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Brexit – still more questions than answers
[ January 17, 2017 // Chris ]The Prime Minister raised more questions than answers in her widely anticipated ‘Brexit speech’ to the House of Commons today (17 January).
Teresa May confirmed speculation that the UK would carry out a ‘hard Brexit’, leaving the single European market but she pledged to push for “frictionless” trade with Europe and other the rest of the world.
She also pledged that the UK would rengotiate its relationship with the EU customs union and even disengage itself from the EU common external tariff – perhaps by becoing an associate member of the customs union, or reaching a completely different type of agreement.
Freight industry experts however questioned how this would work.
BIFA director general, Robert Keen, said freight forwarding companies “would have welcomed clarity on the mechanics that will underpin Mrs May’s desire for ‘tariff-free and frictionless trade’.”
She had promised to take Britain out of the EU single market and pledged to seek a ‘bold and ambitious’ trade agreement with the bloc – while rejecting the Customs Union because of the common external tariff that prevents Britain from negotiating separate trade deals with third countries.
Keen said: “Freight forwarding executives are none the wiser on the actual mechanics of Britain’s future trading relationships and how they might affect the freight forwarding sector. Will Customs reintroduce EU transaction border controls? Will the replacement for CHIEF go ahead and will the new system be able to handle the millions of extra transactions? How will controls on dual use items be managed?
“Mrs May has made reference to maintaining the common travel arrangements between the UK and the Republic of Ireland, but how will freight be managed between the two countries?”
David Jinks, head of consumer research at express wholesaler Fastlane said that May’s professed desire for the UK not to be bound by the Common External Tariff – arguing that it prevents the UK from striking its own comprehensive trade agreements with other countries – could lead to the UK having to set its own duties on 19,000 individual tariff codes across a huge variety of items. This would in turn lead to border delays and red tape for British importers and exporters by billions of pounds, increasing the cost of imported goods by perhaps 20%.
Jinks argues the CET is valuable in that it avoids a proliferation of different rates of duties in different countries. Without it, there could be customs clearance from logistics companies seeking to cover delays at borders, Customs officials at UK and EU borders would be constantly trying to match up UK and EU tariff codes and fees and it cvould also increase transport costs – as the UK outside the Common External Tariff would be a far less competitive and fought over market logistics service providers.
The Freight Transport Association (FTA) said that it welcomed the PM’s commitment to “tariff-free and frictionless trade” with the European Union and to ambitious free trade agreements with other partners globally. Her statement would allow FTA to identify where the new ‘friction points’ in international trade could occur and work with the government to negotiate the best possible outcome for UK businesses.
However, the continued ability of FTA members to employ and recruit these key workers will be essential to their future business success and FTA will be seeking assurances that the government recognises and accommodates the essential needs of the logistics sector.