16 May 2018
A view from Richard Ballantyne, Chief Executive, British Ports Association
A very public debate over the UK’s future customs arrangements has been playing out on the nation’s airwaves and on the front pages of our newspapers for much of the last week. As a trade association representing a wide range of UK ports and terminals, the British Ports Association has provided regular input to Government on Brexit, both publicly and behind the scenes. Whilst the Association did not take a position on the referendum or any other political episodes, we have been clear from the day of the result that where possible, retaining the benefits that the Customs Union and the Single Market provide in terms of trade facilitation, should be a key priority.
95% of the UK’s trade is carried through our ports. Much of our food, consumer goods and manufacturing components move to and from Europe via sea. As a commercial and thriving industry independent of Government, we are sure that our ports will, given time, adapt to whatever challenges are thrown at them. Some scenarios are more challenging than others, clearly, and looking at the Government’s two options on the table for new customs arrangements, to us the ‘Customs Partnership’, which is rumoured to the Prime Minister’s post-Brexit customs option of choice, looks to be the one that will have least impact at the border. This option would create a framework where goods crossing the Irish border could continue uninterrupted and allows the UK to negotiate new trade deals with countries outside the EU.
The Government has committed to leaving the Customs Union and the Single Market and this will have a practical impact on ports that handle traffic travelling to and from Europe. The Customs Partnership proposal offers the advantage of maintaining ‘business as usual’ for goods and this would appear to be the only proposal where freight is not subject to new customs controls at those ports dealing with EU traffic. This would also create a framework where goods crossing the Irish border could continue uninterrupted and allows the UK to negotiate new trade deals with countries outside the EU.
For many UK ports, adapting to life outside the Customs Union will be manageable and relatively straightforward. Ports that handle bulk loads or containers should be able to make modifications to their procedures, systems and infrastructure with relative ease, although some may need to invest in new infrastructure.
However, a sizeable proportion of our trade is transported on lorries through ‘roll-on-roll-off’ ferry ports, handling the more than 10,000 HGV journeys between Britain and the EU each day. For this sector of our industry, the prospect of lorries being stopped for customs purposes at the border remains daunting. These ports and terminals, which include the likes of Dover, Holyhead and Portsmouth, handle more than half of the UK’s trade with Europe, including much of our ‘just-in-time’ traffic. At these ports, business models are based around traffic flowing freely through the port gate, with lorries transiting through with almost no delays.
With new requirements to approve the customs declarations attached to each vehicle prior to their entry into the UK and departure to the EU, traffic could quickly build up both in and around these types of ports. For residents and businesses in these areas, the locality could potentially become very congested. For the freight industry, any stoppages represent inefficiencies and delays push up costs for manufacturers and ultimately consumers. The roll-on roll-off ports, for the most part, do not have readily available facilities for such checks. As they handle almost exclusively EU traffic, they have not had to conduct any customs checks for decades and do not have large amounts of space available for such activity.
The Customs Partnership model is not perfect and the challenges of tracing goods and digital paperwork still need to be worked out. But if we want to build a post-Brexit trade strategy based on facilitation and remain closely linked to our European partners and our largest single trade partner, there are some real attractions with this model.
The Government’s other option, the Highly Streamlined Customs Arrangement, which is now known as the Maximum Facilitation or ‘Max Fac’ model, is essentially the arrangements we have in place now for non-EU or ‘third country’ traffic but with new digital and physical infrastructure, particularly at roll-on roll-off ports. This would require quite a lot of preparation at the border both for Government and the relevant parts of the industry. It would also rely on a much larger take-up of trusted trader schemes and would require a major culture change in the haulage industry to provide customs information in advance of their journeys. It also leaves a big question mark in relation to congestion at some ports whilst customs approvals are granted and goods in lorries are cleared.
We have been somewhat surprised at the criticism levelled at the Partnership proposal in recent weeks, even from some Ministers. Previously this was presented by Government as one of two options last August in a paper published by the Department for Existing the EU on customs. There are also some reservations from parts of the freight industry but we have been jointly considering these options with our partners and we will continue to make the case for the positive effects of ‘frictionless’ trade – which of course is still a key Government aim.
Customs arrangements are usually something left to the consideration of technical experts and if the Partnership option is to succeed it will certainly need some reshaping. But these decisions will have real-world impacts not just at the border but ultimately for our manufacturers and even in terms of our shopping baskets. As important as it is, however, it is worth remembering that customs interventions currently only account for a small proportion of border interventions and delays with a range of over 30 government agencies working at the frontier. As we prepare for Brexit many of these controls will need to be introduced at UK ports which currently only deal with European trade. Customs and other borders agencies, therefore, cannot be view alone and there is certainly still a long way to go in ensuring that we have the right arrangements in place so that goods and people continue to flow smoothly through our ports outside the EU.
This article was published today by Lloyd’s List.