An international logistics expert has said Boris Johnson’s draft EU withdrawal agreement and political declaration would be more damaging for Britain’s businesses than the versions concluded by his predecessor.
Adam Johnson, director of Leeds-based Tudor International Freight, was commenting on the framework finalised by the current Prime Minister with the EU in Brussels on 17 and 18 October. The government’s attempt to have this agreement ratified by Parliament was then paused, following its defeat on the legislative timetable in the House of Commons on 22 October.
Mr Johnson said the trade-related implications of the new draft agreement differed from the texts approved by previous premier Theresa May in crucial respects.
He said: “Boris Johnson’s deal would see Britain exit the EU’s customs union following the envisaged post-leaving transition period. This is currently set to conclude in December 2020, though officially it can be extended for one or two years if the UK and the bloc agree to this in the middle of next year.
“This intended customs union withdrawal is because the government clearly wants the transition period to precede a relatively loose trading relationship with the EU. The plan is that this would be enshrined in a free trade agreement, broadly of the kind the bloc implemented with Canada in 2017.”
Mr Johnson said Mrs May’s approach, in contrast, would have seen the whole UK remain in the customs union indefinitely. This intended arrangement could only have been set aside if both parties agreed it was no longer necessary, through them having concluded a free trade deal that rendered this so-called backstop redundant, for example.
“Customs union membership, alongside British participation in the EU single market – which, like his predecessor, the current Prime Minister plans to end, following the transition period – are immensely beneficial for businesses trading with other EU companies.
“These arrangements mean none of the bloc’s states charge import taxes, known as tariffs, on goods they receive from fellow members and no VAT needs to be paid before these items can be moved from receiving ports or airports, for example.”
Mr Johnson said provisions such as these meant sending goods from Leeds to Latvia was currently hardly more complex than transporting items to Liverpool. When his company imported goods from elsewhere in the EU now, for instance, the only documentation it needed was a copy of the packing list or commercial invoice and the relevant travel document.
He said: “In contrast, the government’s proposed agreement means a damaging very hard Brexit could well take effect at the end of 2020. This is because it seems unlikely a free trade deal – which would, in any case, probably offset only some of the damage leaving the customs union and single market would cause British businesses – can be concluded by then.
“The EU’s treaty with Canada, for example, took seven years to negotiate, yet the present Prime Minister seems much less inclined to seek an extension to the transition period than his predecessor might have been.”
Mr Johnson said the government’s plans would make life much more costly and complex for Britain’s EU traders, with the goods they sent and received being subject to increased documentation and checks, taking longer to reach destinations and costing more than at present.
“The time-consuming impact of the proposed changes alone can be gauged from the fact that one international trade expert recently estimated over 60 regulatory, taxation and customs checks – covering aspects such as where goods originated – could apply to items moving across a future trade frontier between Britain and the EU.
“A similar example is provided by the customs declaration form British companies will have to provide for every consignment shipped to the EU. This will have 50 fields and, according to an official government estimate, take an hour-and-three-quarters to complete.”
Mr Johnson said the fact that, under the government’s proposals, Northern Ireland would join the list of territories to which such complications would apply only made its deal potentially more burdensome for British businesses.
“In summary, we believe Britain’s EU traders will find it hard to disagree with Green Party MP Caroline Lucas, who described the Prime Minister’s agreement as ‘as bad deal with a backdoor to a no-deal’.”
For further information about Tudor International Freight, please visit https://tudorfreight.com/