The UK government today set out proposals for a temporary customs arrangement with the EU to protect trade post-Brexit. But is the food and drink industry heading for a smooth transition or chaos at the borders? We take a look at the key questions posed by the plans.
1. Will the plans avoid a fall off the dreaded ‘cliff edge’ ?
Today’s so-called ‘future partnership paper’ talks, with delicious irony, about forging a ‘new, deep and special partnership’ with the European Union. But much of it is aimed at persuading businesses they are not heading for an almighty fall off the cliff edge come March 2019.
Whilst today’s paper confirms the UK intends to quit the EU customs union, it suggest the UK will effectively mirror the existing arrangements for around two years after Brexit at least, and possibly until 2022.
That has sparked controversy among hard Brexiteers, who are angry the UK will be scuppered from putting into place free trade deals with non-EU countries during the period. But food & drink industry sources say they, too, are confused. “I’m struggling to get my head around it,” says one source. “Ministers talk about the importance of having just one change to avoid two periods of disruption, yet how can you possibly talk about that when there is absolutely no clarity over what the solution will be?”
2. Will the transitionary customs arrangements leave food safety systems in limbo?
The document sets out two plans to transform the UK’s customs arrangements beyond Brexit.
One is to bring in a “highly streamlined customs arrangement “between the UK and the EU”, streamlining and simplifying border requirements to remove barriers to trade, with an onus on new technology being used at customs controls.
However, a second more ambitious plan is for an “unprecedented”, and “untested” approach, which would do away with the need for a UK-EU customs border by the UK mirroring the EU’s requirements for imports from the rest of the world.
According to one source, the second approach, whilst bold, is also riddled with the potential for red tape, something which will not go down well with anyone involved in the food supply chain.
And while these plans, due to be published in greater detail in a Customs White Paper in advance of the Customs Bill in the autumn, are aimed at preventing border chaos, trade body leaders point out they leave many key worries for the food industry unaddressed.
Food gets just one mention in today’s document, with the government acknowledging it is one area where “speed and efficiency” at the border is crucial. Crucially, there is no mention at all of what would be done to replace the existing EU rules in areas such as food, plant or animal health.
“There is very little recognition of food and drink in the report,” says an industry source. “There is far more to customs than tariffs. There is no mention here of country of origin legislation, safety inspections or any of the other huge areas of EU legislation involving food and drink. There simply isn’t the capacity at Dover for any of this and it would be a disaster to have extra delays added to the supply chain. I can only hope there is a lot more detail to come.
“There is also a huge piece of work to be done about infrastructure and staffing and how it will be paid for.”
BRC director general Helen Dickinson adds: “It’s good that the government has started the discussion on future customs controls. Bu this is a complex issue, including safety checks as well as customs paperwork, and we need to develop a system that avoids disruption at our ports. We import more food than non-food from the EU and much of that is fresh, so delays would have a significant impact on supply chains.”
3. What role will the food and drink industry play in shaping the arrangements?
The government has been holding Brexit-related talks with a range of businesses, including dozens of trade bodies from the food and drink industry.
Still, sources suggest that today is an important milestone.
“We are now starting to get some substantive detail which takes it beyond just talk,” says one source. “Now we can actually get down to talking about the devil in the detail and what these policies actually mean for the food and drink industry. It feels like we have moved to a new phase.”
The report claims ‘private sector input, creativity and innovation can help the government achieve the most frictionless customs arrangement anywhere in the world’.
But much as the government is desperate to keep businesses on board and to tap their much-needed knowledge about the practicalities of what Brexit actually means on the ground, there is also a huge political battle looming.
When the Tories came so close to losing the election, many were convinced a so-called “soft Brexit” was on the cards. But despite its admission that the UK will have to stay locked into Europe’s processes for longer than some Tory hard liners would like, today’s document nevertheless confirms there is no going back into the EU Customs Union or the Single Market.
4. Will the UK’s new IT system be able to cope?
As if the complexities of customs controls were not enough, the UK is going into the process of a massive overhaul of its customs technology, which is due to be completed just two months before March 2019’s Brexit. This will see the implementation of a new £157m Customs Declaration Service (CDS), which will replace the existing HMRC customs system (CHIEF). A recent report by the National Audit Office raised huge doubts that the system will be able to cope.
According to today’s report, the government and HMRC are ‘on track to deliver by January 2019’.
‘CDS will be compliant with the EU’s Union Customs Code to ensure continuity for business and will provide modern, digital customs technology, which will ensure HMRC has the flexibility needed to deal with the outcome of the negotiations with the EU,’ it adds.
But that upbeat assessment flies in the face of fears elsewhere. National Audit Office boss Sir Amyas Morse warned last month there was “very little flexibility” in the plans and described the potential for a “horror show” if the IT support as not in place to handle the fallout from Brexit.
5. What is going to be done to secure free trade at the Irish border?
The government is due to unveil more plans tomorrow to tackle the burning issues of the Irish border, but today’s report stresses the urgency of the situation.
“We must avoid a return to a hard border, and trade and everyday movements across the land border must be protected as part of the UK-EU deal,” it says.
“The government has made clear that the answer to avoiding a hard border between Northern Ireland and Ireland cannot be to impose a new customs border between Northern Ireland and Great Britain. We should avoid any approach that would create new barriers to doing business within the UK.”
Says one food & drink industry source: “I hope that this report has more recognition of the role of food and drink considering the huge importance of the industry in Ireland and the huge questions posed by Brexit.”