How will leaving the customs union affect my business?

Author
Matt Griffith
Director of Policy
19th April 2017

Although the UK government’s position on the Customs Union and its alternative proposal is unclear, one thing that is becoming increasingly apparent is that we are leaving the EU’s common external tariff and the EU’s Customs Union.

What does this mean in practice?

In the simplest terms, it will mean that there is now a customs border somewhere between Dover and Calais. The UK will no longer be inside the Customs Union, so will definitely face customs paperwork, potential tariffs and customs compliance issues.

Given that the most popular Brexit negotiating priority for Business West members when we surveyed them in the autumn was “the ability to trade without additional paperwork” (with 65% of all businesses and 79% of exporters choosing this answer), this is not a popular outcome for our region’s businesses.

The UK’s stated aim will be to negotiate a Free Trade Agreement with the European Union. If this is achieved (and it is a big ask to do so by 2019), then the UK can expect to export under similar conditions to other EU bilateral signatories (such as South Africa or Canada). If we fall back on WTO rules, we will face higher tariff hurdles and probably more paperwork.

The government has also talked a lot about sector specific deals – which raises big questions about which sectors would be included, how they would be certified and how legally sound this arrangement would be. Watch this space.

All of these arrangements will also include companies having to do basic filling out of tariff lines and customs codes, seeing if you export a good that is subject to quotas and other exciting things. Hopefully this will be electronic.

Hopefully French Customs Officials won’t want to look at every crate, but the degree of ‘friction’ is in the hands of our negotiators.

New arrangements outside of the Customs Union will almost certainly include Rules of Origin and Certificates of Origin – which will mean compliance costs and could have implications for your business model if you do not add much local value to your raw materials.

If you export something like animal products, you may also find yourself having to export to a specific EU port with a Border Inspection Post (for example Dunkirk) with the formal ability to make sure your goats eye pie complies with EU regulations here. This will pose logistical challenges for some businesses.

At present we simply do not know what the detail of new arrangements will actually look like in practice. However, for most of it we can have a good guess at approximates.

We will blog about what this paperwork could look like based on precedents for non EU exporters into the EU. Business West also has decades of experience of helping firms do their export documentation – and will be there to hold your hand when needed.

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