In the report, titled, ‘The Case for Continued Customs Union Membership’, Anna Soubry and Chuka Umunna, co-chairs of the APPG, write that the Government is subjecting the UK economy to “a reckless and economically dangerous self-inflicted wound” as they outline the difficulties leaving the Customs Union would cause. They cite figures showing it could cause a £25bn a year hit to the UK economy, with the number of firms forced to make customs declarations increasing by 128%.
The cross-party MPs issue ten challenges to the Government, asking them to reveal how they plan to deliver the “exact same benefits” in trade outside the Customs Union; what analysis the Government has done to support their policy; and how HMG can make a new customs system work in the limited time remaining before Britain leaves the European Union.
The report sets out two main areas of difficulty – the economy, encompassing tariff and non-tariff barriers to trade; and borders, encompassing logistical difficulties, Northern Ireland, and security. Overall, it makes clear that British business faces a Brexit bureaucracy bombshell if we do leave the Customs Union.
On the economy, the MPs warn that products exported to and imported from the European Union could face tariffs, which would increase costs for businesses and consumers alike. Although the Government is aiming for tariff-free trade with Europe, there is no trade deal on Earth – except the Customs Union – that eliminates all tariffs on all products. Firms will also face new non-tariff barriers to trade, such as customs declarations and Rules of Origin requirements, which could be extremely expensive for small companies in particular.
On borders, we could face gridlock at ports and airports, as it is unlikely that the Government will be able to set up a properly-functioning customs system in the short time left before Britain exits the European Union. Leaving the Customs Union could also make a hard border on the island of Ireland more likely, and could put our security at risk by breaking down cooperation between customs authorities across Europe.
The MPs also heavily criticise the Government’s position paper on customs, released in August, as being “overly optimistic to the point of being irresponsible” as it failed to provide detail about the Government’s customs policy, or even set out a coherent position.
The APPG on EU Relations is co-chaired by Labour MP Chuka Umunna and Conservative MP Anna Soubry, a former Shadow Business Secretary and former Business Minister respectively. Its vice-chairs are Jo Swinson MP from the Liberal Democrats, Stephen Gethins MP from the SNP, and Jonathan Edwards MP from Plaid Cymru.
In the foreword to the report, Chuka Umunna MP and Anna Soubry MP, co-chairs of the APPG on EU Relations, say:
“Making an ideological choice to wrench Britain out of the EU’s Customs Union after Brexit would unilaterally surrender the best economic option for our country
“Leaving the Customs Union would be a reckless and economically dangerous self-inflicted wound. It doesn’t have to be that way.
“Ministers have shown greater pragmatism on several Brexit issues in recent weeks, which is welcome. But on the issue of customs, rhetoric simply does not match reality.
“Their hasty choice to leave the Customs Union, and their lack of realism and preparation regarding real alternatives, increases the chances that we could face a crash into chaos and confusion in our customs system after Brexit.
“One of the reasons consistently put forward for leaving the EU was to reduce the amount of red tape but the new, more complex, proposals look nothing short of a Brexit bureaucracy bombshell for British businesses.
“In our view, a total commitment to full membership of the Customs Union is what is required in the national interest, not just for a transitional period but for the long-term future.”
Notes to editors:
The 10 challenges the APPG has laid down to the Government are:
Can the Government guarantee that the UK economy and UK businesses will enjoy the exact same benefits of Customs Union membership, as they have repeatedly promised, after March 29th 2019? And, if they cannot, can they confirm how much leaving the Customs Union is expected to cost the UK economy
Can the Government guarantee that there will be no return to a hard border or an economic border between Northern Ireland and the Republic of Ireland, as is now the case?
Will the Government outline, in detail, what plans have been put in place to deal with any increased volume of traffic around the UK’s exit and entry points, including sea ports such as Dover, and what the costs of such plans will be?
Can the Government guarantee that new trade deals with third party countries will make up for the value of trade lost by leaving the Customs Union? And if they can, will they produce a cost-benefit analysis to back up that assertion?
Will the Government provide greater clarity as to how it intends to negotiate and sign new trade deals whilst still operating within an interim customs arrangement with the EU and while the UK’s future trading relationship with the EU remains undecided?
Will the Government publish the fifty analyses it has undertaken into the impact of leaving the Customs Union on various sectors of the UK economy so that it can be seen by businesses, employees and the public at large? And, if not, why not?
Can the Government guarantee that its planned new digital customs system, the Customs Declaration Service (CDS), will be fully operational by January 2019 and that it will have been fully tested to ensure it can deal with the increased volume of declarations associated with leaving the Customs Union? Can the Government also outline what contingency plans are in place if the system is not fully operational before the UK is due to leave the EU in March 2019?
Will the Government publish an assessment of the number of new customs officials it believes will be required as a result of leaving the Customs Union and what the estimated additional annual cost will be?
Will the Government publish a detailed breakdown of the expected additional bureaucratic requirements for British businesses – both in terms of red tape volume and additional costs – they expect from leaving the Customs Union?
Will the Government provide more detail about the types and the costs of new technological solutions to dealing with both customs checks and border checks and what evidence they have from other countries to suggest that they can be successfully introduced in the UK?
About the APPG on EU Relations
The APPG on EU Relations was established at the start of the newly elected Parliament in July 2017. Its members work together to campaign in and out of Parliament with the following objectives:
- To ensure the UK does not exit the European Union without an agreement on the terms of its withdrawal and future relations with the EU;
- To ensure that, in the negotiation with the UK’s EU partners, all options are kept on the table; and,
- To secure the closest possible working with relationship with the EU and its 27 member states.
The co-chairs of the APPG are Chuka Umunna MP and Anna Soubry MP and the vice-chairs are Caroline Lucas MP, Jo Swinson MP, Stephen Gethins MP and Jonathan Edwards MP.
The Secretariat for the APPG on EU Relations is provided by four pro-European groups: Open Britain, Best for Britain, European Movement, and Vote Leave Watch. Though the groups broadly support the APPG, the APPG speaks on behalf of its Parliamentarians and not on behalf of those groups.
The draft of this report was compiled by the Open Britain campaign.
For information about the APPG, please visit our website: http://www.eurelations.uk/