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Brexit Movement of Goods and the Supply Chain

brexit-movement-of-goods-and-the-supply-chain-pdf

SPECIAL TRADE COMMISSION

SPECIAL TRADE COMMISSION 1. INTRODUCTION 1.1 Handled well, Brexit could be a huge opportunity for the British people. In her speech at Lancaster House, Prime Minister Theresa May referred to it as a prize. However, in order for this vision to be realised, we will need to make sure as the UK exits the EU, it does not unwittingly take any of this prize off the table. The UK government should therefore hold to the following operating pillars of the Brexit negotiation: 1.1.1 To negotiate trade deals with other countries, we must be fully outside the customs union. The language we use must be clear enough that trading partners understand that the UK will be ready to sign a trade deal immediately on departure from the EU. If trading partners think this might be extended for an additional two two years after exit, they will focus on other agreements with other parties. 1.1.2 To negotiate on services, a key UK export, we must be able to put our domestic regulation on the table, so we must be out of the single market 1.1.3 To secure trade deals, we must be prepared to be more open on agriculture (as this is the sector that is of key interest to most of our trading partners). 1.2 We believe that the component parts of a successful Brexit include: 1.2.1 a ‘Prosperity Zone’ consisting of a group of like-minded countries which agree to a massive reduction of trade barriers, behind the border barriers and economic distortions. Members might include US, Canada, Singapore, Australia, New Zealand, Mexico and Switzerland; 1.2.2 bilateral Agreements between the UK and a series of major trading partners such as India and China; 1.2.3 economic partnership agreements with developing countries (primarily in Africa, Caribbean and the Pacific region, so-called ACP countries) that are true economic partnerships involving access for their agricultural products, an end to tariff escalation and reduction of tariffs to advanced manufacturing as well as regulatory reform in these countries, which such countries often need to do but are prevented from doing because of powerful vested interest groups; and 1.2.4 a productivity and consumer welfare agenda in the UK that leads to a reduction of distortions at home and policies that use free trade and free markets to lower key costs such as food and energy. 1.3 Achievement of these policy goals could lead to an injection of at least 2-3% into global world product, creating the economic engine that the world currently lacks. They cannot be achieved, however, if the UK stays within the EU customs union or retains membership of the single market, by way of the European Economic Area or otherwise. 1 2 |

SPECIAL TRADE COMMISSION 1.4 Leaving the customs union and the single market could entail significant changes to the processes around movement of goods between the UK and the EU and vice versa. In this paper we explore what those changes could be, from the position of the Common External Tariff applying to UK exports to the EU and the same tariffs being applied reciprocally by the UK to imports from the EU, and from the preferred position of both sides agreeing to retain tariff and quota free trade in goods. The position of access to services is not addressed in this paper. 1.5 The import and export of goods between the EU and third countries involves customs clearance and conformity assessment. As a member of the single market and customs union, exports from the UK are not currently subject to customs clearance, as no import duties are payable and the conformity of goods with the applicable legal requirements is assumed as the UK is subject to the same harmonised requirements that apply throughout the EU. 1.6 Supply chains in manufacturing and sale of goods are highly integrated as a result, and it could be costly for businesses on both sides of the channel and across the Irish border if duties become payable and logistical and administrative barriers come into operation. We have therefore examined the existing processes for importing goods from third countries to the EU which would apply if no bespoke agreement were reached, and the enhanced processes that would be available going forward, based on best practice at the borders of other closely linked trading nations. | 3

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