Study says, post-Brexit customs checks could cost 4 billion pounds a year

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A think tank report released last Monday said that the implementation of post-Brexit customs checks could cost traders over 4 billion pounds a year.

The British government has revealed when it leaves the bloc, its plans to leave the European Union’s customs union as well, and it wants to negotiate a new relationship that will make sure that trade is as free of friction as possible.

The Institute for Government, in its report ‘Implementing Brexit: Customs’, said that the government needed to offer as much assurance as possible to business and help them plan for reforms to customs.

Around 180,000 traders presently operate only within the European Union and risk making customs declarations for the first time after Brexit. The government estimates that an extra 200 million declarations a year will be made.

The IfG said that the said declarations cost 20 to 45 pounds each, putting the additional cost at around 4 billion to 9 billion pounds in total.

“The scale and cost of change for many traders could be significant. Government must engage with them in detail about changes, understanding their requirements and giving them as much time to adapt as possible,” stated the report.

The government has suggested two options for the future customs relationship. The first one is a system that makes use of technology to make the process as smooth as possible; while the second one is a new customs partnership eliminating the need for a customs border. It requires a transition period after March 2019, when Britain leaves the bloc to allow time to adapt.

However, the European Union states that negotiating the customs relationship must be deferred until both sides have made progress on the Britain’s border with EU member Ireland, the rights of expatriates, and a financial statement.

“To be in and out of the customs union and ‘invisible borders’ is a fantasy,” the European Parliament’s coordinator for Brexit, Guy Verhofstadt, posted on Twitter after the British government announced its proposals on the customs relationship. “First need to secure citizens rights and a financial settlement.”

Among the report’s suggestions for smoothing the process are: retaining access to key EU computer systems, transferring customs requirements away from the physical border, and setting up working groups with the private sector on implementing changes.

The IfG stated that the government must make sure everyone — from port operators to freight companies and local authorities — is ready, to avoid cliff-edge. It should also collaborate with European Union partners to make sure that significant setbacks to supply chains will not be disrupted by issues at European ports.

“In the past, they have been given years to adapt to any government change; they now have fewer than 20 months to prepare without yet being clear what they are preparing for,” said the report. “Successful change relies on all these organisations being ready.”