Britain’s strength is as a manufacturing and innovation trailblazer. Our industry has a trading relationship characterised by supply chains that weave between the UK and Europe in complex patterns. For many British manufacturing companies that trade with the EU, this is the only trading environment they’ve ever known.
The UK government estimates that 132,000 traders and businesses will have to make customs declarations for the first time once the UK leaves the EU.
In 2015 around 55 million customs declarations were made. The UK’s exit from the EU could see the number of customs declarations which HMRC must process each year increase five-fold to 255 million. This is unprecedented and new territory for everyone. The negotiations on exiting the EU were always going to be complex.
For manufacturers, there is now an acceptance that the nature of the trading relationship with the EU could change. There is likely to be friction and added costs of doing business. Although business recognises it will have to change, there remains the need for a gradual adjustment process to the final new arrangements.
For UK companies to flourish post-Brexit, we want and need a bespoke trade arrangement between the UK and EU to become a reality.
Maintaining zero rate tariffs is critical to the manufacturing industry and the frictionless movement of goods to and from Europe. Any new arrangement must provide continuity of market access for our manufacturers and be a genuine free trade arrangement, where the tariffs applied on exports remain at zero.
For many of our members, facing even relatively low percentage tariffs would have significant cost implications. The introduction of tariffs on WTO terms, as some in the government want, would see a ten per cent tariff on cars, 20.5 per cent on sugar and confectionery items and 4.7 per cent for chemicals, when exported as the finished product to the EU.
On leaving the EU Customs Union, and in the absence of a similar robust agreement, manufacturers in the UK will face the imposition of customs administration when exporting and importing goods to and from the EU. Even if systems are digitalised and streamlined, there will be time and transaction costs currently not experienced in the form of import and export declarations, levying of new duties, the production of origin certificates and the likelihood of physical inspections.
It is vital therefore that a future UK customs code is aligned with the current Union Customs Code.
This can ensure a range of pre-authorisations in documentation, reductions to inspections and checks of consignments at or in the proximity of the border between the UK and EU, and harmonisation of customs and trade facilitation systems between the UK and EU member state authorities on both sides of the border.
EEF is calling for continued access to the preferential trade arrangements. We want to retain preferential access to third country markets provided by the EU’s existing agreements. Many of these markets, including Switzerland, South Africa, South Korea and the Mediterranean area, have become critical bases supporting EU/UK supply chains.