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26 April 2018

Ministers must set up new customs processes, whatever the final outcome of the Brexit talks

by Victoria Hewson

Originally published by Brexit Central.

This week the debate around Customs Union membership has intensified with the Prime Minister herself – while ruling out joining a customs union – has suggested a “customs partnership” could be on the cards. What this might look like remains to be seen, but at this juncture it is worth assessing why those in favour of a continued customs union between the UK and EU are pushing for it. If it is (as is often professed) going to protect trade, why is not more energy spent making the case for measures that will be vital in supporting and improving UK trade?

So far there has been little attention paid to the practical steps needed to be taken once we leave the Customs Union, not only to make the transition smooth, but also to ensure we are able to reap the benefits of our independent trade policy when we do.

The IEA’s International Trade and Competition Unit, together with ACITA (the Automated Customs and International Trade Association) have put together a set of both short and long-term recommendations that will make international trade more streamlined and efficient – and will serve as good preparation for all possible outcomes of the Brexit process.

The parliamentary to and fro over whether or not we should stay in the Customs Union has meant that HMRC is being forced to prepare for a minimum of three different scenarios post-Brexit. So with this in mind, the recommendations we have put forward are intended to be beneficial in all outcomes.

Customs formalities will still apply even with a tariff-free trade deal in place. To ensure businesses and border systems cope with the inevitable increase of customs declarations, applications for reliefs and authorisations, HMRC must make customs processes as simple as possible as well as providing support and information to firms – particularly for those who have had no previous experience of customs compliance.

Among some of the technical and operational preparations that should be made include implementation of the new “CDS” IT system; rolling out self-assessment – which will allow traders to carry out certain formalities normally undertaken by customs; improving the processing of applications for authorised economic operator status; and increasing resources devoted to training and support applicants.

Transparency should also be improved by upgrading communication channels with businesses, as new entrants and smaller businesses can be deterred from international trade by perceived bureaucracy and uncertainty.

Looking ahead to more long-term actions, the Government should consider bringing the functions of the border force that relate to goods back within HMRC’s remit to operate more streamlined border processing. A comprehensive communication strategy will also be required to meet the needs of large businesses with complex supply chains which will need clarity on the changes they will have to make, and smaller businesses which will have to undertake customs compliance for the first time. And further investment in skills and retention of customs officials will be vital.

As the debate about Customs Union membership goes on, it is crucial we don’t lose sight of the tools and processes that will help businesses on the ground, whatever the outcome may be. Many of these are already available to the UK Government and should be implemented both as Brexit preparation, and to show we are serious about global trade and competitiveness.

The uncertainty surrounding the outcome of the Article 50 negotiations is currently delaying HMRC from beginning to prepare for the seismic change that is coming. By addressing these legal matters, parliamentarians would bring improvements to our trading capabilities and ensure we are operationally prepared regardless of the outcome of these ongoing negotiations.



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