Only when they negotiate on trade will we know how the UK plans for customs and the border will fly

It’s clear already that the options easiest to negotiate with the EU in the UK position papers on customs and the Irish border are those which  cross UK red lines and point  to a soft Brexit by any other name.

But this is far from the end of the story. The Institute for Government which has close links with Whitehall warns that free trade proposals  will have to emerge first  before we know how what sort of runners they really are.  “The government’s position papers show it grasps the potential for disruption to trade when we leave the EU,” Jill Rutter, the institute’s Brexit program director, said in an email, reported by Bloomberg . “Until we see plans for the future relationship with the Single Market, particularly for agriculture and fisheries, we will not know the scale of likely border checks and additional compliance costs.”

The Financial Times says the position papers “throw open more questions.”  

Migration

Under the UK proposal, Irish and Northern Irish citizens would continue to live and work on either side of the border, and UK officials would not check the passports of EU citizens crossing into the UK from the Republic. This would effectively allow people to cross into the UK illegally — something Open Britain, a think-tank campaigning for a “soft” Brexit, says “fundamentally undermin[es] the argument that leaving the EU would involve taking back control of immigration”. But the position paper says immigration could be regulated by “controlling access to the labour market and social security” and that the “no-checks” proposal should be seen in the context of “wider plans for the future immigration system in the autumn”. The statement implies that EU nationals visiting the UK mainland may not be required to have visas if they are not planning to work or claim benefits.

Trade

Britain has proposed two possible customs deals with the EU: a “partnership” and a “new arrangement”. Under the partnership, the UK and the EU would not have border checks, but would instead establish a tracking mechanism to trace goods to their final destination in Britain. This would be intended to ensure that products that do not comply with EU regulations are not exported to anywhere in the bloc. But the tracking mechanism is untested, and it remains unclear how it would apply to parts which are ultimately combined in an assembled product that may or may not be exported to the EU. Under the customs arrangement, there would be reduced border formalities. Firms with fewer than 250 employees would be exempt. “Until a future UK-wide customs system is in place, it is difficult to see how any guarantees can be given about the absence of physical borders or checkpoints,” said Josh Hardie, deputy director-general of the CBI. “

 Farm standards

To avoid disrupting the trade of food and agricultural products, the UK says one option could be “regulatory equivalence”, where it agrees with the EU to achieve “the same outcome and high standards, with scope for flexibility”. That would appear to scupper any prospect that the UK could loosen regulation — for example, by allowing hormone-treated beef or chlorinated chicken in British supermarkets — as part of a trade deal with the US. Open Britain called equivalence a “bureaucracy-heavy alternative to membership of single market”.

 Electricity

A single wholesale electricity market currently exists on the island of Ireland, with both sides of the border dependent in part on natural gas from the UK. The UK proposes a new framework to “the continuation of a single electricity market”. But the market is subject to the jurisdiction of the European Court of Justice, which Mrs May has said will no longer apply to the UK after Brexit. The UK is proposing a new dispute resolution forum, but has not specified what the forum would look like.

The only way for the U.K. to avoid customs checks and extra costs would be to stay in the single market and customs union, the Institute for Government said in a report.  The Institute has close links with Whitehall Other options include staying in the customs union while leaving the single market or negotiating a free-trade agreement, but these would cause disruption to supply chains and would require trade-offs with the EU, the institute said.

The U.K. detailed two proposals to manage the border with the EU in the long run, through either a “highly streamlined customs arrangement” or a new customs partnership under which each side would enforce the other’s customs rules. It also said it hopes to stay in the customs union during a transition phase while beginning the process of trade talks with new partners.

The customs union approach would be likely to come at the cost of an impaired trade policy and the inability to set tariffs, the report said. Copying existing EU free-trade agreements, like the one with Canada, “would not come close to achieving the breadth and depth required to avoid barriers to trade,” it said.

While a conventional free-trade agreement would get rid of most tariffs, it would not solve the problem of customs checks. The U.K. government has suggested it could get around this by using technology to establish which country a product comes from or make importers pay the higher of the EU or U.K. tariffs and claim a refund as necessary.

The only option that would allow Britain to keep the same trade freedoms it has now is maintaining the status quo, the report said. The U.K. government has ruled this out as it would mean continuing to comply with the EU’s four freedoms, which allow for the free movement of goods, capital, services and labour throughout the bloc.

The report also said the sectors most dependent on the EU for supplies, including auto manufacturing, rubber and plastics, will be at risk. Introducing friction to the supply chain between the U.K. and the bloc would increase costs through higher prices for products, changes to business models and ruined produce due to delays, it said.

The think tank called on Prime Minister Theresa May’s government to publish a cost-benefit analysis of its plans to “allow an informed debate about negotiating priorities.” In its customs plan published on Tuesday, the U.K. didn’t include such an analysis but said it wants to “explore” the suggested approach with business to understand the complexities involved.

 

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  • Jag

    So, the EU is insisting we work out the tariffs and barriers on London’s financial services sold into the EU, BEFORE we work out the pesky Irish border.

