Customs questions mean PM’s blueprint could take years to deliver, peers warn
THERESA May’s Chequers blueprint for Brexit relies on mechanisms that are complex and untested and will take years to implement, a parliamentary committee has warned.
While the Prime Minister insists it is the only credible plan on the table, the Lords EU Committee said there were still “significant questions” which needed to be resolved.
In particular it pointed to concerns over the proposal for a “facilitated customs arrangement” (FCA) after Britain leaves the EU which lies at the heart of the plan.
“Agreement on the principles underpinning any future customs arrangements has become a matter of urgency,” the committee said.
The FCA is intended to enable trade between the UK and EU to continue on existing terms, while allowing Britain to pursue free trade deals around the world.
It would establish a free trade area with a “common rulebook” for trade in goods, with no tariffs and no routine customs checks. For goods coming from outside the EU there would be a dual tariff system, with either the UK or the EU tariff being charged depending on their final destination.
If this could not be firmly established, the UK authorities would charge the higher tariff and businesses would then claim back the difference on proof of final destination.
HM Revenue and Customs has estimated it will add £700m a year to the costs of UK importers – still a fraction of
the estimated £18bn a year cost of a nodeal Brexit.
The committee warned, however, that the repayment mechanism was “untested” and would take “several years to be developed and implemented”.
It said the government had yet to make clear how goods could be reliably tracked, potentially raising fears of an increased risk of fraud, while the EU has rejected the suggestion that the UK authorities could collect revenues on its behalf.
At the same time, the committee said that the “administrative burdens” for firms enagaging with the repayment mechanism could “reduce the attractiveness” for other countries of striking free trade agreements with the UK.
Baroness Verma, the chairman of the EU external affairs sub-committee, said: “The government must, as a matter of urgency, provide answers to questions on the FAC. With only six months to go until Brexit the clock really is ticking on a mutually acceptable customs agreement.”
The committee also again highlighted what it said were the dangers of a nodeal break, which it said would be “costly and disruptive”.
It warned of delays at the ferry ports as new customs checks were imposed, with additional costs and paperwork for businesses. It said there would have to be “some form of physical infrastructure” on the border between Northern Ireland and the Republic, with potentially “severe consequences” for UKIrish relations.