UK position paper on Customs duty: How does it stack up?

20 September 2017

On 15 August, HMG published “Future customs arrangements: a future partnership paper”, long-awaited by UK businesses and their overseas suppliers and customers. This article summarises the paper and the initial EU response.

The paper received an immediate and scathing judgement from the EU – there were press reports the same day that EU leaders dismissed HMG's post-Brexit customs plan as “a fantasy”. The main criticism has been its focus on desired outcomes rather than how to accomplish those outcomes. For example, regarding the UK’s future customs borders with the EU, including the land border with Ireland: “The Government believes a model of close association with the EU Customs Union for a time-limited interim period could achieve this [avoid a cliff-edge for businesses and individuals]. It would help both sides to minimise unnecessary disruption and provide certainty for businesses and individuals if this principle were agreed early in the process. The Government would need to explore the terms of such an interim arrangement with the EU across a number of dimensions”.

Such sweeping statements are of limited use to businesses seeking concrete guidance on what HMG is planning. We believe the paper’s key points are:

  • The paper does not comment on membership of the European Economic Area - we interpret this as an admission that the UK will remain outside the EU Single Market post-Brexit
  • Confirmation that the UK will not seek membership of the EU Customs Union post-Brexit
  • Cited as one potential approach: UK to operate a regime that aligns precisely with EU’s external customs border – which can only mean that HMG will apply same customs duty rates and same import licensing requirements as the EU (without having any influence on what such rates and requirement could be).

To conclude, the paper cannot be said to help UK businesses preparing for the post-Brexit customs landscape. For example, it is far from clear what “developing new innovative facilitations to deliver as frictionless a customs border as possible” actually means. We believe this is a missed opportunity but perhaps it can be explained by the fact that HMG needs to retain maximum negotiation room in the ongoing Brexit negotiations with the EU.

We will keep you informed of any further papers issued by HMG on this topic and we are of course available to assist you with customised Brexit impact assessments.

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