Frictionless Trade with EU after Brexit?

An international logistics expert has warned UK businesses that even a permanent post-Brexit customs union with the EU will not alone mean frictionless trade with the bloc continuing.

Adam Johnson, director of Leeds-based Tudor International Freight, was commenting on what is believed to be the central trade-related demand of Labour party leaders in their talks with the government aimed at breaking the current Parliamentary Brexit impasse.

The deadlock follows MPs having repeatedly and decisively rejected the withdrawal agreement and political declaration Prime Minister Theresa May concluded with the EU last November but failing to establish a consensus on alternative arrangements.

Mr Johnson explained, “The UK, as a full EU member, is currently part of the bloc’s customs union, covering its constituent countries and some other states.

What is a Customs Union?

“A customs union is essentially an arrangement under which nations agree to waive tariffs - import taxes - and other administrative demands on goods sent from one member to another. Members also agree to charge common tariffs on items entering their territories from outside countries. Customs unions can take many forms - there are 16 operating globally, their details offering varying mixes of cross-border integration and national autonomy.”

Mr Johnson said although customs unions typically eliminated checks at borders for tariffs and origin of goods, one international trade expert had recently pointed-out there were over 60 regulatory, taxation and customs checks possible on goods moving across any future trade frontier between the UK and EU.

He said, “Even a permanent customs union, if such a thing can be agreed by the government and negotiated with the bloc, will therefore not alone mean UK businesses continue to enjoy frictionless trade with the EU after we leave it.”         

Mr Johnson said Turkey, for example, was outside the EU but in a partial customs union with it, broadly the position the UK would be in under Labour’s proposal. Yet, it was not uncommon for Turkish lorries to be held up for 24 hours or more at the country’s border with the union. That was because drivers of these trucks still had to show documents such as invoices, export declarations and transport permits for each country within the EU that their vehicles were going to travel through. 

He said, “Only combining a permanent customs union with maintained full UK membership of the EU single market would stand a chance of guaranteeing truly frictionless trade with the bloc continues for British businesses after Brexit.

“Yet neither objective features in the current withdrawal agreement or political declaration and neither main domestic party seems to be advocating continued full single market membership.”

Mr Johnson explained British businesses trading with the EU now enjoyed almost ideal arrangements.

Currently Documentation Free

He said, “When we import goods from the EU on a client’s behalf, for example, the only documentation we need is a copy of the packing list or commercial invoice and the travel document.

“This is a waybill for air freight, a bill of lading for sea consignments and a CMR note - the abbreviation being derived from its French full name - for road haulage. No customs clearance processes or duties apply, and no VAT is payable before goods can be moved from receiving ports or airports.”

Mr Johnson said these arrangements continuing would help to constrain British businesses’ costs, keep their prices competitive and enable goods to reach and be received from by far our largest trading partner quickly. They would also remove the need for a hard border in Ireland and avoid the UK having to engage in long and tortuous free trade negotiations with the EU after we left.

He said, “So, while a permanent customs union with the EU would certainly be much better than nothing, alone it still falls well short of the ideal circumstances for us, our customers, and UK businesses generally.” 

For further information about Tudor International Freight, please visit https://tudorfreight.co.uk.

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