A new high-level report by the House of Lords fears the UK’s ports could “choke” unless arrangements are put in place to maintain frictionless trade with the European Union post-Brexit.
The report also flags the potential shortage of staff once Britain leaves the economic bloc, an issue recently highlighted by many trade associations involved in the movement of goods.
The just-released report, entitled ‘Brexit: food prices and availability’, published by the Authority of the House of Lords, considered potential consequences of Britain’s exit strategy for the country’s food supply.
The report was commissioned because “it is inconceivable that Brexit will have no impact on EU food imports to the UK”. At present, around 30 percent of Britain’s food requirements are importedfrom the EU, with about 11% entering the UK from non-EU countries under trade terms laid down by the EU.
Report authors, The European Union Committee – the arm of the House of Lords set up to scrutinise the UK Government’s policies in matters relating to the EU – highlight some concerns and apparent inconsistencies in policy direction.
For instance, the government policy is to maintain ‘frictionless’ imports of food, but this could be problematic or even impossible outside the customs union (Prime Minister Theresa May’s stated policy). Any agreement to maintain the smooth flow of goods would require the UK Government to “mirror all EU standards and regulations”, which could prove politically unacceptable.
“If no agreement is reached, and food imports from the EU are subject to the same customs and border checks as non-EU imports, the UK does not have the staff, IT systems or physical infrastructure to meet that increased demand,“ stressed The European Union Committee. The reports suggested imported food prices would rise if European tariffs (normally set at around 22%) are applied in the event of no agreement.
Fears are raised that any delays “could choke the UK’s ports”. The proposed solution of allowing food throughout without any checks is dismissed on two counts: lack of safety and failure to monitor customs charges. Report authors also pointed out that attempts to increase the UK’s self-sufficiency in food would require access to the EU workforce, particularly in the short term.
Potential post-Brexit workforce shortages was a theme recently taken up by Helen Dickinson OBE, Chief Executive of the British Retail Consortium. Not only did she echo the House of Lords’ concerns regarding high non-tariff barriers at the UK’s ports, but she stressed the need to consider skills requirements post-Brexit. She called for an immigration policy that “strikes the best balance between getting the right skills in place and a migration system that complements our domestic labour market”.
The UK’s Freight Transport Association (FTA), whose members operate more than 200,000 lorries, almost half the UK fleet, points out in its ‘Brexit Manifesto’ that the logistics sector employs 290,940 EU workers. This includes 10% of HGV drivers and 23% of warehouse workers from the EU. The manifesto stresses that the logistics sector must be able to continue to have access to staff coming from outside the UK and retain EU workers currently employed in the sector. It also urges present-day EU funding, for instance, to train HGV drivers, must be replaced by some form of financial support.
With skills shortages starting to bite, the organisation recently called for clarification on the future status of European workers in the logistics industry in the light of an interim report by the Migration Advisory Committee on European Economic Area worker status, as reported in The Loadstar.
Some of the issues raised by the House of Lords report and the various trade bodies were put into sharp focus by Michel Barnier, European Chief Negotiator for the United Kingdom Exiting the European Union, during a recent speech at the Eurofi High-level Seminar 2018.
Calling Brexit a “lose-lose situation”, he dismissed any notion of frictionless trade outside the customs union and single market, pointing out that businesses will face “non-tariff barriers and border checks that do not exist today”. Closely integrated value chains will be affected, which will impact manufacturing and logistics, and the agricultural and food sectors in particular.
He stressed, “The situation would be made worse in a “no deal” scenario, which would result in the return of tariffs, under WTO rules… so, Brexit will come at a cost.”
The UK’s Financial Times revealed that Theresa May is considering a so-called “customs partnership” whereby Britain would remain in effect part of the EU’s customs territory, but would still be able to operate its own trade policy. UK ports would still collect EU tariffs, while new technology would be utilised to track the final destination of goods (the UK or the EU).
However, some commentators expressed fears the proposal is unworkable under present technology. The Financial Times reported that the head of Revenue and Customs insists it would need five years to introduce a customs partnership.
Speaking on BBC radio, Lord Teverson, who chairs the EU Energy and Environment Committee, fears having to negotiate and agree on a free trade agreement over the 21 months available during the transition period, and getting all the EU member states and national parliaments to agree to it, will be a “tough ask”.