Crashing out of the EU without a deal will impose a raft of new regulations on business, according to the government’s first detailed contingency planning for Brexit.
Two new white papers, published in response to mounting deadlock in Brussels, also envisage the appointment of many new Whitehall officials to cope with other negative effects on the economy.
Despite pre-referendum promises that Brexit would rid Britain of both excessive red tape and bureaucrats, Theresa May said the new proposals were necessary to “minimise disruption” in the event of talks collapsing.
Among the hardest hit in such a scenario would be exporters and importers who trade between the UK and EU but potentially face more complicated consequences than anticipated if new border tariffs are introduced.
These include an expectation that the government would require companies to register their exports in advance to reduce the danger of huge traffic queues building up outside the Channel ports.
“Because of the nature of the trade and the fact that the majority of ro-ro ports are space-constrained, it would not be desirable to hold vehicles for any amount of time in order for declarations to be lodged,” explains the white paper. “Therefore, the bill will enable the government to require that consignments are pre-notified to customs.”
VAT would have to be collected on small parcels coming from the EU because the UK cannot risk allowing the same waivers it currently applies to non-EU countries due to the recent growth in internet commerce.
The customs white paper said: “Due to the EU’s geographical proximity to the UK, allowing parcels valued £15 or less to be sent from the EU without VAT being payable would potentially undermine the UK high street in the same way as low value parcels sent from the Channel Islands did before the rules were changed in 2012.”
Britain wants to discuss its future trading relationship with the EU because 44% of UK exports go to, and 53% of imports come from, the EU 27 countries. Post-Brexit conditions of trade could, therefore, have a major effect on Britain’s economy.
The World Bank estimates UK trade with the EU in goods and services could fall by 50% and 62% respectively if no trade deal is agreed after Brexit, against 12% and 16% if the UK stays in the single market through a Norway-style agreement.
Clean Brexit campaigners say the shortfall can be offset through more trade with non-EU countries, but those who argue the UK must retain close links with the single market doubt this, certainly any time soon. Both groups want certainty.
However, the EU27’s negotiating guidelines for the two-year Brexit talks say discussion of the “framework” of a future relationship can only take place in phase two of the talks, once “sufficient progress” has been made on the separation phase and particularly the UK’s exit bill.
Most of the methods of mitigating border chaos remain to be formulated however. “The government is committed to developing solutions to the issues that implementing a new customs regime would raise, particularly in the areas, such as ro-ro ports and the Northern Ireland-Ireland land border, that are likely to be the most complex,” says the paper.
Rather than put such details to a vote by MPs, the government expects to rely on secondary legislation to rush in new customs rules if negotiators fail to agree a transitional arrangement before the Brexit deadline.
A separate trade paper published by Liam Fox’s Department for International Trade acknowledges that any deals struck outside the EU will have to put on hold during any such transition.
Instead, it focuses on the administrative steps that will have to be put in place to prepare for when Britain does eventually strike out on its own with new international trade deals.
These includes a “trade remedies framework that addresses unfair and injurious trade practices or unexpected surges in imports” – something many farmers and manufacturers fear would be the consequence of any unilateral drive for free trade by Fox.
“If a particular domestic industry suffers harm as a result of distortions of international trade (including through state-assisted subsidies and dumping), trade, remedy measures can be used as a safety valve to ensure fair trade,” said the trade white paper. “Without action, this could have serious effects on certain UK industries including those in the steel, ceramics and chemicals sectors.”
The new white papers included a number of apparent typos, including a 130-word section that was published twice, both as section 5.12 and section 5.13 of the customs document.
Critics claim the government proposals are “unnecessary and unrealistic” responses to pressure from the trade department to cut loose from the single market.
“This fudge has been dreamt up so Liam Fox can jet around the world trying to negotiate trade deals,” said Liberal Democrat Brexit spokesperson Tom Brake. “Making these half-baked demands only increases business uncertainty and the chances of a disastrous ‘no deal’ Brexit.”
But May told the House of Commons that her approach was a “creative solution to a new economic relationship” with the EU.
“We don’t want to settle for a model enjoyed by other countries,” said the prime minister. “Instead I am proposing a unique and ambitious partnership that reflects our unprecedented position of starting with the same rules.”
Sat beside May was Brexit secretary David Davis, who was absent from the opening day of the fifth round of Brexit negotiations for the first time since Article 50 was invoked.
Overnight leaks of May’s Commons statement included references to the “ball” now being in the EU court after her more emollient speech in Florence. When talks opened on Monday, this prompted officials in Brussels to respond that the ball was on the UK side – a sporting metaphor that was batted back once again by May when she delivered her statement, insisting it was on the side of the EU court.
