Interim customs proposal casts doubt over UK regulatory continuity

The UK government’s proposal for an interim Customs Union agreement after Brexit could bring about regulatory uncertainty, the Chemical Industries Association says. In its policy paper released recently, the government proposed the possibility of a “model of close association with the EU Customs Union for a time-limited interim period” after the UK leaves the EU in March 2019. This, it says, will allow businesses more time to adapt to new long-term arrangements. In her comments prior to the general election earlier this year, prime minister Theresa May said, the UK would leave the EU single market and not pursue full membership of the Customs Union. Following Ms May’s failure to secure a majority for her Conservative party at the general election in June, however, industry associations said a ‘soft’ Brexit was more likely. This, they said, might mean the UK retains access to the EU single market, the Customs Union and free movement of skilled labour. The CIA has questioned the value of an interim Customs Union agreement and says that the best way to guarantee “no adverse disruption” to business, during a transition period, is to seek to retain existing membership of the single market and the Customs Union. This should be done, it says, “rather than pursue a ‘close association’ with the Customs Union that still leaves key questions around regulatory continuity, tariff and non-tariff barrier impacts”. The EU market remains “by far the most critical” for chemical imports and exports, CIA chief executive Steve Elliott says.

In its paper, the government says it could take one of two “broad” approaches:

  • a “streamlined” arrangement that would mean no customs checks at UK-EU borders; or
  • a customs partnership that mirrors the EU’s external border regime.

Mr Elliott says that simultaneous negotiations on new free trade agreements (FTAs) and the UK’s future relationship with the EU will be “inter-related and therefore incredibly complicated”. It is very possible, he adds, that countries outside of Europe, with whom the UK seeks a new trading relationship, “will want to know the final new deal we secure before they agree anything with the UK”. The UK government has made the full transition to Brexit “unnecessarily complex”, the CIA says.

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Chemical Watch, 17 August 2017 ; http://chemicalwatch.com