European Union Committee
Brexit: the customs challenge

20th Report of Session 2017-19 - published 20 September 2018 - HL Paper 187

Contents

Chapter 1: Introduction

Chapter 2: How the EU customs union works

The EU customs union

Administrative requirements and customs procedures for intra-EU trade

Figure 1: Summary of administrative requirements for intra-EU trade

Bilateral customs unions with the EU: Turkey, Andorra and San Marino

How is the EU’s customs union different from the Single Market?

Chapter 3: What if the UK fails to secure a deal with the EU?

Trade with the EU under WTO rules

Tariffs and their cost

Current UK customs procedures when trading with non-EU countries

Box 1: Rules of origin

Existing customs facilitations

Box 2: The Authorised Economic Operator scheme

What would be the impact of new customs procedures under a ‘no deal’ Brexit?

Cost to businesses

Impact on ports

Disruption to the flow of goods

The Northern Ireland/Ireland border

Conclusions and recommendations

Chapter 4: Mitigations open to the UK Government in the event of ‘no deal’

The UK Government’s ‘trilemma’ in the immediate term

“A border is like a tango—it takes two”

Contingency planning

Moving away from the border

Joining the Common Transit Convention

HMRC preparedness

Longer term improvements to customs controls

Conclusions and recommendations

Chapter 5: The UK Government’s proposed customs arrangement

The Facilitated Customs Arrangement

Box 3: The Facilitated Customs Arrangement

Authorised Economic Operators and other trusted trader schemes

Possible shape of a new trusted trader scheme

Tracking of goods

Question 1: Who carries liability for ensuring compliance?

Question 2: Does this create a fraud risk?

Question 3: Could goods be funnelled to the EU via the UK?

Question 4: Could the model give the UK a competitive advantage over the EU?

Revenue sharing

Negotiations of free trade agreements (FTAs) with third countries

Timescale for implementation of the FCA

Lack of clarity

The view from Brussels

Conclusions and recommendations

Summary of conclusions and recommendations

Appendix 1: List of Members and declarations of interest

Appendix 2: List of witnesses

Evidence is published online at https://www.parliament.uk/hlinquiry-brexit-customs-arrangements/ and available for inspection at the Parliamentary Archives (020 7219 3074).

Q in footnotes refers to a question in oral evidence.

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