    Whitehall, let me introduce you to the descendants of Richelieu, Bismark and Talleyrand! EU, let me introduce you to the descendants of Benny Hill!

  • runnymede

    Brian – the Institute for Government is a pro-Remain lobby group. As is the FT, more or less. You need to broaden your reading a bit.

  • mickfealty

    They have a point here:

    “…the sectors most dependent on the EU for supplies, including auto manufacturing, rubber and plastics, will be at risk. Introducing friction to the supply chain between the U.K. and the bloc would increase costs through higher prices for products, changes to business models and ruined produce due to delays, it said.”

    Phase two of Britain’s de industrialisation process? To avoid this the UK will need to create novel forms of corporate incentives, and not just rely on private “understandings” with large employers like Toyota.

  • Kevin Breslin

    Nope, when they IMPLEMENT the changes we’ll know how they’ll fly, if they can still fly.

  • The Saint

    That made me laugh!!!

  • Conchúr

    I thought this quote from the comments below the FT article was good:

    “What is surprising is how the UK government is approaching Brexit now; I thought free trade with North America and Asia was the plan, now we’re planning for ‘regulatory equivalence’ and open borders, which is just extraordinary. All this, and for what?”

  • Karl

    As I said months ago, a soft Brexit ie customs union and free movement, is just EU lite with a bigger bill than is currently paid. That wont wash because it exposes the Brexiteers for delivering less with more cost.

    Thats why its got to be a hard Brexit. What the Tories didnt realise was just how fuct the economy would be and how integrated the UK is with the EU on matters like energy and air transport. So they want a transitional period.

    What is happening now is merely optics to allow the UK to walk away saying the EU demanded too much and that in reality it is the EUs fault that negotiations broke down.

  • Roger

    Immigration.

  • Karl

    Which they badly need to keep their farming and restaurant industries running

  • lizmcneill

    And what does a hard Brexit deliver and what’s the cost of that?

  • Karl

    A hard Brexit removes the ECJ, allows Britain define its own immigration policy and to move away from EU standards.
    The cost will be gargantuan.
    Let them do it. Lets not cosset them from the foolishness of their mistakes.
    While it will hurt others around them, only then will they realise the propaganda theyve been fed over 40 years about the one sided relationship with the EU. Rip the plaster off and start again holding a mirror up to how the UK looks fully outside the EU.
    It wont do the DUP any harm (well it will) to face the consequences of what they advocate either.

  • lizmcneill

    The cost, unfortunately, will not be limited to the Brexiteers.

  • Karl

    Pay the full price up front for what you want rather than paying with interest ad nauseum for a compromise. Bit like NI really.
    It will cost others but better pay now than have it drag on.
    I suspect when NI is exposed to the utter debacle that Brexit will be that unification will take place over a longer transition period within the customs union.

  • siouxchief

    Fabulous article by Fintan O’ Toole in the Guardian on the topic here. Well worth a read:

    https://www.theguardian.com/commentisfree/2017/aug/16/uk-government-border-proposals-ireland-brexit-position-paper

  • MainlandUlsterman

    Notional control of it though.

  • Karl

    True although if they had the notion they could have restricted access to the British welfare system until a certain period of work like the Germans. Problem was they had other notions and notions about themselves until all they really wanted was notional control over their self harming notions of self reliance.

  • Kevin Breslin

    http://www.chroniclelive.co.uk/news/north-east-news/mps-react-after-vote-leave-11269819

    It seems that politicians seem to enjoy that other activity that is done with the hands instead of making stuff.

    Beating their chests 😉

  • MainlandUlsterman

    There is a kind of restricted access linked to work – the Cameron deal before the referendum – but it wasn’t enough. I am a pro-immigration Remainer but we have had too fast a flow of immigration in the last 15 years not to upset the horses. Short term surges in numbers are bad for long term immigration because they give the impression of the government not being in control.

  • runnymede

    Quite a lot of the usual scaremongering there.

    Cross-border supply chains operate around the world, between countries with no customs unions, and in some cases no FTAs either. For an example, the NAFTA deal has allowed a very integrated market for autos and auto parts between its members.

    Even in a non-FTA situation, things are less dire than often understood. For example, existing rules allow duties to be waived/reclaimed on components imported for use in exports. So even if the UK theoretically adopted the EU’s common external tariff as its own, there would be no necessary need for eg car parts needed by large exporters to become any more expensive than now.

    On customs delays – these are already very short/limited for the vast bulk of goods imported to the UK from outside the EU. They can probably be made shorter still. This is another scare story really.

    Yes there are going to be some additional frictions, but their extent and consequences are wildly exaggerated.

  • lizmcneill

    Pay the full price for what benefit? What use is Brexit to the population of NI?

