What will customs look like after Brexit?

With Brexit Day fast approaching and major customs-related issues still yet to be agreed & made law between Ireland, the UK and the EU, there’s still far too much uncertainty surrounding the costs and delays that Brexit will cause. To prepare as best we can, we’ve researched the likelihood of import-export duties and border delays in the event of a number of different scenarios.

UK/EU Customs Predictions for 29 March 2019

We’re currently basing our assumptions on 3 possible Brexit scenarios for post-29 March 2019, namely ‘Chequers’, ‘Plan A+’ and ‘No Deal’. The contingency plans that we’re developing in-house are all based around these three scenarios, and are updated as and when further information becomes available.

1: A ‘Chequers’ Brexit

  • Border delay risk: low
  • Trade tariff risk: medium
  • Likelihood: slim

The Chequers plan, a whitepaper formally titled “The future relationship between the United Kingdom and the European Union”, would have perhaps been the simplest short-term solution for those of us in the transport and logistics industry. The full document can be read on the UK Government website here.

In essence, the Chequers plan aims to treat the existing shared standards of the EU and the UK as a common regulatory foundation, effectively resulting in “no hard border between Northern Ireland and Ireland, and no border in the UK,” by establishing a “common rulebook” for all goods crossing UK/EU borders, including foods. There would effectively be no border delays at first, although the EU and UK would be free to implement customs controls on new goods in future should this be required.

Chequers is ideal from a transport industry perspective — it avoids a sudden spike in border delays and tariffs, and enables us all to gradually accommodate changes to customs regulation over time. Sadly, the likelihood of Chequers becoming a reality is slim. A number of high profile Pro-Brexit politicians are strongly against it (David Davis and Boris Johnson resigned in protest when it was announced), and the EU have also rejected it (Michel Barnier described it as ‘cherry-picking’ out of the EU Single Market’s four freedoms (movement of goods, people, services and capital)). It is our hope that key passages from the Chequers plan may survive in the upcoming negotiations.

2: A ‘Plan A+’ Brexit

  • Border delay risk: high
  • Trade tariff risk: low
  • Likelihood: slim

Plan A+, put forward by the UK’s Institute of Economic Affairs in response to the Chequers plan, is seen as the preferred choice of pro-Brexit politicians in the UK. It proposes a Canada-style free trade agreement, where customs tariffs are low or non-existent (especially on goods that the UK doesn’t produce itself), and it acknowledges a need for additional border controls. An executive summary can be found here, or you can download and read the full 150 page proposal here.

The Plan A+ whitepapers suggest that our industry could reduce or avoid customs delays in a number of ways, including…

  • Conducting checks away from the physical border,
  • Implementing customs self-assessment
  • Expanding Trusted Trader schemes “like AEO and CFSP”

Plan A+ also vaguely alludes to “ensuring that intermediaries like customs brokers and freight forwarders have a clear legal framework that will enable them to provide competitive, scalable solutions”, but offers no clear detail around what such a framework would actually look like or when it would be implemented.

Plan A+ has not been put on the table by Theresa May’s government, nor has it been formally considered by the EU’s negotiating team, however we feel it’s an important document to be aware of. In the event of the UK’s House of Commons failing to agree on an EU withdrawal bill when they vote on the Brexit deal in Jan/Feb 2019, it’s likely that pro-Brexit MPs will push for parts of Plan A+ to be included in the final bill.

3: A ‘No Deal’ Brexit

  • Border delay risk: high
  • Trade tariff risk: high
  • Likelihood: medium

If Britain ‘crashes out’ with no EU agreement in place on 29 March 2019, then Britain will default to WTO rules and be classed as a ‘Third Country’. Countries like Norway, Liechtenstein and Switzerland have long-established agreements that enable for near-seamless road border transitions in and out of the EU, but these agreements don’t yet exist with the UK.

In the absence of a clear agreement between the UK and the EU, as many as 1 in 3 trucks carrying goods like raw chicken could be subject to border checks until a new customs agreement has been reached and made law. This could cause significant delays on both sides of the border; it will affect how pallets can be combined on a single truck load, and transport costs will inevitably increase.

We’ve been watching the Brexit process closely, and a number of key deadlines have already been missed, however the publication of a draft agreement on 14 November is a positive sign that a deal can be reached in time. Because of this, we believe that a ‘No Deal’ Brexit is likely, but by no means a certainty.

Other potential outcomes

There are a number of outcomes not covered here (e.g. a second referendum on EU membership being held in the UK), but at this stage we believe that these other possibilities are too unlikely to merit serious consideration.  We’ll update our Brexit Customs predictions as more facts emerge. If you have any specific questions, you can reach out to our dedicated Brexit Team or take a look at our news section for the latest updates.

How Baku GLS are preparing

Our aim is to become industry experts on all matters Brexit so that, when the UK formally leaves the EU, we can continue to deliver the highest standards for our transport clients. We’re actively attending all Brexit talks, customs briefings and department of agriculture meetings. We’re reading every whitepaper and government proposal, and we’re keeping a close eye on developments here, in the UK and on mainland Europe. We’re maintaining a number of contingency plans so that, whatever the outcome of the next few months, we’re able to respond quickly. If you want to know more about how Baku can help you control costs and timelines after 29 March 2019, please get in touch.