Brad Ashton

Written by: Brad Ashton

Brad Ashton

Partner

A post-Brexit customs union would still add cost and complexity

With the increasing press exposure of whether the UK should seek a customs union agreement with the EU post Brexit (or indeed a free trade agreement) it is easy to lose sight of the practical implications for UK and EU businesses operating under a customs union agreement. 

Using the existing EU/Turkey customs union as a reference, such an agreement would indeed bring tariff-free access to the UK and EU markets which many businesses would welcome. 

What can be lost in the debate is that such an arrangement would also bring additional costs and compliance obligations.

Using the Turkey example as the benchmark, UK businesses sourcing goods from the EU under a post-Brexit customs union would still be required to clear the goods through UK Customs and make a customs declaration; the EU supplier would be required to make a corresponding export declaration from the member state of export. The opposite scenario would apply where a UK business exports to an EU customer.

We anticipate this would introduce additional costs in the region of £150 per shipment. This would include the cost of customs clearance, provision of certificates of origin and additional administrative expenses - costs and procedures UK businesses trading with the EU are not currently exposed to.

The UK Government’s proposed approaches to the post-Brexit customs landscape could remove some of the burden of border customs declarations. The two proposals that could be adopted to shape the future customs landscape with the EU are a ‘highly streamlined customs arrangement’ or a ‘new customs partnership with the EU’. Both solutions closely mirror the existing EU customs position, effectively seeking the overall benefits of the single market and customs union under a different guise. Whether either approach can gain any traction will have be seen.

The overriding point is that businesses should expect additional costs and compliance obligations relating to the movement of goods between the UK and EU regardless of what trading agreement is ultimately agreed (or not).

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Brexit - time to plan

There is no doubt that Brexit will have far-reaching impacts, with reverberations felt across every sector. Many in the business world will understandably be concerned.

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