A leading UK Cabinet minister has told businesses trading with the EU to prepare for “inevitable” border checks in what is the first official confirmation of how a 'Canada-style' deal will lead to trade barriers next year.
During its membership of the EU’s Customs Union and Single Market, Britain was able to import and export goods seamlessly but the government has underlined that border controls will be needed to ensure the right customs and excise duties are collected and borders are kept secure after the 11-month transition period ends on December 31, 2020. The EU as a whole is the UK's biggest trading partner.
According to media reports, de facto deputy Prime Minister, Michael Gove (whose official title is the chancellor of the Duchy of Lancaster), told delegates at a Cabinet Office event in London earlier this week that there would be border checks for “almost everybody” after the transition period finishes at the end of the year.
He went on to warn that there would be checks on food and goods of animal origin, as well as customs declarations and mandatory safety and security certificates required for all imports after December 31, 2020.
“You have to accept we will need some friction. We will minimise it but it is an inevitability of our departure. I don’t underestimate the fact that this is a significant change, but we have time now to make that change,” he said at the ‘Preparing Our Border for the Future Relationship’ event.
Under the trade deal struck between Canada and the EU, 98% of tariffs were removed. However, the EU has said it is not willing to offer Britain the same terms as Canada, wanting the UK government to follow specific EU laws.
After meeting Mr Gove, Elizabeth de Jong, UK policy director of the Freight Transport Association, told the Financial Times: “Frictionless trade has been kicked to the touchline. This was a big dose of realism. It’s going to be really costly for business.” UK exporters would have to “make do and mend” on current systems for at least four years.
Expanding on her comments in a FTA statement, de Jong noted that the announcements about the UK’s future relationship with Europe “provide more much-needed clarity for logistics operators, and his (Mr Gove's) assertion that there will be no extension to the transition period gives businesses a finite deadline to which to work. The news of funding to help industry prepare for operation outside the EU is certainly welcome, whatever the outcome of the negotiations.”
She continued: “Mr Gove put to rest (Home Secretary) Sajid Javid’s assertion that industry had plenty of time to prepare. It is encouraging for industry that he said he does not underestimate what needs to be done and that he has his civil servants focussed on capturing and providing industry with the details we need, we hope within the timeframes we need to prepare.”
De Jong added that as representatives of the logistics industry, the FTA was “naturally disappointed that the promise of frictionless trade has been replaced with a promise that trade will be as seamless as possible but not until 2025, with a more realistic but costly “make do and mend” approach to be employed until then. Industry will need the support of government during this period to Keep Britain Trading effectively.”
In a related development, HM Revenue and Customs (HMRC) has extended the deadline for businesses to apply for customs support funding to January 31, 2021.
The scheme, first announced in September 2019, had been due to close on January 31, 2020. To date, applications have been made for around £18.5 million out of a possible £26 million – meaning there is at least £7.5 million left to claim from HMRC.
Robert Keen, director general of BIFA, the trade association for UK freight forwarding and logistics companies, commented: “During many meetings with both HM Treasury and HMRC over the last three years, BIFA has highlighted the concerns of our members regarding the capability of the Customs brokerage sector to increase capacity, at a time when that sector already faces a shortage of staff of suitable quality.”
He said BIFA had emphasised that it could take up to a year to train staff to be fully conversant to prepare a range of basic Customs declarations, even if there was a sufficient number of trainers to train those staff, as well as relevant courses for them to attend.
"So, the news of a further extension to the deadline for this funding is very welcome, and we are encouraging our members who believe they might benefit to apply; if they have not done so already,” he added.
