Cabinet Office minister Michael Gove has admitted that a new “smart” border to cut post-Brexit trade friction with the EU will not be ready until 2025, sparking warnings that exporters and importers will face big costs at the end of the year.
Mr Gove on Monday told the freight industry to prepare for new bureaucracy and costs from January 1 2021 when the post-Brexit transition period ends and the UK leaves the EU customs union and single market.
“Frictionless trade has been kicked to the touchline,” said Elizabeth de Jong, UK policy director of the Freight Transport Association, after meeting Mr Gove. “This was a big dose of realism. It’s going to be really costly for business.”
Speaking at a “border delivery group stakeholder event”, Mr Gove confirmed that Britain would introduce import controls on EU goods from the start of 2021 — effectively treating them in the same way as imports from any third country.
Authorities on both sides of the border will collect customs, value added tax and excise duties and check the safety of goods crossing a frontier that has — under Britain’s EU membership — been largely friction-free.
UK government officials said that by 2025 Britain would have the “best, smartest and most efficient border in the world” — with new simplified systems in place — but in the meantime industry has been told to prepare for significant friction to trade.
“The UK will be outside the single market and outside the customs union, so we will have to be ready for the customs procedures and regulatory checks that will inevitably follow,” said Mr Gove.
He told hauliers that from 2021 there would be “symmetry” and that the UK would impose the same checks and customs procedures on EU goods entering Britain as the bloc conducted on exports from the UK.
That would mean that customs declarations and regulatory checks would take place on trade in both directions.
Ms de Jong said UK exporters would have to “make do and mend” using existing systems for at least four years.
Mr Gove is the latest in a series of ministers in recent weeks to make explicit the central trade-off in the government’s Brexit policy: that reclaiming sovereignty over rulemaking from Brussels would impose new costs at the border.
In an attempt to allay concerns about the costs of new processes at the border, particularly to small companies, Mr Gove said that money would be available to help cope with the bureaucracy, including recruiting more customs agents.
Although business laments the passing of Theresa May’s objective of “frictionless trade” between the UK and the EU, there was a welcome for how Mr Gove was straightforward in explaining what to expect from Boris Johnson’s approach.
The government estimated in 2018 that the Canada-style free trade agreement which Mr Johnson hopes to negotiate with the EU would cut Britain’s growth by 5 per cent over the next 15 years, as the economy adapts to more complicated trading relations.
The customs checks and regulatory inspections outlined by Mr Gove would apply in the event of a Canada-style deal or in the event that Britain leaves the EU on World Trade Organization terms without any trade agreement.
