Effect of Post-Brexit Customs
Brexit is likely to dislocate existing EU trade with other EU states significantly. The barriers and costs are likely to be most burdensome on smaller scale businesses which have limited capacity to undertake the necessary customs and other additional administrative requirements both at the point of export from the UK and import into the EU.
In the event of a Brexit without a trade agreement tariffs will apply to a range of goods which may by themselves make their export and sale to EU countries uneconomical. Even assuming a trade agreement with zero or close to zero tariffs, in the absence of a customs union and close regulatory alignment, new procedures and administrative burdens will arise.
Undertaking Customs
If it is to be at all possible to continue a particular export from the UK to the EU, it will be necessary to absorb very significant new costs and burdens into the process of import and export. In some sectors, there may be tariffs and duties in the absence of a full free-trade agreement.
What is not widely understood is that even with a full trade agreement with zero tariffs on all products in the absence of a customs union and very close regulatory alignment the above customs controls and procedures would remain. In such a case the focus would not be so much on customs duties as VAT issues of origin and regulatory requirements.
Businesses will need either to train up persons in-house or contract services to undertake the customs procedure applicable in the UK for importing components parts et cetera and for exporting finished goods or intermediate components to the EU in accordance with the nature of their business.
Each consignment (to a distinct importer) will require a customs declaration and transit notice by the transporter both outgoing to the UK authorities and incoming to the EU authorities. Unless the entity on the other side acts importer and undertakes the corresponding obligations on its side, then the UK exporter will need to undertake these obligations itself and manage issues of VAT and of applicable customs duty on the EU side of the border.
Customs Servies
In the case of most smaller businesses, it will be necessary to outsource the customs returns to the transport company or to a customs agent or broker. This will entail charges per declaration. It will still oblige the UK exporter to give all the required details to its transport company customs agent or broker et cetera.
In addition to charges per declaration, ongoing fees and costs may increase significantly if more controls at the border are applied. Logjams and delays may arise where custom required to examine either documents or the goods on the UK or EU side. Delays and logjams may also arise where other products within the same container or load et cetera require documentary or physical inspection.
Effect of Customs Costs
It is not difficult to see that all of the above makes trading with the EU much more difficult even with a full zero duty trading agreement. For many smaller and micro businesses it may not be economically possible to continue existing lines of trade because of the extra cost and complications in the process. Of course the same applies reverse to EU exports into the UK.
The net result is that much trade which is now undertaken between the UK and the EU may be deflected into the local market. It might be easier for the EU purchaser to buy from within the EU than the UK. Equally, it might be easier for the UK purchaser to buy from within the UK rather than the EU.
It might be that larger scale organisation which can more easily absorb the costs of customs and border controls have a good track record with customs on the UK and EU side such that the trade flows freely and can organise the distribution networks and both sides of the border take up trading opportunities which are no longer available to smaller-scale businesses. This creates both risks and opportunities.T