Brexit bureaucracy bombshell for business

In the report, titled, ‘The Case for Continued Customs Union Membership’, Anna Soubry MP and Chuka Umunna MP, 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.”

You can read the report here.