Customary concerns over state of the union

Posted by Paul Cherpeau

Chief Executive

Fri 18th, Aug

This week finally resulted in the most pressing trade issue surrounding Brexit coming to the fore – membership of the Customs Union and the implications for trade, specifically the movement of goods across borders.

There is no doubt that Chambers of Commerce have identified the issue as one of considerable concern and consternation. The rhetoric concerning the UK’s negotiating position during the initial Brexit discussions had failed to identify the key fundamental principles under which the UK envisaged such trade being undertaken. Several of our members who export their goods to – or import raw materials from the EU - had already identified fundamental concerns regarding the anticipated costs they will incur without a favourable customs arrangement.

This week it was announced that there are fundamentally two options envisaged by the UK government for the post Brexit customs arrangements:

1. A highly streamlined customs arrangement with a simplified system – using technology – to speed up the passing of goods through ports
2. Establishment of a new customs partnership with the EU that would remove any customs border and essentially enable the maintenance of UK customs union membership benefits whilst independently negotiating trade deals with non-EU countries.

The movement towards understanding a longer term operating model is welcome news but it remains true that it is only a negotiating position at this stage. Also, there are fundamental differences between the practical applications of both options that will need to be addressed.

The potential of a transitional deal muddies the water further. Though eminently sensible in principle, the potential for a ‘hard Brexit’ with the technology-driven ‘light touch’ customs arrangement would be massively complex to manage given the investment required for the development of such technology and the affordability for organisations using it to transport their goods, particularly smaller companies. A transitional deal could cause the adjustment costs of such development to be prohibitive for all concerned.

The further announcements this week confirming the maintenance of an open border arrangement between the Irish Republic and Northern Ireland “at the heart” of the UK’s exit negotiations is undoubtedly welcome but again, from a movement of trade perspective, adds further questions regarding the trade status of Northern Ireland and its access to the mainland UK.

All of this context comes as the British Chambers of Commerce/DHL trade confidence index results were issued yesterday revealing the maintenance of a strong performance in the most recent quarter but an increasing level of concern regarding exchange rates, access to skilled workers and price pressures.

The British Chambers of Commerce (BCC) International Trade Summit on Thursday 12th October will address several of these issues and provide businesses with some clarity regarding the implications of Brexit. BCC are also seeking first hand experiences of member companies in this negotiating period and their expectations regarding a post-Brexit trade impact to enable the use of qualitative evidence to be provided to government with the existing quantitative data.


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