15th and 16th August 2017 have seen a flurry of activity from the Department for Exiting the European Union (Brexit) .
Two papers have been published in two days. These are not, and the not has to be emphasised, Position Papers rather they are the UK’s proposals.
The first is on how a future trade deal between the EU and the UK may work and the second is what do about the island of Ireland and the vexatious question of the border.
Let us examine them one at a time.
The first paper is called “Future Customs Arrangements – A Future Partnership Paper”
The paper describes itself:
“This paper is part of a series setting out key issues which form part of the Government’s vision for that partnership, and which will explore how the UK and the EU, working together, can make this a reality.”
In other words this is the UK government’s wish list which seem to revolve around four f’s, the first three are “facilitate (and derivatives), freest and the ubiquitous frictionless”. It adds “flexible” when it comes to talking about the border between Northern Ireland and Ireland.
Facilitate 5 Facilitative 1 Facilitations 8
The paper offers two of its preferred models in the following terms:
1 A highly streamlined customs arrangement between the UK and the EU, streamlining and simplifying requirements, leaving as few additional requirements on UK-EU trade as possible. This would aim to: continue some of the existing agreements between the UK and the EU; put in place new negotiated and unilateral facilitations to reduce and remove barriers to trade; and implement technology-based solutions to make it easier to comply with customs procedures.
2 A new customs partnership with the EU, aligning our approach to the customs border in a way that removes the need for a UK-EU customs border. One potential approach would involve the UK mirroring the EU’s requirements for imports from the rest of the world where their final destination is the EU.
It talks about UK aims in relation to these two models for example under the detail of 1 it states at paragraph 29:
“Under this approach, 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 and rest of the world easier. This will support our ability to facilitate trade with other countries in the world, although there will remain an increase in administration being inside the EU Customs Union. While the Government has looked at precedents set by customs agreements between other countries, it is not seeking to replicate model and will pursue the approach that works best for the UK”
And the detail under 2 at paragraphs 38 and 39:
“The streamlined customs arrangement is based on the UK and the EU trading with each other essentially as third parties, and looks to ensure the supporting customs processes are as efficient as possible. The Government believes that the UK and the EU should also jointly consider innovative approaches that could support UK-EU trade outside of a customs union arrangement, while still removing the need for customs processes at the border.
One potential approach the UK intends to explore further with the EU would involve the UK acting in partnership with the EU to operate a regime for imports that aligns precisely with the EU’s external customs border, for goods that will be consumed in the EU market, even if they are part of a supply chain in the UK first. The UK would need to apply the same tariffs as the EU, and provide the same treatment for rules of origin for those goods arriving in the UK and destined for the EU.”
One thing this paper does not do is offer any concrete solutions to deal with the practicalities of implementing either of these two models. Indeed at paragraph 42 it is accepted that:
“We acknowledge this is an innovative and untested approach that would take time to develop and implement.”
Previously having stated that:
“There would need to be a robust enforcement mechanism that ensured goods which had not complied with the EU’s trade policy stayed in the UK.”
The paper continues with detailing its own aims objectives only at paragraph 53 acknowledges that this may not be the outcome recognising that the UK is actually entering a negotiating period and goes on to make the point:
“In this scenario, without any further facilitations or agreements, the UK would treat trade with the EU as it currently treats trade with non-EU countries. Customs duty and import VAT would be due on EU imports. Traders would need to be registered. Traders exporting to the EU would have to submit an export declaration, and certain goods may require an export licence. The EU would also apply the customs rules and VAT to imports from the UK that it applies to non-EU countries. The Government is actively considering ways in which to mitigate the impacts of such a scenario. Other EU Member States will also need to make contingency preparations to mitigate the risk of delays resulting from their own customs processes.”
Giving what some may call a very optimistic timeframe taking account of everything that is currently due to be processed in Parliament it says:
“Regardless of the outcome of the negotiations, the Government will need to legislate for a new customs regime to be in place by March 2019, and make changes to the VAT and excise regimes. This is because the rules governing customs are mostly in EU law and current UK customs legislation is insufficient to create a standalone customs regime. Leaving the EU will therefore mean that the UK will require new domestic legislation and the Government will bring forward a Customs Bill in the autumn.”
Brexit Blog Post References