The UK’s Brexit negotiations have not begun well, the former head of the UK’s diplomatic service told the BBC earlier this week.
Sir Simon Fraser blamed divisions within Theresa May’s government for the problem and he called on the government to publish details of its views on a number of key issues – including future customs arrangements.
This is a reflection of growing concern over the lack of clarity on the customs issue. Just a couple of days earlier, Oxera, the economics consultancy, warned that increased customs checks could easily cost £1 billion a year.
Oxera partner Andrew Meaney set out four possible scenarios for a post-Brexit customs regime ranging from low regulation and low enforcement, which would be similar to the current regime, to high regulation and high enforcement, which has been described as “Armageddon” by the Port of Dover.
The £1 billion cost relates to the low regulation, high enforcement scenario where enforcement would undertaken either at the ports, or on a random checks basis.
Meaney argues that the cost could be considerably higher than £1 billion as it does not account for the costs of the uncertainty, extra staff, congestion measures such as Operation Stack, extra land need for customs checks, or the wider economic impact of jobs moving overseas due to the uncertainty over the operation of just-in-time logistics.
This all adds to the body of evidence that the government must address. Earlier this year, Professor Alan McKinnon, in an article entitled “Supply chain naivety in Brexitland” highlighted the fact that many of the upstream links in European supply chains are highly time-compressed – and for much EU-UK trade this would no longer be possible if customs barriers were to be reimposed.
Given that the government itself has recognised the complex nature of European supply chains, the concern has to be that it is failing to present a clear vision of how it expects them to operate in a post-Brexit environment.
Industry organisations such as the FTA and BIFA have be active in pressing for a frictionless customs regime in the future – but there is clearly more to be done to ensure that the message does not get lost among the government’s other concerns.