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Peers attack Theresa May's post-Brexit customs plan over lack of clarity

Peers attack Theresa May's post-Brexit customs plan over lack of clarity
3 min read

Peers have laid into the customs plan Theresa May wants to sell to Brussels and warned that time is running out to find a solution.


The Lords EU External Affairs Sub-Committee said the so-called Facilitated Customs Arrangement (FCA), proposed by the Prime Minister in her Chequers plan, poses more questions than it answers.

And it warned that failing to reach an agreement with Brussels and crashing out of the bloc without a future trade deal would be "disruptive and costly" for the country.

It comes amid heightened pressure to reach agreement in the coming weeks on keeping an open land border with Ireland after Brexit, while allowing the UK to set its own trade policy outside of the customs union.

Part of the FCA plan involves the UK collecting tariffs on behalf of Brussels where the final destination of goods is unknown, to prevent a hardening of the frontier.

For the remaining goods the Government suggests using technological solutions to ensure the correct rates are paid before courriers reach the border. 

In a new report, the committee said ministers have yet to outline in detail how goods could be "reliably tracked" as well as how system would be enforced.

It said the repayment mechanism - which would allow pre-paid tariffs to be re-adjusted at a later date - was “untested and will take several years to be developed and implemented".

Chair of the committee Baroness Verma said: “The Government must, as a matter of urgency, provide answers to questions on the Facilitated Customs Arrangement, such as how goods would be tracked, how revenue would be collected and how the repayment mechanism would work.

“With only six months to go until Brexit the clock really is ticking on a mutually acceptable customs agreement."

NO DEAL 'DISRUPTIVE AND COSTLY'

The Government has been ramping up preparations for crashing out of the EU without a deal, in the event talks with Brussels break down or MPs reject the final Brexit plan.

But the peers warned against a no-deal outcome, highlighting HMRC analysis that said it would cost business £18bn a year - rather than just £700m a year under the FCA plan. 

They noted that the use of technology would not prevent the need for any checks at the border between Ireland and Northern Ireland, and said trade would be disrupted by a swamp of regulation.

“The Government would face a ‘trilemma’ between keeping trade moving, ensuring security of the border, and the collection of revenue,” the report said.

“Its position that, in the event of ‘no deal’, customs checks of EU goods could be unilaterally suspended may be in breach of WTO rules.

“The Committee calls on the Government to set out its plans to ensure fair and equal treatment of all imported goods coming in on most-favoured nation terms.”

Baroness Verma added: “A ‘no deal’ Brexit will cause disruption – mitigation options are limited and no technology currently exists, which would eliminate border checks completely.

“Even if the UK waived customs checks on goods arriving from the EU, the EU has said that it will not reciprocate.”

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