 27 in the years after Brexit.
A strong, workable, deliverable and mutually acceptable deal on the transition and final status agreement is absolutely essential to deliver a fair Brexit for consumers.
Helen Dickinson is chief executive of the British Retail Consortium