Customs union expert: The government's Brexit plans would never create 'frictionless' trade

LONDON — The UK government’s proposed customs arrangements would not create “frictionless” trade following Brexit even if implemented in full, an expert on the customs union has told Business Insider.

Joe Evans, a senior researcher at the Institute for Government, said if Britain remained a member of the customs union checks would still be required on borders as it would no longer be a member of the EU’s single market.

Evans said “even if we stay in the customs union, that does not eliminate the need for checks” because of regulation differences between the EU and an independent UK.

On Tuesday the Department for Exiting the EU (DExEU) published an official position paper on the future customs arrangement between the EU and the UK after Brexit.

It laid out plans for a transitional customs deal designed to prevent cross-border business coming to a standstill when Britain leaves the EU in March 2019, followed by a “new” and “frictionless” long-term customs arrangement, which DExEU Secretary David Davis hopes will come into effect in mid-2019.

The EU has repeatedly insisted that the UK cannot expect to enjoy “frictionless trade” if it is outside both the customs union and single market, despite the claims of ministers like Brexit Secretary David Davis and Trade Secretary Liam Fox. A European Commission spokesperson said on Tuesday: “frictionless trade not possible outside the single market and customs union.”

Evans told BI that Theresa May’s government will not be able to negotiate a “frictionless” trade relationship with the EU if the relationship is any less than Britain being a full member of both the customs union and single market.

Evans said: “If the UK and the EU diverge on their regulations in areas from agriculture, product standards around cars etc, that is a source of potential friction and the introduction of checks.”

The introduction of checks could cause problems on the Irish border, as some kind of system of regulation would need to be introduced.

Evan’s remarks echoed those of Professor Anand Menon, Director at research group UK In A Changing Europe.

Speaking to BI on Tuesday, Menon, a professor of European politics at King’s College London, said: “If you’re outside the single market, you’ll almost certainly have to impose checks anyway… It’s not true that because the Turks are in a customs union with the EU they don’t have checks on their border.”

The paper, which can be read in full here, outlines two options for the future customs arrangements:

  • A “highly streamlined customs arrangement” using technology to make the process as easy as possible;
  • and a “new customs partnership with the EU” where the UK would meet the EU’s customs arrangements for goods travelling through the UK destined for the continent.

Evans said that the first option, the “highly streamlined customs arrangement” seems like the “more traditional option.”

“If you were to say ‘we are leaving the single market and we’re leaving the customs union and we want trade with the EU to be as frictionless as possible, what can I do?’ this is the more obvious answer based on what happens now and precedent elsewhere,” he said.

On the other hand, a new customs partnership is “a more speculative and complicated” option, according to Evans. “It is really not clear how it would work in practice.”

Menon told BI that the government’s decision to publish position papers this month “seems like a sign of weakness,” but Evans said that the EU “will welcome the clarity on what the UK is actually looking for.”

“Setting that out is probably quite helpful for them, it doesn’t mean they’re going to get onto the negotiations but presumably it would be useful for informing their thinking,” Evans said.

The proposal of a transition period shows that “there is a realisation that this is a huge and time-consuming task to change a customs system.”

He said: “The transition period loses its value the longer it takes to agree,” as businesses and EU countries need reassurance, but it “gets easier to negotiate the longer you leave it,” as the cliff-edge approaches.

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