  • Karl

    The benefit of a cold bucket of water in the face to unionists who recommended Brexit to their electorate.
    The benefit of Britain explicitly deciding that their industries are more important than the DUP red lines to customs controls
    The benefit of the realisation that the EU money that was paid into the NI economy will not be replaced by a British govt strapped for cash
    The benefit of the NI political class having to face the reprecussions of decisions they made without the cushioning from Big Brother
    The benefit of realising that Ireland within the EU is a better option for some in NI than the UK outside it
    The benefit of the NI electorate actually having to grow up

  • Kevin Breslin

    Not Scaremongering … CONCERN

    https://uploads.disquscdn.com/images/95334251fd6166733f82d522d5b92991145099ba3a24ad1f12fc8960e8dd0b13.png

    Hand waves will solve nothing Runnymede

  • Oriel27

    Karl, where do you see the siutation arrising for a border poll?

    After all, if things get so bad becuase of brexit, surely NI can have a border poll to decide is the border worth having.

  • Karl

    Funnily enough 2021, at the end of the 2 year transition period when it is clear how fuct the UK will be. NI will be given a choice to remain in the customs union as part of Ireland or to leave with Britain.

  • Oriel27

    How will they be given the choice ? Surely that would be the outcome of a border poll.

  • Kevin Breslin

  • Kevin Breslin

    So we are going to see if those English you admire so much will take the effort to ensure that we are not “disseised” of our “free Customs”

    https://uploads.disquscdn.com/images/374c59d2dfe62b391faa029374916ee0904eae32edf02c49dce604f9492ad995.png

    Otherwise we’ll remain concerned and not amused.

  • eamoncorbett

    Rosslare and the North Wall may indeed become the new EU border if there’s going to be an exemption for the whole island . I would expect tarriffs to be imposed on goods from GB at all Euro ports and vice Versa because of the rejection of the freedom of movement charter .
    I can’t figure out how to keep imported meat from crossing the border, there would have to be an all island food standards authority.

  • eamoncorbett

    If it goes ahead every man , woman and child in these islands will bear the brunt of this ill conceived notion.

  • eamoncorbett

    There is one ray of hope , Britain can change its mind right up to the end of negotiations, after that its re -apply.

  • Jag

    Equally fabulous, Mary Dejevsky
    “A united Ireland is the only practical solution to Brexit”
    http://www.independent.co.uk/voices/brexit-northern-ireland-only-practical-solution-a7898831.html

  • Karl

    Pretty much. A rose by any other name….

  • Karl

    Afraid not. Apart from going against the referendum result, the EU have already said that there would be no rebate if they changed their minds. Theres a £5 billion public humiliation which they wont swallow. There are no rays of hope from this idiocy.

  • Karl

    Too fast a flow of immigrants??
    The UK has the lowest unemployment rate in europe.
    It has been proven that immigrants provide a net economic benefit.
    Health, farming and food industries rely on immigrant labour.
    If Britain had had any fewer it would have negatively impacted on economic growth.
    Immigrants came to take up the economic slack. There are always outliers but as Brexit is proving Britain is putting off the people who want to come and work. Soon there will have to be incentives to get them over.
    Bonkers.

  • William Kinmont

    This paper is only a negotiation tactic rather than a reflection of what might actually happen. Uk pointing out one of their few negotiating advantages is the border and delaying any real negotiation until trade is on the table. Pity our politicians of all types haven’t been able to act together and turn these statements ‘re us into proper guarantees and obligations that might be of some leverage to NIs advantage come the actual negotiating.

  • MainlandUlsterman

    I’m in full agreement with all that and I’m comfortable with large scale immigration personally. But I also think the rate of change in a population matters. People need time to digest changes and get used to them. The rate of immigration this century has been at a level where it has made immigration an issue – it’s felt like a big change in society that has happened to us without our choosing. But it’s only one ingredient. Without the right wing press and worst of all, the Tories, we’d have been OK. But the Tories post 2010 went on their eccentric, ideological austerity drive at precisely the time when we needed investment. Hence pressure on school places, hospital waiting times etc – the Tories being in cloud cuckoo land have not planned for the numbers we have. We are expanding to be a nation of 75, 80 million before too long and we should have been planning for that by investing in infrastructure and public services, long term. Instead we’re trying to muddle by as if we’re still 55 million. Hence the Brexit vote, which is of course disastrous.

  • NewSouthernMan

    “UK officials would not check the passports of EU citizens crossing into the UK from the Republic. This would effectively allow people to cross into the UK illegally”

    Will the people who voted for Brexit in GB be OK with that?

    According to Ivor Roberts in today’s Sunday Indo, the border “exposes Ireland to the prospect of jihadist cells planning an attack in the Republic, executing it in the UK and then retreating to the Republic to plan further attacks in the UK.”

    Seems to me there are only 2 choices – a hard land border or an Irish Sea border. Which would MI5 prefer?

  • Karl

    A unionist complaining about unfettered immigration changing the dynamics of a country.
    Really??

  • MainlandUlsterman

    you weren’t reading carefully. What did I say my personal position on immigration was?

  • aquifer

    Learned a new word today. A writer in the Independent used “Neverendum” to describe this Slo-Mo coup by little England’s alt right, this cruel fraud against those of us with less than £500k of assets. This will run and run. http://www.independent.co.uk/topic/brexit